Winning a losing game: Turkey’s electricity utility gets a fossil fuel subsidy award for its role in coal expansion

Europe in transition

What’s the situation?

Turkey’s electricity utility, EÜAŞ, “won” the second place in the Sneaky Special Treatment category of the Fossil Fuels Subsidy Awards due to its significant and increasing public support for new coal mines and power plants which would not attract investors otherwise.

According to official 2023 targets, Turkey is set to double its coal based energy production. However, according to our research for the Global Plant Tracker a lot more coal based energy is planned. A great deal of this coal lies at the hands of EÜAŞ, to be privatized through auctions and coal power plant projects .

EÜAŞ has recently taken the lead role in developing new finance and business models for exploring new local coal reserves, increasing them from 8 billion tons in 2005 up to 15 billion tons in 2016 and making unprofitable coal projects bankable for investors and financiers. The idea is to maintain the expansion of coal reserves, in the post-Paris era where private money for coal is drained, making investments financially secured through tenders that guarantee higher electricity price for suppliers. In other words, as the Turkish Minister of Energy puts it, “boneless” investments.

Through the privatization of its coal assets including older, dirtier coal plants which are nearing retirement, and major local lignite reserves, EÜAŞ offers favorable access to resources, infrastructure and land. On top of all of that, privatization also offers certain exemptions from permit and impact assessment processes. The Turkish state has set the price of electricity generated from local coal to about 5 Euro cents per kWh (186 TRY/mWh), which is above wholesale price (2016 average is 140 TRY/MWH), and committed to purchase 6 billion kWh of electricity from the private companies operating local coal fired power stations.

What’s happening next?

A new bill, called “Production Reform”, on clearing olive groves, pasture areas and coastal zones for industrial facilities is being discussed at the industry commission of the Turkish Parliament which will facilitate expropriation for coal mine and power plant projects, as well as other “strategic” big industrial investments. Due to rapid and massive public pressure, olive groves will probably be excluded from the bill. However, the bill shall be completely thrown out as it will increase subsidies and public incentives to large industrial projects, rendering the country the land of cement and concrete, increasing her contributions and vulnerability to climate change. For more information read here.

By Elif Gunduzyeli