Out-Law News | 09 Jan 2018 | 4:39 pm | 2 min. read
It will do so by imposing a strict 'emissions intensity limit' of 450g CO2 per kilowatt hour (kWh) of electricity generated from this date, which is broadly equal to the emissions intensity of unabated gas. The effect of the new limit will be to prevent coal-fired electricity generation from this date, unless emissions from this activity are offset by the use of carbon capture and storage (CCS) technology.
The government ruled out mandatory retro-fitting of CCS on existing coal power stations as an alternative to an emissions limit, in its response to last year's consultation on its proposals. Doing so would take too long and be prohibitively expensive, it said.
The 1 October 2025 deadline has been chosen to align with the beginning of the 2025/26 capacity market delivery year, meaning that unabated coal-fired generators will be unable to bid into the four- and one-year ahead capacity market auctions for delivery on or after this date.
The government will now consider an "appropriate legislative vehicle" with which to introduce the new limit, it said.
Energy law expert Richard Griffiths of Pinsent Masons, the law firm behind Out-Law.com, said that the proposed legislation "comes as no surprise, given the phasing out of coal is one of the Conservative party's flagship green policies".
"It also comes as no surprise that the government is allowing coal-fired plants to compete in the capacity market until 2025, as this allows coal-fired plants to plan for that date and, potentially, put in place alternative arrangements," he said.
"For example, we could see some coal-fired plants being re-powered by other low carbon fuel sources. This effectively involves the re-use of some existing infrastructure within the coal-fired plant but with the fuel source changing – such as from coal to gas. Similarly, some coal-fired plants may have sufficient land in order to construct a wholly new power station adjacent to the existing coal-fired plant, with the latter being 'switched off' once the new low carbon plant is operational," he said.
These developments would take time to plan, to obtain the necessary consents and then to construct and test, making the government's lead-in time for the policy "perfectly sensible to ensure security of supply", Griffiths said. A number of respondents to the government's consultation called for an earlier date, but this was ruled out in order to balance "the need to ensure security of our electricity supplies, maintaining affordability and the benefits of emissions reductions", the government said.
The government announced its intention to phase out unabated coal-fired power generation by 2025 in 2015, and began consulting on its plans in 2016. Since then, UK reliance on coal generation had continued to decline as a result of the UK's carbon price support mechanisms and an increase in low carbon generation, reaching a record low of 2% of electricity generated in the second quarter of 2017, according to the government.
The new emissions intensity limit will apply on a per-unit basis to generators in England, Wales and Scotland with a thermal capacity of over 300MW which burn any solid fossil fuels, such as coal or lignite. Emissions from other fuels co-fired with solid fossil fuel will be included in the emissions intensity calculation. The calculation will be slightly different in the case of biomass, to ensure that biomass generators will be able to continue to use some coal where this is under the emissions limit.
The government intends to incorporate an emergency provision into the new legislation, allowing it to suspend the emissions limit in the event of "significant and imminent concerns about security of supply".
"While we are confident that it is considerably unlikely that such a provision would ever be invoked, we consider it prudent for the secretary of state to retain provisions to act in emergency situations, as a last resort, where there might be a shortfall in electricity generation, or risk of one, and that suspension would wholly or partially mitigate that risk," it said. "Given the capacity market's role in ensuring there is sufficient capacity on the system, it is unlikely these powers would need to be invoked."