In a statement issued earlier today the Department for Energy and Climate Change (DECC) said it plans to amend the latest draft of the capacity market rules to ensure existing coal plants are excluded from lucrative 15-year contracts potentially worth billions of pounds. [1]
The announcement was made after journalists approached DECC officials with analysis by Greenpeace showing proposed rules could see subsidies worth up to £10.5bn handed out to old coal-fire powered stations. This level of state aid would keep these ageing plants in business for decades to come, undermining government efforts to cut carbon emissions.
The move comes as new government data published today shows energy imports, including coal, have reached a record high last year [2]. A separate Greenpeace investigation published today shows the UK is now spending nearly a billion pounds each year buying coal from Russia, with the money going to a small clique of energy firms with ties to the Kremlin [3].
While the original draft of the capacity market rules excluded existing power plants from bidding for long-term contracts, the latest version opened up the auction to any power stations spending more than £500 million on upgrades – the kind of investment energy companies are already considering in order to meet tougher air pollution standards.
A Greenpeace analysis shows that under the new rules coal plant operators would be able to bid for a total of £1.5 billion per plant over 15 years. As there are seven coal plants large enough to be eligible for these contracts, about £10.5 billion could be made available to the companies running them.
If the government follows through with today’s pledge, existing coal plants won’t be eligible for multi-billion-pound deals but would still be allowed to bid for 1-to-3-year contracts worth tens of millions.
A 2013 report by the Health and Environment Alliance showed pollution from coal plants is responsible for 1,600 premature deaths a year, as well as other health damages leading to more than 360,000 lost working days each year. [4]
Commenting on the statement from DECC, Greenpeace UK energy analyst Jimmy Aldrige said:
“The idea that super-polluting old coal plants should get billions in subsidies for the next 15 years is so indefensible that the government has little choice but to close this loophole. If it's true that no one at DECC was aware of it, this raises serious questions about who's really writing our energy policy.
"One colossal waste of bill payers' money has now been ruled out, but the government is still offering ageing coal plants other subsidies worth hundreds of millions, putting our climate ambition at risk and locking us into more years of dependence on coal, the dirtiest of all fuels.
"A much better use of this money would be to invest in clean, sustainable ways to help keep the lights on such as cutting energy waste and building interconnectors with Europe, storage, and smart demand management."
ENDS
Notes
[1] DECC’s statement quoted in the Guardian:
“We have been clear throughout the development of the Capacity Market that only new plants will be eligible for 15 year agreements, while existing plants undertaking refurbishment can access a maximum of 3 year agreements. We are going to amend the Capacity Market Rules to clarify without any doubt that only new projects can access the 15 year maximum term. We will be consulting on this shortly.”
[3] http://www.greenpeace.org.uk/newsdesk/energy/investigations/uk-ties-russian-coal-oligarchs
[4] http://www.theguardian.com/environment/2013/dec/02/coal-kills-1600-vote-tighter-controls
Contact: Stefano Gelmini, m 07506 512442
