RWE, the German utilities company based in Essen, has warned that it will suffer “drastically” if plans by Angela Merkel’s government to increase emissions charges for older coal-fired power stations go ahead.

RWE said that it is already being “squeezed” by the German government’s support for renewable energy. The subsidised expansion of so-called ‘clean’ energy, which now accounts for more than a quarter of electricity generation in Germany, has pushed down the wholesale price of power.

RWE’s chief financial officer, Bernhard Günther, said: “The emissions proposals will have significant economic consequences. We would have to shut down two of our three lignite mines and 17 out of 20 lignite-fired power stations.”

Coal miners and power-plant workers led protests against the plans at a series of rallies in Berlin last month, warning of job losses. The German Economics Ministry has said that it will review the impact on employment before going ahead with the plans.

RWE’s operating profits from conventional power generation dropped from 559 million euros to 428 million euros in the first quarter.

Mr Günther said: “As expected, the crisis in conventional power generation continues, and this leads to shrinking profits.”