The government has passed legislation introducing new emissions limits for mid-sized generators.

They include a ceiling on nitrogen oxide emissions aimed at shutting diesel engines out of the capacity market, following their headline-grabbing success in the 2014 and 2015 auctions.

The legislation partly represents the transposition of the Medium Combustion Plant Directive (MCPD) into UK law.

The directive was introduced by the EU in December 2015 to address a gap in emissions limits for mid-sized generators. Larger plants are covered by the Industrial Emissions Directive, whilst smaller appliances such as heaters and boilers are covered by the Ecodesign Directive.

In accordance with the MCPD, the legislation places limits on the emission of sulphur dioxide, nitrogen oxides and dust from plants with a thermal input of at least 1MW and up to 50MW.

For new plants, the limits will come into effect from 20 December 2018, whilst for existing plants the limits will apply from 1 January 2025 if they have thermal input of more than 5MW, and from 1 January 2030 if they have thermal input of up to 5MW.

Generators can receive an exemption if they commit to operating for no more than 500 hours per year when measured as a three-year rolling average for new plants, and a five-year rolling average for existing plants.

The Department for Environment, Food and Rural Affairs (Defra), which drafted the legislation, also included an additional limit on nitrogen oxide emissions of 190mg/Nm3 designed specifically to prevent the continued success of diesel-fired reciprocating engines in the capacity market.

As with the MCPD, the limit covers generators with a thermal input at least 1MW and up to 50MW, but also extends those with a thermal input below 1MW if they have a capacity or balancing service agreement.

For existing plants – those which became operational before 1 December 2016 – and plants with capacity agreements from the 2014 and 2015 auctions, the limit will come into effect from 1 January 2030 if they have a thermal input of up to 5MW. This also applies to generators with a thermal input of less than 1MW if they secured a capacity agreement in the 2016 auction or entered a balancing service agreement before 31 October.

For those with a thermal input of more than 5MW, the start date is 1 January 2025 if they have nitrogen oxide emissions less than 500mg/Nm3 and 1 October 2019 if their emissions are at least 500mg/Nm3.

However, the start date shifts forward to 1 January 2019 for all generators if they enter into a capacity or balancing service agreement after 31 October 2017 which remains in force after 31 December 2018.

There is an exemption for plants which are used for backup generation, provided they are operated for testing purposes for no more than 50 hours per year, but they will lose this exemption if they enter into a capacity or balancing service agreement.

Diesel-fired reciprocating engines made up a significant proportion of the new build capacity which secured 15-year contracts in the four-year-ahead (T-4) capacity auctions in 2014 and 2015. Following a backlash against the subsidising of “dirty diesel”, Defra promised to introduce new emissions limits to prevent this happening again. In anticipation of the changes, diesel generators won contracts for far less capacity in the 2016 auction.

The new rules will impact not only bidders explicitly categorised as generation but also providers of demand-side response (DSR), most of which has so far consisted of backup generation. The year-ahead (T-1) capacity auction for delivery in 2018/19 began earlier today.

Environment Minister Therese Coffey said: “These regulations will help deliver further substantial reductions in emissions, while minimising the impact on energy security and costs to businesses.

“Poor air quality affects public health, the economy, and the environment, which is why we are determined to do more, and later this year we will publish a comprehensive clean air strategy which will set out further steps to tackle air pollution.”

Association for Decentralised Energy director Tim Rotheray commented: “We support Defra’s ambition to take necessary action to improve air quality and welcome many of the measures announced. However, we are concerned that new controls on certain small generators will harm the DSR market for unproven air quality benefits.

“Defra has not undertaken quantitative analysis of the air quality impacts, yet are removing an important opportunity for the public sector and industry to participate in a secure power system with more renewable energy participation.”