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ippr calls for UK to lead a two year Europe-wide freeze on new coal-fired power stations

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02 July 2008

The UK should propose a Europe-wide freeze on coal investment for a minimum of two years in order to reach carbon emission targets, says a new report from the Institute for Public Policy Research (ippr) published today (Wednesday).

The think tank says that the European Union’s goal of reducing emissions from the power sector and heavy industry by 21 per cent by 2020 through its emissions trading scheme is endangered by proposals for seven new coal plants in the UK, such as that at Kingsnorth in Kent, and up to 75 across Europe.

ippr says that even if only a proportion of these are built, the EU emissions reduction target would only be achievable through widespread deployment of the as yet untried technology of carbon capture and storage (CCS). Although CCS has the potential to cut carbon emissions from coal plants by up to 90%, at current rates of development the technology will not be ready until after 2020 according to most industry experts.

The report author, Matthew Lockwood, ippr Senior Research Fellow, says:

“The Government says that the EU’s carbon trading scheme is the central pillar of its climate policy, not only for reducing emissions but also for building a global climate change agreement. However, that pillar is still weak, and ippr’s report shows that the scheme would collapse in the event of a new coal rush. Europe needs to do two things urgently – freeze conventional coal investment until we get greater certainty, and accelerate the development of new carbon capture technologies.”

ippr's report says a temporary moratorium on new coal power plants should remain in place until uncertainty about a new post-Kyoto global climate deal is resolved - at least until 2010 - and carbon markets can guide investment effectively. It also says the UK government should immediately engage Germany, the largest potential new coal market, on this issue in order to agree an EU-wide moratorium.

Ahead of a Government consultation on coal and CCS expected later this week, ippr says that accelerating the timetable for CCS is essential. It says that a new EU Directive on CCS is needed as part of the energy and climate package, with a concrete timetable and financing for the EU’s goal of 12 demonstration plants. The UK should support a second CCS demonstration project and begin planning the national infrastructure that will be needed to transport carbon dioxide to the North Sea.

ippr says that if the UK meets its renewable energy target by 2020, the case for new coal would be very much weakened. Last week the UK Government launched proposals for a new renewable energy strategy, to meet its expected obligations under the EU 2020 energy and climate package that includes generating 35 per cent of electricity from renewable sources (mainly wind) by 2020.

- Ends -

Notes to editors

ippr's report, After the coal rush: assessing policy options for coal-fired electricity generation, is the most comprehensive and authoritative new analysis of the coal issue available, and is based on extensive research, including interviews with five of the six main energy suppliers in the UK, government advisors and officials, environmental campaign groups, the TUC, CBI and independent energy experts.

The EU emissions trading scheme
The ETS is the centrepiece of European climate policy, widely seen as key to an international climate agreement in 2012. But uncertainty still remains about such an agreement, and especially the commitment of the USA and China. As a result, companies do not have full confidence in the scheme, and consequently are discounting the carbon price, just at the time when they are rushing to make investments to meet the looming generation gap.

Coal investment plans
In the UK, energy companies are considering investing up to seven new coal-fired power stations (see table), although only one formal application has so far been made, by E.On UK at Kingsnorth in Kent. Estimates of new coal capacity being considered across the EU range from 38 GW to 64 GW. Germany, the UK, Holland, Poland and Italy are the major potential new coal markets.

Potential new UK coal plants

Location	Company	Capacity	Status at January 2008
Kingsnorth	E.ON	1.6 GW	Approved by Medway Council, with BERR for selection 36* approval
High Marnham	E.ON	1.6 GW
Tilbury	RWE npower	1.6 GW	Scoping report submitted. S36 application imminent.
Blyth	RWE npower	2.4 GW	Scoping report submitted. S36 application imminent.
Ferrybridge	Scottish and Southern Energy	800 MW	Scoping studies underway. S36 application shortly.
Longannet	Scottish Power	2.3 GW	Feasibilty study announced
Cockenzie	Scottish Power	1.15 GW	Feasibilty study announced

Source: ENDS Report 396 (January 2008), and interviews with energy companies

* Section 36 refers to approval required for all large power plants from the Secretary of State

Carbon capture and storage

Carbon capture and storage (CCS) has the potential to reduce carbon emissions from coal-fired power stations by up to 90 per cent. There are various technologies available for carbon capture, but all have yet to be demonstrated at the scale of a power station.

In 2007, the European Commission called for 12 CCS demonstration plants to be constructed by 2015. However, the energy and climate package proposed by the Commission in January 2008 does not include any concrete plans or financing for this goal.

The UK has announced that it will support one demonstration project of carbon capture covering up to 300-400 MW of coal-fired power generation, using post-combustion technology. A shortlist of bids is expected to be announced later this year, with the demonstration project operational by 2014 at the latest.

Contact:

Kelly O'Sullivan, media officer, 020 7470 6125 / 07753 719 289 / k.osullivan@ippr.org