Germany has ordered a review into the potential effects of its proposal to force old coal power plants to buy EUAs, Economy Minister Sigmar Gabriel told unions on Friday, Reuters reported.

The plan won’t go ahead if the review finds it would result in an industry meltdown with considerable job loss, Gabriel said in a letter to energy unions IG BGE and Verdi seen by Reuters, without saying when the review would be completed.

The plan has divided industry and the government over the extent to which the plan will impact energy and mining jobs, energy security and the environment.

Senior members of Chancellor Merkel’s Christian Democrats have opposed the plan, but the party’s climate delegate told Montel on Thursday that the party wasn’t universally against the idea.

The proposal would from 2017 give fixed emission limits to older plants, forcing them to pay fines in the form of EUAs for any discharges above those limits.

Analysts said it’s difficult to assess whether utilities will buy EUAs to keep operating or shutter plants completely, and uncertainty surrounding its implementation could impact their appetite to sell electricity forward, a key source of demand for carbon allowances.

Sources told Reuters on Friday that utility Vattenfall was also facing delays in its planned sale of brown coal assets in Germany due to concerns over the proposal.

For more details about how the plan works, see here.

By Ben Garside – ben@carbon-pulse.com