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EU investigates state aid for UK power plant

World Coal,

A European Commission investigation was opened yesterday into whether British plans to use public money to convert a coal power plant into a wood-burning facility broke EU competition law.

The Commission aims to make sure that the funds used to support the project are limited to what is necessary and do not result in overcompensation. It will also assess whether the positive effects of the project in achieving EU energy and environmental objectives outweigh potential competition distortions in the market for biomass.

Once converted, the Lynemouth Power Station will generate renewable electricity by burning wood pellets. It is expects to produce 2.3 TWh/y of electricity. The Commission estimates that the plant will use more than 1.5 million wood pellets each year. As the EU market will not be able to satisfy demand, the British government will need to pay to import them from the US and Canada.

“Subsidising such a large volumes of wood pellets could significantly distort competition in the biomass market”, the Commission has stated.

The Commission will investigate further to see if its concerns are justified. It will give all interested parties the opportunity to express their views on these issues before finalising its assessment.

Edited from various sources by Emma McAleavey.

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