The most heavily emitting coal plants will be barred for bidding in auctions for procuring back-up power generation capacity, according to new government plans for phasing out the fuel by 2025.
The Department for Business, Energy and Industrial Strategy (BEIS) said unabated coal plants, which have not been fitted with measures to limit their CO2 emissions, will be excluded from participating in capacity markets from the middle of this decade.
The move is outlined in a document which sets out how the government plans to implement prime minister Theresa May’s pledge that unabated coal plants will be phased out from 2025.
The response says unabated coal units will be unable to bid into the four- and one-year ahead Capacity Market auctions for 2025/26 and beyond, which are due to be held from late 2021 or early 2022.
The document also sets a cap on the amount of emissions, which coal plants will be required to comply with to remain open after 2025.
It states the emissions intensity limit will be 450g of CO2 per kWh of electricity generated.
This limit is in line with the emissions intensity of unabated gas generators and with the existing Emissions Performance Standard for new build fossil fuel plants.
The emissions intensity limit will be applied on a unit by unit basis, enabling generators to introduce measures to limit CO2, like the conversions of coal-fired plant to biomass at the Drax station in Yorkshire.
The emissions intensity limit will apply form October 2025 to all 300 MW plus plants burning solid fuel, such as coal and lignite.
To ensure any biomass used in measures to abate coal generation is sustainably sourced, the emissions will be calculated on the total life cycle of the material burned to take into account factors such as whether it has been transported over a long distance.
The government has also ruled out mandating the deployment of Carbon Capture and Storage (CCS) technology on existing coal power stations.
It said the cost of retro-fitting CCS on “relatively inefficient” and older power stations would be “prohibitive without significant support”.
In addition, it said it will take longer than 2025, the cut- off date for unabated coal plants, to roll out CCS technology once fund raising, securing consent and construction have been taken into account.
Frank Gordon, policy manager at the Renewable Energy Association, welcomed the government’s use of the capacity market as a tool for phasing out heavily emitting coal stations.
He said: “The way the government will implement the phase-out of coal commits them to using carbon intensity as a measure to exclude certain technologies from the capacity market, which is a major auction that procures back-up power capacity.
“Using maximum carbon intensity levels is something we have been calling for over the past year, and we now urge the government to commit to further reducing the carbon intensity of technologies that can bid in so that dirty diesel facilities will no longer be eligible to bid into the scheme.
“The constructive decision to phase-out coal is also somewhat undermined by recent proposals from the department to restrict the development of new biomass plants in government auctions, including a lack of funding for coal-to-biomass conversion. Converting retiring coal facilities to sustainable biomass is the most cost-efficient way to transition these existing assets to this new low-carbon future and to retain and grow jobs and investment.”
Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit, said the government could have phased out coal sooner given the rapid drop in the fuel’s use over the past year.
He said: “While delivering on the top line of a 2025 closure, the government’s decision to allow coal plants to compete in the capacity market on equal footing until then looks like something of a missed opportunity. In light of recent rhetoric, observers could have expected a stronger move from the government, that would utilise the market to remove coal generation as soon as possible rather than handing it another lifeline.
“While these plants remain in action – and in receipt of government support – the technologies of the future will continue to be stymied. Analysis shows that the UK can move beyond coal well before 2025 without risking of supply interruptions, so it’s slightly mystifying that ministers haven’t tried to pull the plug out a little quicker. It’s also worth noting that the move doesn’t apply to Northern Ireland, which somewhat compromises the government’s desire to present this as a national UK action.”
But big energy users welcomed the government’s package. Jeremy Nicholson, director of the Energy Intensive Users Group, said: “UK industrial users currently face the highest electricity prices in Europe, so it is important the phase out of unabated coal does not further undermine our international competitiveness.
“Consumers will therefore be relieved that remaining coal units will have flexibility in how they meet the proposed emissions limit, whether by increasing use of biofuel, CCS or other measures, which will help to keep costs down. It is also wise to make provision for temporary relaxation of the regulations in emergency conditions if that proves necessary to preserve security of supply, although we all hope this will not be required in practice.”
Hannah Martin, head of energy at Greenpeace UK, said: “This is significant progress on making coal history in the birthplace of the industrial revolution. The government shares the credit with millions of UK citizens who have voiced their support for this move over the years.
“But it is important that this is carried through, and the government must provide enough Parliamentary time to do it properly. Coal should be replaced with clean technologies well before the 2025 deadline if we are to stay global leaders in tackling climate change.”