Spanish utility Iberdrola has called for “a complete rethink” of Europe’s energy taxation system so that the heaviest polluters pay the most under the new Green Deal, which aims to take the EU to net-zero CO2 emissions by 2050.

Group CEO Ignacio Galan said electrification would be key to the success of the Green Deal and would encourage the bloc’s utilities to almost double their investments over the next 30 years.

But he said Iberdrola wanted to see a fair allocation of decarbonisation costs so companies which pollute the most should be forced to pay for doing so. “If such new taxation measures were introduced then every energy player would then be able to make their own decisions.

“For instance it makes no sense that a hydroelectric power plant in Spain pays twice the tax per kWh than a coal plant.”

Under the Green Deal the European Commission last month put forward an ambitious plan to cut greenhouse gas emissions in the EU by 50-55% by 2030 – substantially more than the 40% reduction planned so far – on the road to climate neutrality by 2050.

Green energy advocates hope the EU will this year announce plans to tighten rules for member states over climate and energy taxation, creating a more harmonised Europe-wide regime that supports its low-carbon ambitions.

Speaking at the Davos summit, Galan pointed out that the Green Deal would hopefully serve to “streamline permitting procedures for new infrastructure and reward those companies genuinely transforming their business model to deliver a green economy.

“At Iberdrola we have accelerated the pace of our investment in renewables and smart grids to almost €10bn a year, twice as much as four years ago. We aim to commission another 3.3GW in clean energy this year, which will add to the 5GW that came on stream in 2019.”

Galan said that the energy transition is feasible given that the energy industry already has the necessary technologies at a very competitive cost.

“Onshore wind is now mature and the cost of solar has fallen by around 80% since 2010. Along with offshore wind, which has seen a 50% drop in costs, these technologies are now capable of competing with the most polluting sources of traditional generation.”

Iberdrola last year submitted plans to build 550MW of subsidy-free wind and solar to replace the group’s last Spanish coal-fired power plants in northern Spain which are expected to be shut down this year.