There is a widely held view that tough EU air pollution rules
will force most coal-fired power stations to
close
by the early 2020s. But that simply isn’t true,
according to campaign group Sandbag.

It explains why in a new report called ”
Europe’s failure to quit coal
“. Its plant-by-plant analysis
finds that 110 gigawatts of EU coal capacity – nearly
three-quarters of the total – will be able to stay open despite air
pollution rules.

The remaining 40 gigawatts could stay open too,
Sandbag says, with 14 gigawatts of that in the UK. It adds that
recent policy changes make it more attractive for UK plant to
continue to operate.

We’ve taken a look at why Sandbag says everyone’s been
getting it wrong on coal.

Climate targets

There’s broad consensus that there
isn’t room
to keep burning coal unabated if we are
to meet climate targets. Coal makes the highest-emissions
electricity, but recently it’s been cheap
to burn
and has been enjoying something of a
renaissance.

Analysts including the
International Energy Agency
say that’s just a
temporary blip
, however. The National Grid agrees and
expects
all UK coal plants to close by 2023. Late last year
climate and energy minister Baroness Verma said:

“All sides in this
debate can agree that we neither expect nor desire large amounts of
unabated coal to be operating in the 2020s.”

People expect coal plants to close because of
the EU industrial emissions directive (IED). This sets emission
limits for pollutants including sulphur dioxide (SOx), nitrogen
oxides (NOx) and mercury.

The rules are due to kick in from 2016 but there
are various exemptions that mean coal plants can operate limited
hours until as late as 2023. After that there’s no escape. A 200
microgram per cubic metre limit for NOx is thought to be
particularly difficult and costly to meet – as much as €180 million
per gigawatt of capacity. That’s why National Grid thinks plants
will close in 2023 at the latest.

EU coal database

Sandbag isn’t so sure. It has collated a massive
database of all the EU’s coal-fired power stations and then checked
each plant to see if it will comply with the IED or if it has
announced firm plans to do so in future, by building NOx abatement
equipment.

Only one coal plant has announced that it will
close because of the IED, Sandbag says. Apart from that most coal
plants have plans to become IED compliant or are already, it says.
For instance in Germany, where there is 46 gigawatts of coal
capacity, only 4.3 gigawatts is not yet compliant.

Across the EU 110 out of 150 gigawatts are or
will become IED compliant. The remaining 40 gigawatts could become
compliant too if it invests in NOx abatement. Sandbag says
technological changes and flexibility in the rules means compliance
will be much less costly than that €180 million per gigawatt
figure.

It had been thought that the only way to comply would
be to install selective catalytic reduction that turns NOx into
nitrogen and water. But cheaper options such as selective
non-catalytic reduction are now
available
, it says.

Sandbag’s report says:

“There is a real,
preventable threat many coal power stations will invest to stay
open, creating high-carbon lock-in into the 2030s.”

UK policy changes

For the UK the situation is even worse, Sandbag
says. That’s because of two recent policy changes that make it more
favourable to invest in keeping old coal plants open.

The first change is a new “capacity market” that
will offer subsidies to power stations that promise to be available
in future. The market was designed to make sure gas plants stay
open to provide back-up when the wind isn’t blowing and the sun
doesn’t shine.

But coal plants can bid into the market too,
potentially receiving subsidy for
up to 15 years
. The way the market has been
set up means it will benefit old coal rather than new gas,
according to analysts
Bloomberg New Energy Finance
.

The government says there are investment
thresholds that will make it difficult for old coal to secure these
long-term subsidies.

Baroness Verma said:

“Even if an existing
[coal] plant could justify making that level of capital investment,
it would be unlikely to do so. Modelling demonstrates that the
wider market conditions, such as the carbon price floor, will make
coal uneconomic in the 2030s.”

The carbon price floor is a top-up tax designed
to bolster the currently low carbon price under the EU emissions
trading scheme, now trading at €6 per tonne. We’ve described the
price floor in more detail
here
.

This is where Sandbag’s second problematic
policy change comes in. In this year’s budget the chancellor

froze
the level of the price floor, a move
that Sandbag says will make coal relatively more profitable during
2017-2020. It adds that freezing the price has set a dangerous
precedent indicating that further amendments can be
expected.

The price floor is part of a complicated
three-way calculus that determines how profitable coal will be in
future, depending on the relative price of coal versus gas and the
cost of emitting a tonne of carbon dioxide.

Market forces may reverse the recent shift from
gas to coal-fired electricity that has been driven by cheap coal.
But we can’t be sure this will happen, and if it doesn’t UK and EU
climate targets will be in serious jeopardy.

Policy prescription

So what should we be doing to make sure we
aren’t stuck with coal in the 2030s? Sandbag has a policy wish-list
that includes fixing the emissions trading scheme and setting
carbon emissions limits for power plants.

It also wants tighter pollution limits under the
IED. The technical reference documents behind these limits are
currently being
revised
with the new version due for publication
next year. This could see the NOx limit tightened from the current
200 micrograms per cubic metre down to anything between 65 and 180
micrograms, according to a
draft text
.

The lower end of that range would not
automatically see coal plants close across the EU but it would make
a “huge difference” to their economic viability, says Sandbag
policy analyst Dave Jones, because they wouldn’t be able to get
away with cheaper NOx abatement options.

Sandbag’s wish-list is broadly the same as the
policy prescription issued by a several other NGOs earlier this
week, on the back of their ‘
Dirty 30
‘ report on the EU’s top 30 coal
emitters. The two reports in a week are part of a wider NGO push
that is attempting to put the spotlight on coal.

Unlike much of the climate problem, which is diffuse
and consequently hard to target, there are relatively few coal
plants each emitting huge quantities of CO2. Shutting them would be
a big step towards tackling the climate problem.

Via: http://www.carbonbrief.org/blog/2014/07/europes-coal-plants-could-stay-open-despite-air-pollution-rules/