As part of investigation, the EC will assess whether Spain's €440m ($523.5m) environmental incentive for coal power plants is in line with European Union (EU) State aid rules.

Since the introductioon of environmental incentive scheme in 2007, 14 coal-fired power plants have received €8,750 ($10,444) per year in exchange for installing sulfur oxide filters, to reduce emissions below certain limits.

Over the last 10 years, the power plants have received more than €440m in total in public support, with payments expected to continue until 2020.

The Commission said that the Spain did not notify about this measure to it for assessment under EU State aid rules.

European Commissioner for Competition Margrethe Vestager said: "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. We will now investigate this issue further."

The Commission raised concerns that Spain’s environmental incentive support used by the power plants has given them an unfair advantage.

The commission said: “If confirmed, this means that the scheme did not actually have any environmental incentive effect.

“Furthermore, the financial support may breach a long-standing principle of EU State aid rules, namely that Member States may not grant State aid to companies to meet mandatory environmental EU standards.”

Image: About 14 coal-fired power plants in Spain have received €440m in environmental incentive since 2007. Photo: courtesy of John Kasawa/