By Ed Crooks, Energy Editor
Published: June 18 2009 02:51
“Clean coal” power stations will be paid a guaranteed price for the carbon dioxide that they store, funded by a levy on electricity users, under plans the government set out on Wednesday.
That levy, expected to rise to 2 per cent of electricity bills – about £8 ($13) per year – by 2020, was described by one industry executive as “instituting a carbon tax”.
In a consultation paper on Wednesday, the department of energy and climate change confirmed its plan to support up to four pilot coal-fired plants that can capture and store their carbon dioxide emissions.
It also published a study suggesting that clean coal technology could support 30,000-60,000 jobs in Britain by 2030, serving domestic and international markets.
Ed Miliband, the energy secretary, said it was “important to get on with it and move forward as quickly as possible on carbon capture and storage.”
He argued that pressing ahead with clean coal would secure energy supplies while cutting greenhouse gas emissions, create a “big industrial opportunity”, and show other countries, such as China, how their emissions could be cut.
The government wants the financial support in place next year, and the first plant running by 2014.
To encourage companies to invest in untried and uncommercial clean coal plants, Mr Miliband has promised a subsidy on top of the support provided by the European Union’s emissions trading scheme.
The price of emissions in the scheme has been volatile and industry has argued that it does not provide enough certainty to invest in expensive technology. The government’s favoured solution is to guarantee a price for all emissions that are prevented by the pilot clean coal plants.
The proposals were welcomed by the industry, which had been growing impatient over the lack of clarity in the government’s stance on coal.
However, The Association of Electricity Producers, the industry group, highlighted the risk that old coal-fired plants could be forced to shut down.
New coal-fired power stations will be given consent only if they include carbon capture on at least 300 megawatts of their output, and will be forced to fit carbon capture within five years of the technology being proven, which the government expects to be in 2020.
The consultation paper suggested that old coal plants could also be forced to retro-fit with carbon capture equipment.
Copyright The Financial Times Limited 2009