Money in old coal

Drax, which produces about 8 per cent of Britain's electricity, might seem an odd choice for a stock tip. One of Europe's dirtiest coal plants, it churns out millions of tonnes of carbon dioxide every year. With Europe planning a tougher carbon emissions trading scheme in 2012, the theory is that such dirty plants will be gradually priced out of the market. But power station owners, and the government, are scared stiff about Britain's looming generation gap - by 2015 many older coal plants will be shut down because they do not comply with EU laws on air quality. The word is that the industry will ask the government for an exemption to keep the old coal plants open. Drax, which already complies with these EU rules, would quite rightly cry foul and expect some compensation in return - for example some easing of the carbon penalties it must pay under the EU trading scheme. It may not be good for the environment, but expect some haggling from the coal power lobby in the next year or two. With the government not wanting to risk blackouts, expect the likes of Drax to get their way.