Coal-fired power plant policy until 2030. Effects of production limitation on CO2 emissions and offsetting

At the request of the Foundation for Nature Conservation and Environmental Protection (Stichting Natuur en Milieu), in this study CE Delft has provided an overview of the effects of reintroducing a production limitation and an earlier ban on coal-fired electricity with regard to four policy alternatives. In the absence of new policies, we conclude that the projected high gas prices between 2023 and 2029 will result in considerable electricity generation from coal. A reduction in production or earlier ban could therefore result in significant CO2 reductions, as the replacement gas plants have lower CO2 emissions.

The amount of disadvantage compensation for production curtailment is highly uncertain, due to the method of determining compensation and the significant fluctuation of energy prices. As a result, it cannot be determined at this stage whether the policy alternatives are cost-effective and there is a risk of over-compensation and under-compensation. If the decision is made to restrict production again, we recommend using other methods to determine compensation for loss, with the proviso that these methods do comply with European state aid regulations. One proposal is for a more comprehensive retrospective analysis to adjust the disadvantage compensation to actual market conditions, in line with the SDE++.

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