EU Draft Plan May Extend Coal Power, Slow Gas Growth

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  • New EU pollution limits to take effect in 2021
  • Capacity payments could help utilities upgrade coal plants

Europe electricity generation from coal and gas

Source: Bloomberg New Energy Finance

Coal generators in the European Union could finance upgrades to comply with the pollution standards beginning in 2021 and extend their operations if the bloc implements a draft regulation to award such plants new “capacity payments” for their contribution to security of power supply. The payments would enable more coal plants to keep operating, benefiting utilities with substantial coal capacity such as RWE AG and Vattenfall AB while reducing the prospects for gas generators to step in. The talks on capacity payment rules will be complicated and are expected to last until at least 2018.

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