The subsidies, which are taken from people’s energy bills, would enable coal stations to modernise their facilities. This could in turn render coal generation economically viable past 2020.
The move would hinder the UK’s efforts to meet carbon emission reduction targets, as coal produces roughly twice the level of CO2 as gas.
The scheme was announced shortly after Ofgem stated that in the last year the risk of blackouts in the UK had increased from one in 12 to one in four.
Tackling carbon emissions
Lord Teverson, the Liberal Democrat lead on energy policy in the Lords, has proposed amending the Energy Bill to extend the emissions performance standard (EPS) to relevant coal stations.
Speaking to The Independent he said: “Just a few years ago we all thought that coal was on the way out. But that is no longer the case. The collapse in its price due to America switching from coal to shale gas means power plants that would have been uneconomical may now be given a new lease of life. That is why it is so important that we put new safeguards into the Energy Bill so that, if they remain on the grid, their emissions are controlled by EPS.”
Suppliers won’t be ‘big winners’
A spokesperson from DECC said coal fuelled power stations should be allowed to compete in the capacity market. “Ruling out all existing coal plant overnight would add unnecessary cost to consumer bills. The future economics of existing coal plants don’t stack up well. The combined effects of their age, EU environmental regulations and the escalating carbon price will outweigh benefits of staying open,” he added.
“Capacity market payments will be a fraction of that suggested and will also lead to a lower wholesale electricity price, so it’s wrong to expect participants to be big winners.
“Our modelling tells us that by 2025 only about 3% of our power is expected to be provided by coal.”
Joss Garman, deputy political director at Greenpeace, expressed his concerns over the handout: “This latest subsidy, amounting to hundreds of millions of pounds taken from consumers’ bills, would keep the UK dependent on the dirtiest fuel of all for at least another decade, while simultaneously putting at risk investment in less polluting power systems.”