Memorandum submitted by EEF
SUMMARY
An Emissions Performance Standard for coal-fired
power stations would deliver no environmental benefit could undermine
energy security, reduce the competitiveness of electricity prices
and slow deployment of carbon capture and storage
INTRODUCTION
1. EEF is the representative voice of manufacturing,
engineering and technology-based businesses with a membership
of 6,000 companies employing around 800,000 people. A large part
of our representational work focuses on the issues that make a
difference to the productivity and competitiveness of UK manufacturing,
including regulation, investment, innovation, skills and tax issues.
2. This memorandum is a submission to the
Environmental Audit Committee's inquiry into the pros and cons
of Emissions Performance Standards (EPS) for coal-fired power
stations.
ENVIRONMENTAL BENEFITS
3. Total carbon dioxide emissions from UK
power generation are already capped and regulated under the European
Union Emissions Trading System (EU ETS). Therefore introducing
power station level limits through an EPS would deliver no additional
carbon savings or environmental benefits.
4. The environmental logic for an EPS only
exists in jurisdictions, such as California where it has been
pioneered, where no industry level cap exists.
RISKS AND
UNINTENDED CONSEQUENCES
5. Whilst delivering no environment benefits,
a poorly implemented EPS could have a number of negative and unintended
consequences.
6. Firstly, by removing the option of investment
in coal-fired power stations an EPS could undermine energy security.
Without the option of coal, utilities are likely to turn even
more than they already are to investment in gas-fired power stations
for flexible base-load plant (which will be increasingly necessary
in a world with more intermittent generation). This will only
serve to exacerbate the already considerable risks associated
with rising dependence on imported natural gas.
7. Secondly, by removing the option of investment
in coal-fired power stations an EPS runs the risk of unnecessarily
increasing electricity prices. Utilities will have less flexibility
to develop balanced portfolios of plant with which to deliver
secure and low carbon energy supplies for their customers.
8. The government, through the renewables
target, is already making a major intervention in the market to
specify where utilities should source a significant portion of
their electricity. Prohibiting coal-fired without CCS plant will
remove the option of using one of the most widely available, flexible
and cost-effective power generation fuels. This would limit even
further their investment options and as result could increase
the cost of both decarbonising the UK economy and providing secure
supplies of electricity.
9. Finally, by removing the option of investment
in coal-fired power stations an EPS runs the risk of delaying
deployment of CCS in the UK. If CCS develops into a commercially
viable abatement option, it is likely to be deployed first on
modern coal-fired power stations (the additional cost CCS will
impose on power generation means that it is unlikely to be viable
to deploy on older and less efficient coal plant). So without
state of the art coal plant the UK will be unlikely to be in a
position to quickly roll out and take advantage of CCS.
CONCLUSION
10. The logic for introducing an EPS for
power generation in the UK is difficult to fathom—it will
deliver no environmental benefit but could have a number negative
unintended consequences. Furthermore, policies that deliver no
environmental benefit but undermine energy security and price
competitiveness could have the unfortunate consequence of undermining
support for action on climate change.
11. Limits on emissions whilst essential,
are more effective when they are applied at the portfolio level
where they give power generators flexibility over how to provide
customers with a reliable supply of low carbon energy.
September 2010
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