On 18 November UK energy secretary Amber Rudd set out the country's latest energy policy in a speech at the Institution of Civil Engineers in London. As expected, it called for an increase in the natural gas burn, and outlined policies intended to encourage nuclear energy and renewables, in order to address the retirement of a significant amount of generating capacity over the next few years and meet climate change targets. It also sets out a programme for the retirement of all coal fired plants by the year 2025. Her vision, she said, was of "an energy system that puts consumers first, delivers more competition, reduces the burden on bill-payers and ensures enough electricity generation to power the nation."
There were some indications about how this vision is to be achieved. The first step is to ensure that in the next 10 years, the UK gets new gas-fired power stations built, by sending "the right signals in the electricity market" and improving the capacity market. The government is consulting on how to achieve this, and after this year's auction will "take stock and ensure it [the market] delivers the gas we need".
For renewables the picture was slightly less enthusiastic. The government is will not support offshore wind at any cost, further support being strictly conditional on acceleration of the cost reductions already seen. In other words, the technology needs to move quickly to cost-competitiveness, and if so the government could support up to 10GW of new offshore wind projects in the 2020s.
On coal and the linked question of carbon emissions reduction the political outlook was far less vague. "... the UK also has to focus on where we can get the biggest carbon cuts, swiftly and cheaply. That is hard to do when, after 20 years of action on climate change, 30% of our electricity still comes from unabated coal" said Rudd.
Therefore the government takes the view that unabated coal (ie coal firing without emissions control such as CCS in place) is simply not sustainable in the longer term and will move to replace coal fired power stations with gas, which is 50% less polluting in carbon terms. "In an ideal world" she said "the carbon price provided by the ETS would so the job of phasing out coal for us using market signals. " But that has not happened, so the government wants to take action now - ie more intervention - and it will be launching a consultation in the spring on when to close all unabated coal-fired power stations. The consultation will set out proposals to close coal by 2025, and restrict its use from 2023.
If we take this step, she says, we will be one of the first developed countries to deliver on a commitment to take coal off the system. (The sub-text here is that the move can be held up at the Paris conference in a couple of weeks as an example to others - presumably along with those set by Germany and China which have also announced closure plans.) But the government will only proceed if it is confident that the shift to new gas can be achieved within these timescales.
Comment
There was much reaction to the speech, most of it of the predictable vested interest variety. The general tone was 'good about the coal, not nearly emphatic enough on renewables'. Rhian Kelly, CBI Business Environment director, said: "With recent changes in energy policy, it's vital the government gives investors clarity on the direction of travel. The Secretary of State's announcement is an encouraging sign that [it] is looking at ways to bolster our long-term energy future. As we move away from relying on coal for our energy supply, it's important the right signals are in place for investors to build new gas-fired power stations - at present, they are hard to find. A smooth transition from coal to gas is critical, so we must ensure we have new capacity before we take coal out of the energy mix."
Joern Richert, professor at the University of St Gallen said: "In principle, the UK's phase out of coal is a very positive sign. However, as with any decision regarding energy choice, an evaluation needs to consider the overall energy system . From this perspective, the government's emphasis on gas and particularly nuclear is more troubling."
Juliet Davenport, chief executive of renewable energy company Good Energy said: "While we welcome the phasing out of coal, the government needs to be much braver in its energy policy. A commitment to gas raises questions over our legally binding decarbonisation targets by locking us into more long-term reliance on fossil fuels. I'd challenge the government to offer a truly level playing field for all technologies. efore the government changed the policy goalposts, onshore wind and solar were on track to be the cheapest sources of UK power with the potential to be subsidy-free by 2020."
ETI Chief Executive Dr David Clarke said: "Stable and clear government policy is critical to engaging industry and investors in development of the UK energy system. Whilst today's announcement recognises the need for urgent action to address near-term energy security needs these actions need to be linked to critical longer term strategic decisions - particularly the requirement for any new gas plant to be capable of being fitted with carbon capture and storage technology at a future date. This also means new gas power stations should be preferentially sited close to the east and west coasts to allow ready, economic connection to a future CCS pipe and storage network."
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