Amber Rudd will announce of a coal phase-out today, whereby all coal power stations will shut by 2025. At Sandbag, we have been involved in analysis feeding into the coal phaseout. We will produce a fuller briefing on the implications for the UK electricity system later, but we just wanted to get out our initial reaction:
“This is great news. The eleven remaining UK coal power stations emit around 1/6th of the UK's greenhouse gases – it's high time they were phased out. Cutting coal is one of the quickest and cheapest way to significantly decarbonise the UK.
Some new gas power stations will need to be built, especially in the short-term to bolster electricity margins. But this does not mean there will be a new dash for gas. Whilst gas emits less than half the CO2 of coal, per unit of electricity, there are many ways of generating electricity with no CO2 emissions. Renewables and new nuclear are built gas is likely to play a reduced role for power generation in the longer term, regardless of how strong the government rhetoric on gas is today.
The key question now is how the Government will guarantee a phase out. We encourage them to look again at the capacity market rules which can reward old coal and is bringing forward investment in dirty diesel at the expense of larger gas plant. If new rules are needed they can be added into the Energy Bill which is currently going through parliament. It’s also important that the phase out is not used as an excuse to remove the UK’s carbon floor price; if this is taken away, it could lead to a massive increase in coal generation over the 10 years prior to phase-out.
Looking internationally, today's announcement has big significance – particularly for other developed countries using coal for power, like the US and Germany. In 2015, global coal consumption will see its biggest fall on record. But coal generation needs to be phased out if we want to limit temperature rises to 2 degrees. The UK has now raised the bar: countries should no longer be thinking about how to reduce coal generation, they should be thinking about how to phase-out coal generation altogether.