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High carbon taxes increase likelihood of future no-coal records

ByJez Davison

Jun 18, 2019 #Energy

High carbon taxes in Britain were the key reason why Britain’s electricity system ran without coal for more than two weeks in late May/ early June 2019 – a record which stretches back almost 140 years.

That’s the view of EnAppSys, which indicates that further no-coal records could be broken should these taxes remain at current levels.

These higher carbon taxes do not, however, apply in neighbouring regions and over the initial two-week period of zero coal, Britain imported 50.9GWh of power from coal-fired power stations operating abroad.

Of this power, only a relatively low share of the modelled coal-originating imports came from France and Ireland (0.1GWh and 0.9GWh respectively), with France seeing a high share of power from nuclear plants and with Ireland seeing high levels of wind generation over the noted period.

Instead, the largest share of the modelled total was from the Netherlands where coal-fired power stations continue to operate at a high level of activity as a result of only paying around half the carbon taxes paid within the UK.

Rob Lalor, senior analyst at EnAppSys, said: “Britain’s move towards a green future has seen an increased reliance on low-carbon power sources to generate electricity. This has coincided with a shift in Britain’s energy policy, with coal plants set to be phased out by 2025 and high-polluting power plants penalised by higher carbon taxes, which include the GB carbon price floor of £18 per tonne.

“This has translated into a two-week period without coal-fired power being generated within Britain, but with European markets seeing less aggressive carbon pricing, electricity generated by coal-fired power stations would have continued to have been consumed within British households.

“Without a shift in policy, the number of “no-coal” days is likely to increase again in future as more electricity is generated from renewable sources. Indeed, our latest GB quarterly market report revealed that the amount of clean energy derived from renewable sources hit a record high in the first three months of 2019.”

The figures produced by EnAppSys are based on the different sources of power generated around Europe (incomplete for the Netherlands leading to a potential under-estimate of real coal production). This shows that the Netherlands produced 535.8GWh of power from coal over the period.

With the country also seeing exports to Britain over this period at 7.8% of demand, this translates into an assumed export of coal-fired generation totalling 40.4GWh.

This analysis was also extended into Germany, where 5,017.3GWh of power was produced from coal or lignite plants over the period, but with only 2.1% of demand in Germany being exported to Netherlands, there was only a 0.16% modelled passthrough assumed for German coal into Britain. This translated into a 9.5GWh import of coal from Germany over the period.

These import totals at 50.9GWh imply an effective 151MW baseload production of coal from outside of Britain over this period.

Rob Lalor said: “Whilst the absence of the higher UK-only carbon prices would have prevented this coal-free run from occurring (or at least for as long), the same carbon price levels applied outside of Britain might also have prevented coal from being imported from neighbouring regions.”