October 21, 2016 / 5:32 PM / 4 years ago

UPDATE 1-France delays carbon price mechanism plan

(Adds Uniper, union comments, background)

PARIS, Oct 21 (Reuters) - France will not introduce a carbon floor price mechanism targeting coal-fired plants from January as promised by President Francois Hollande, the country’s budget minister told parliament on Friday.

The plan as conceived could run foul of European Union regulations on state aid and hurt jobs, Christian Eckert told lawmakers during a budget debate. He added that the plan would be introduced gradually over time but gave no details.

The French government, having just successfully hosted the U.N.’s most important climate change conference since Kyoto, committed in April to unilaterally set a carbon price floor for electricity producers in a move aimed at curbing coal-fired power generation and boosting renewables.

Eckert told parliament that France was still in favour of a carbon floor price but the current proposal would condemn France’s five remaining coal fired plants.

Eckert said some amendments submitted as part of the plan could constitute illegal state aid under European Union rules.

He added that the potential closure of the plants was already causing social unrest due to possible job losses at the targeted power plants.

Trade union CGT, which had called for a strike at the coal-powered stations and ports on Thursday to protest the carbon mechanism, welcomed the withdrawal of the plan saying France still needed its coal stations given current supply constraints with its nuclear fleet.

The union said the measure could put up to 5,000 jobs at risk.

There are five coal-fired plants still in operation in France with a total installed capacity of 2.9 gigawatts owned by state-controlled utility EDF and Uniper, a German energy generation and energy trading company.

Uniper, which had threatened to shut down its coal power plants in France, said in a statement that the carbon price mechanism decision would have had grave consequences for jobs and employees at its two sites in France.

EDF was not immediately available for comment. (Reporting by Bate Felix, Myriam Rivet and Michel Rose; editing by Jason Neely and Adrian Croft)

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