EU regulators open in-depth inquiry into public support to convert UK coal plant

BRUSSELS, Feb 19 (Reuters) - The European Commission has opened an in-depth investigation into Britain's plan to use public funding to convert a coal plant at Lynemouth, northern England, to biomass, saying it is concerned Britain may be paying too much.

In a statement the Commission said it would also check to ensure the project was in line with EU energy and environmental objectives.

The coal-fired plant, run by Lynemouth Power, would have the capacity to generate 420 megawatts of renewable energy running exclusively on wood pellets and would get support in the form of a financial instrument known as a contract-for-difference.

It would require approximately 1.5 milion tonnes of wood pellets per year sourced mainly from the United States, Canada and Russia.

Environment campaigners have been lobbying the European Commission to control the extent to which forests are chopped down to provide wood pellets to replace coal, saying that the impact on the climate can be at least as damaging as burning coal, the most polluting fossil fuel.

The Commission said that subsidising a large volume of wood pellets could significantly distort competition in the biomass market and it was concerned the negative impacts could outweigh the positive effect on increasing the share of renewable energy used in Europe.

(Reporting by Barbara Lewis and Foo Yun Chee)