Spain wants to Tax Emission-Free Power Plants

centrale sans émissions

Spain wants to introduce a law to tax emission-free power plants. The latter would have received many benefits due to the tension in the energy markets in general.

The Russian invasion of Ukraine has impacted the various energy markets. Electricity prices are rising exponentially due to the unpredictability of Russian deliveries. Russia is the main supplier of oil and gas to Europe. This, in turn, has prompted country governments to intervene.

A tax for emission-free power plants

Spain wants to introduce a tax on zero-emission power plants, arguing that they have benefited from the rise in electricity prices.

This increase is due to the fact that these zero-emission plants are exempt from paying for pollution permits. These are needed to burn fossil fuels like gas and coal.

For example, Spain is working on a law to require companies that operate these zero-emission plants to make payments to the state to reflect the situation of fossil-fuel plants.

The country says the money raised will be reinvested in the electricity system for the benefit of consumers. Spain estimates that this measure could generate 1.6 billion euros per year.

The big industrial groups oppose this bill and refer to the EU

The industry groups AELEC, Eurelectric, the European Federation of Energy Traders and Wind Europe immediately opposed the law.

They explain:

“The bill severely undermines incentives for investment in decarbonized electricity generation.”

Companies are also concerned about government actions in other countries. Notably, in Great Britain, where the German company RWE has declared that an exceptional tax would lead it to reconsider its investments.

Industrial groups opposed to this law include Iberdrola, the Danish company Ørsted and the French company Engie.

They said the Spanish plan ran counter to the structure of the European Union’s carbon market.

They also explained that they should exclude energy sold under long-term fixed-price contracts, which is not the case.

“We urge the commission to enter into a dialogue with the Spanish government and express its concerns about the draft law that is contrary to the EU framework,” the industry groups say.

The Spanish law should cover nuclear and hydroelectric power plants, as well as some wind and solar farms built before 2003.

That’s when the European Union agreed to create a permit system for power plants, factories and airlines. This is to cover the polluting emissions they produce.

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