The UK’s new Conservative government can deliver on its commitment to international climate leadership by ensuring a phase out of unabated coal use for electricity generation by the early 2020s. The UK is currently undergoing a structural shift in its electricity market and will have just seven coal plants in operation after March 2016. These ageing plants are ripe for retirement but inconsistent policies risk incentivising unnecessary life extensions.
The UK is ranked #3 in the E3G G7 coal phase out scorecard.
UK coal use spiked during 2011-13 due to shifts in fuel prices and increased operation of old coal plants prior to their final closure. In 2014, UK coal use fell back below 30% of electricity generation after this unnecessary increase in CO2 emissions.
Risk of new coal power plants
Back in 2008, the UK faced a wave of proposals for new unabated coal plants. All of these have been cancelled, with only a handful of carbon capture and storage (CCS) projects remaining. Successive UK governments have acted to introduce a policy framework that requires ‘no new coal without CCS’. The UK has thereby successfully addressed the significant risk of new unabated coal.
Retirement of existing coal power plants
In 2014 the UK’s last 10 remaining coal plants were responsible for 20% of total CO2 emissions. Nine of them featured in the top ‘Dirty 30’ coal plants across Europe. They are ripe for retirement and three have recently announced that they are set to close by March 2016. This will leave just seven coal power plants, totalling 12.6GW.
Additionally, 8.4GW of coal capacity had already closed since 2010 due to air pollution controls, helping 2014 to see historically low levels of electricity generation from coal. Continuing this same rate of retirement would easily achieve a coal phase out by the early 2020s. The growth in renewables deployment over recent years saw it overtake coal as a source of electricity generation in mid-2015, further highlighting the structural shift that is underway in the electricity sector.
Prime Minister David Cameron committed to ending the use of unabated coal prior to the 2015 general election. The majority of the UK’s remaining seven coal plants can be closed by 2023 under air pollution regulations, providing the UK government with a great opportunity to secure an orderly phase out. But government policies currently pull in different directions: the UK must act to resolve this policy incoherence and ensure that plants retire rather than extend operating lifetimes.
The UK government has supported efforts to restrict export credit agency support to coal power plants, but has not been as proactive or vocal as France. More negatively, UK banks continue to support coal projects – although Barclays has at last moved to end finance for mountaintop removal mining. The importance of the City of London to the UK economy means that improved performance on coal will be required to reduce financial risks, as highlighted recently by Bank of England Governor Mark Carney.
The UK has an opportunity to secure a place at the top table of climate influence if it commits to a clear timetable for the phase out of unabated coal ahead of the Paris negotiations. The UK faces similar transition challenges to Canada and Italy over similar timescales so could work together to catalyse a broader coal phase out coalition with additional countries and partners.
Internationally, the UK must work with other G7 countries to strengthen OECD conditions on export credits ahead of the Paris talks. This should end financing of unabated coal plants and shift support to accelerate the deployment of renewables.