New UK emissions intensity cap to boost dirty coal plant closures

The UK aims to bring in a carbon emissions cap of 450 grammes of CO2/kWh for power generator from October 2025 to force the closure of coal-fired power plants not fitted with carbon capture and storage technology, the Department for Business, Energy and Industrial Strategy said Friday.

  • Limit of 450g CO2/kWh to be introduced: BEIS
  • Emissions intensity limit to start Oct 1, 2025
  • BEIS rules out CCS roll-out due to costs

The announcement, the first details of a strategy revealed in 2015, follow extensive consultations.

The government is now considering the appropriate legislative vehicle for the introduction of the emissions intensity limit and other measures required to implement it, BEIS said in the statement.

Entry into force of the measure on October 1, 2025 would align with the beginning of the 2025/26 Capacity Market delivery year, BEIS said.

Business executives, traders, risk managers and other mining and energy professionals can be more profitable and stay ahead of the competition by getting the full story and the latest prices from Platts Coal Trader International. Request a FREE trial to see how Platts Coal Trader International can meet your needs. This means unabated coal units will be unable to bid into the four- and one-year ahead Capacity Market auctions for the 2025/26 delivery year, which are expected to be held in 2021/early 2022, unless they can prove they will be able to meet the emission intensity cap, BEIS said.

The majority of remaining coal plants in the UK will be closed or have invested in technology to abate emissions in the early 2020s, with around 1.5 GW of unabated coal capacity likely to remain until 2025, BEIS analysis said. The drop in available coal-fired generating capacity is not solely due to the policy change but is accelerated by shrinking power margins, steady carbon tax and limits to operations under the Industrial Emissions Directive (IED), it said. With less than 2 GW of coal-fired stations expected to remain operational by 2025, the government hopes the Capacity Market aimed at providing reliable generation will allay fears of a potential supply crunch.

The UK has already noticed a dampening effect on wholesale power prices as the start of the early Capacity Market regime this winter period has left the system comfortably supplied. BEIS also said the required legislation for the Capacity Market auctions for the 2025/26 delivery year will be prepared “in good time before these 2021/22 auctions,” along with a final impact assessment document. In addition to introducing a new emissions intensity level, the energy department has ruled out mandating Carbon Capture and Storage (CCS) technology to be deployed on existing coal power stations due to high costs of retro-fitting full-chain CCS. BEIS also said the time it would take for the relevant investment decisions, consents, construction and commissioning of full-chain CCS is likely to extend beyond 2025. But it recognized that co-firing with solid biomass at relatively high levels is one way generators might be able to meet the emissions limit.

BEIS began a consultation last September on proposals to ensure the costs to consumers of new biomass co-firing or conversion under the government scheme are controlled.