Could old coal threaten the UK’s carbon budgets?
- 01 Nov 2013, 15:30
- Robin Webster
Keeping old, polluting coal plants open could
threaten the country's ability to reduce its carbon dioxide
emissions, argue campaigners. The House of Lords is due to vote on
a measure on Monday that aims to stop that happening.
Coal is still the
biggest single source of the UK's
electricity. But as the UK shifts to a
low-carbon power system, the government
assumes our old coal power stations will be
phased out. A complex web of
different different pieces of legislation will interact to make old
coal plants uneconomic, the government predicts.
But the changing economics of coal may mean power
companies decide to keep the coal power stations open, threatening
the country's ability to reduce greenhouse gas emissions and hit
carbon budgets. A vote in the House of
Lords next week could be about to decide whether old coal keeps
going in the UK, or not.
Phasing out coal?
Coal power currently accounts for about 35 per cent
of the country's electricity generation, according to
government statistics. But many
commentators assume that coal is on the way out in the UK - for
First, the government has introduced legislation -
known as an
emissions performance standard -
limiting emissions from new power plant to 450g per kilowatt hour
That's about half what an average coal power stations
emits. The measure gives companies that want to build new coal
power limited options - install expensive capture and storage
technology, combine burning coal with
burning biomass, or run the power
station for only part of the year. Or abandon coal and - the
government hopes - build gas plants instead.
Second, the EU's
Large Combustion Plant Directive (LCPD)
requires old coal generators to upgrade their plants, limiting
their sulphur dioxide and nitrogen oxide emissions, or close down.
Installing the equipment to upgrade to old, polluting power plants
is expensive, so commentators have assumed that power operators are
more likely to
close the power plants down.
Finally, the European-wide carbon price is meant to
make it more expensive to run carbon-polluting coal power plants in
the future - meaning the power suppliers are more likely to turn to
gas or renewables.
The measures could all combine to persuade operators
to shut down their old coal power stations and concentrate on other
The changing economics of coal
The economics of coal is changing, however - and the
old assumptions may not hold true.
Over recent months there has been
something of a European coal revival. One reason is
that the US is currently able to exploit cheap shale gas and is
therefore exporting cheap coal to Europe. So it's
now cheap to buy coal.
It's also cheap to burn it. The carbon price, set by
the EU-wide Emissions Trading Scheme, has also fallen to a
record low in recent months. The EU is
working on reforming the scheme, but there's no guarantee the
carbon price will recover.
There is one measure that could still make coal
unattractive - but it's under threat as well. The UK government has
unilaterally introduced a top-up tax to the ETS, which sets a
'floor' to the carbon price and prevents it falling too low. But
the scheme is expensive, and a number of
commentators from different parts of
political spectrum are urging the
government to get rid of it.
Will old coal power stations be shut
So overall, the policy mechanisms that are meant to
make it uneconomic to burn coal in old, polluting power stations
aren't looking as strong as they were.
The UK has a
number of old coal power stations still
running - many of which have been going since the 1960s. Under the
LCPD, these power stations need to either fit the expensive
filtration equipment to filter out health pollutants, or close
Carbon Connect suggests power companies
are going to choose to adapt their plants, rather than close them
down. It asked the generators about their plans - and concluded 15
gigawatts of coal power going could keep going "well into the
2020s". Keeping these coal power stations open and burning coal
would mean a lot more greenhouse gas emissions.
What's more, the government could be paying for it.
Under the new energy bill, coal power stations could receive
payments from governments known as
capacity payments. Operators could use these payments to pay the filtration
equipment to clean up their power stations and comply with the LCPD
, according to Labour peer
If the country wants to reduce greenhouse gas
emissions, that doesn't make a lot of sense - as old coal fired
power stations are both inefficient and very carbon polluting.
Carbon price means it doesn't
The energy industry argues that this doesn't matter
what individual power plants do - because EU-wide carbon price and
set an overall limit on the greenhouse gas emissions from the whole
The carbon price may be in the doldrums at the moment, but when they're
investing in power stations generators have to think
Jeremy Nicholson of the Energy Intensive Users group
tells Carbon Brief:
"It would be a brave investor who
proceeded on the basis that there's always going to be a low carbon
price. There's more likely to be an increasing carbon price in the
2020s on a national and international basis, and investors know
So power companies won't gamble on a low carbon price
in the long-term - and are therefore more likely to turn away from
A House of Lords amendment
Worthington, along with Lib Dem peer Lord Teverson,
has introduced an
amendment to the Energy Bill that would
prevent old coal power stations from emitting greenhouse gas
The amendment, which is due to be voted on on Monday,
would extend the emissions performance standard to include old coal
plants that stay open, rather than closing down under European
legislation. In other words, operators that choose to clean up
their old coal power stations and keep them open will also need to
reduce their carbon emissions.
The amendment was
previously introduced in the House of
Commons, but it was voted down. Worthington says she doesn't know
whether the government will support the measure or not. If the
government opposes it and it goes to a vote, then it would require
a sizeable Lib Dem rebellion, a lot of unaffiliated peers and
Labour peers to support the measure, so it's by no means
Predicting the future is difficult, particularly
where energy prices and complex pieces of European legislation are
concerned. Over the next decade or so, the price of gas could go
down and the carbon price could go up - both changes that would
make coal less attractive in comparison to gas.
Or the reverse could happen, creating more financial
incentives for operators to keep their coal plants going. If the
House of Lords vote doesn't go through, there's a chance that old
coal could continue to rule in the UK for some time to
Update 05/11: The House of Lords
passed the amendment late last night.