Abby L. Harvey
GHG Monitor
11/14/2014
The continued use of coal in the United Kingdom past 2030 should not be “assumed away,” and is likely to set the country on a path to miss its stated climate goals, according to a report released this week by the Centre for Energy Policy and Technology at the Imperial College of London. The study, supported by a grant from the World Wide Fund for Nature (WWF), states that there exists a prevailing view among energy analysts that the U.K.’s existing coal fleet will be retired or repurposed into biomass by the mid-2020s. However, the study says, due to favorable conditions for coal, the ongoing use of the high-carbon fuel source is likely to continue well beyond the 2020s. “Retaining old coal fired power stations threatens policy goals to decarbonise the UK electricity sector. Moreover, if market and policy conditions favour the ongoing operation of existing coal plant, this represents a risk to investment in replacement capacity such as gas, storage, demand response, interconnection and low carbon plant. Hence creating a self-fulfilling prophecy where coal has to operate to keep the system secure despite the implications for carbon dioxide emissions – an explicit and ongoing failure of policy,” the report says.
The report considers several policy and market factors that could affect the continued use of coal in the United Kingdom, including the EU Emissions Trading System and the UK Carbon Price Support, which forces UK electricity generators to pay the difference between the EU ETS price of carbon and an administratively set Carbon Price Floor. The study also considers the EU Industrial Emissions Directive (IED), under which power station operators have to either commit to closing their plant after 17,500 hours of operation or by Jan. 1, 2016, enter a Transitional National Plan (TNP) which defines a maximum combined emissions ceiling for all participating plants or become fully compliant on a plant by plant basis with the emissions limits mandated in the IED. As these factors currently stand, they create a favorable situation for coal which in turn, leads to favorable investment opportunities for coal that will lead to the continued use of the fuel.
This is a problem, the report says, because if coal continues to be a part of the U.K.’s energy mix, the country will not meet its climate goals. “The carbon intensities of power generation in Great Britain in our scenarios are much higher than the 2030 target of 50gCO2/kWh recommended by the [Committee on Climate Change] as part of a least cost approach to cutting national emissions, and above central projections provided by [Department of Energy & Climate Change],” the report says. Even in scenarios where the carbon price reaches £75/tonne in 2030, emissions are around 130gCO2/kWh, according to the report.
Carbon Price Not Adequate to Spur Divestment in Coal
Because of uncertainty in the future of a carbon price in the U.K., there does not exist an adequate deterrent from investing in coal, the report says. Uncertainty also exists with the European Emission Trading Scheme (ETS). “The long-term future of the UK carbon price is uncertain given ongoing discussions over the future of European Emission Trading Scheme (ETS) and the recent decision by the UK Government to freeze the level of the UK Carbon Floor Price until 2019,” the report says. This uncertainly could be damaging to the U.K.’s efforts to meet climate goals and must be addressed. “The carbon price is a key driver of investment decisions. Government should provide a clear trajectory for UK carbon prices in the 2020s and continue to support a strong carbon price through the EU Emissions Trading Scheme,” the report says.
Emissions Standards Should be Expanded
An easy means to send clear market signals to investors would be to place emissions standards on existing coal-fired power plants, according to the report. This would create a risk in investing in coal and could thus spur investment in low-carbon technologies, making it less likely that unabated coal use will continue far into the future. “Perhaps the simplest means to reinforce policy clarity would be by applying Emissions Performance Standard regulations to existing coal plant, which could be linked to the 2023 [EU Industrial Emissions Directive] deadline. Once such a standard is in place, coal operators considering IED compliance would do so on the basis that after 2023 such plans would be subject to the overall cap of the EPS,” the report says. “It may also be possible to introduce new regulations that specifically target existing coal fired power stations, perhaps capping total annual operating hours at a low level for IED compliant plant after a fixed date in the 2020s,” the report says.
