(Bloomberg) -- Germany is set to outline its proposals to break a deadlock with France over the design of the European Union’s electricity market, the latest crunch point between the nations over the region’s climate transition.
The paper lays out three options for resolving how governments can support existing power plants, such as France’s aging nuclear generators, without unduly subsidizing operators, according to a draft seen by Bloomberg News.
The issue has resulted in a political stalemate between Paris and Berlin. France is pushing for rules that would allow it to ensure more stability for state-controlled Electricite de France SA and to tap new financing sources for extending the life of its reactors. Germany has been blocking the initiative over concerns that its own energy prices may be undercut if EDF can sell power at uneconomical costs.
The overhaul of the electricity market design is one of the last elements of the EU’s Green Deal still to be negotiated, and time is running out ahead of regional elections next year. Germany and France have sparred on other elements of the EU’s climate plans, like an effective ban on new combustion engine vehicles from 2035 and the role of nuclear power in the bloc’s energy mix.
Germany proposes ensuring that revenue from so-called contracts for difference, a key tool to spur investments in renewable energies, are proportionate to the amount invested, or that the guaranteed prices set under the mechanism can be adjusted. Another option would be to redistribute revenue only to households or to apply strict limits on the amount that can be redistributed.
The draft paper is still subject to change.
Germany is looking to bring other countries on board with its push, according to people familiar with the matter. It’s not clear if the document would mark a clear step forward in talks with France.
Spain, which holds the rotating Presidency of the bloc, submitted a new compromise proposal on Friday that also laid out options for a breakthrough at a meeting of energy ministers scheduled for Oct. 17. One of those possibilities involves completely removing the section that governs subsidies for lifetime extensions, according to the paper seen by Bloomberg News.
--With assistance from Ewa Krukowska.
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