(Updated with Gabriel’s comments)

A German government proposal to force the country’s oldest coal plants to buy EU Allowances if they exceed set emissions limits has been shelved, German media reported on Wednesday, citing unnamed government sources.

The plan, which was opposed by major utilities including RWE and some senior lawmakers in Chancellor Angela Merkel’s coalition government, was aimed at shifting more energy generation towards gas plants and renewable sources to help cut Germany’s GHG emissions, while at the same time absorbing some of the excess EUA supply.

German television network ARD-Hauptstadtstudios reported that the plan was no longer under consideration, and that the government would opt for an alternative proposal put forward by workers’ union IG BCE and industry association BDI, both of which also vehemently oppose the coal levy.

Their strategy would see older coal plants with a combined capacity of 2.6 GW mothballed and put into a reserve to support periods of excess baseload demand, while the operators are compensated accordingly.

But economy minister Sigmar Gabriel said his ministry is still weighing up the two options and plans to decide on July 1, Reuters reported.

The coal levy had originally aimed to cut the country’s emissions by 22 million tonnes by 2020, but Gabriel last month said it could be weakened to shoot for cuts of 16 million tonnes.

Germany has pledged to cut its emissions by 40% below 1990 levels by 2020, and the Gabriel’s ministry drafted the plan to help the country meet that target.

By Mike Szabo – mike@carbon-pulse.com