In their response to the consultation on Greece’s capacity mechanism, the Greek organisations of WWF and Greenpeace note that the potential for the proposed scheme to prolong Greece’s dependence on fossil fuels is the biggest concern. This is through a potential capacity contract for the new 660MW lignite unit Ptolemaida V, currently under construction, refurbishment contracts to extend the life of old lignite plants, and annual contracts to subsidise all fossil fuel power plants year-by-year. These contracts would slow down Greece’s vital transition to 100% renewable electricity system.

Key points raised:

  • No emission limits
  • Flawed assessment of capacity needs
  • Lack of transparency
  • Fossil fuel subsidies that fuel the climate crisis
  • Air pollution concerns
  • Soft penalties
  • Distorting the “polluter pays” principle
  • Risks of market distortion

Capacity mechanisms are a fundamentally flawed scheme, especially as they are currently employed. While their stated aim is to secure electricity supply adequacy, in reality they finance fossil fuel (coal, oil and gas) power plants and fail to address the climate crisis and the decarbonisation objectives for Europe’s energy system.

At a macro EU level, there is evidence that member-states tend to systematically overestimate capacity needs, consequently using these mechanisms to subsidize conventional carbon-intensive power generation plants despite over-capacity at an EU-wide level.[1]

The track record of the Greek capacity remuneration schemes to date is CO2 intensive. In total, from 2006 to 2014, state aid through the Greek capacity remuneration schemes has been at least 3.8 billion EUR, 2.9 of which supported the operation of fossil fuel units.[2] This translates to 1.4 billion EUR for lignite plants, 1.35 billion EUR for natural gas and almost 180,000 EUR for oil powered units.

The proposed capacity mechanism opens the door to state support which is inconsistent with EU climate and energy objectives, as well as internationally agreed climate mitigation obligations.

Read the comments here.

Notes:

  1. Greenpeace European Unit. (2018, 13 September). EXPOSED: €58 billion in hidden subsidies for coal, gas and nuclear. Retrieved from: https://www.greenpeace.org/eu-unit/issues/climate-energy/1519/exposed-e58-billion-in-hidden-subsidies-for-coal-gas-and-nuclear/
  2. WWF Greece. (2018). Greek subsidies to fossil fuels [in Greek]. Retrieved from: http://www.wwf.gr/images/pdfs/Fossil_Fuel_Subsidies_in_Greece_Final.pdf

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