The Association of Coal Importers is calling for policy intervention to prevent “premature closure” of coal plants and preserve a “critical mass” of infrastructure to supply future plants equipped with carbon capture and storage technology (CCS).
The difference between coal and gas power starkly illustrates the trade-off between environmental sustainability and cost. Gas power produces roughly half the carbon dioxide emissions at twice the cost of coal.
Nigel Yaxley, managing director of the Association of Coal Importers, said: “There almost seems to be a conspiracy of silence among politicians about the reason for it and to deflect blame onto the energy companies. I think there is incredible dishonesty on the part of politicians on the reasons for this…
“All three parties have essentially made a choice to sacrifice low energy prices for climate change policies. To make that choice and then to pretend that is not their fault…
“Ed Davey says competition means people have a choice. Of course that is true, but they don’t have a choice between paying for expensive green electricity and cheap coal-fired electricity.”
While recent price hikes have focused attention on the cost of environmental and social obligations paid for through bills, Yaxley said: “What is being missed is all the policy instruments which are designed to push generation from coal onto gas and prematurely close existing coal plant.”
Coal generators must decide in January whether or not to “opt in” to the Industrial Emissions Directive. This European legislation requires them to upgrade their equipment to reduce emissions of sulphur and nitrous oxides or close by 2023.
A report by the Association of Coal Importers said government “could and should” use its proposed Capacity Market to “get best value from our existing coal infrastructure so that it is still here in years to come”.
It also called on government to reconsider “the steep upward trajectory” of its carbon price floor. This adds to the cost of coal power, although National Grid estimates the carbon price would need to rise tenfold to £60 a tonne for gas to displace coal in the merit order.
In the long term, Yaxley argued the UK could meet its climate change obligations more cheaply using coal equipped with CCS. He said it was “scandalous” that the government “seems to be going lukewarm” on the technology.
According to Department of Climate Change projections, coal with CCS could compete with offshore wind on price by the 2020s.