The European Commission has launched an investigation to assess Spain’s “environmental incentive” for coal power plants.
The Commission is concerned the support has been used to meet EU environmental standards that were in any case mandatory.
In 2007, Spain introduced a scheme to support the installation of new filters in existing coal plants to reduce sulphur oxide emissions, with developers receiving public support for a period of 10 years.
A total of 14 coal plants have so far received more than €440 million (£393m) in state aid and payments are to continue until 2020.
However, Spain did not notify this to the Commission under EU state aid rules – as member states cannot provide public support to meet mandatory environmental standards.
Commissioner Margrethe Vestager, in charge of competition policy said: “If you pollute, you pay – this is a long-standing principle in EU environmental law. EU state aid rules do now allow member states to relieve companies of this responsibility using taxpayer money.
“We currently believe that this Spanish scheme did not incentivise coal power plants to reduce harmful sulphur oxide emissions – they were already under an obligation to do so under EU environmental law. Therefore, we are concerned that the support gave these coal power plants an unfair competitive advantage.”