Without Kingsnorth, we have an energy opportunity

Ed Miliband may not be able to help fund a new coal-fired power station, but now he can focus on low-carbon solutions elsewhere

Catherine Mitchell
guardian.co.uk, Thursday 8 October 2009 15.35 BST
Far from being a disaster for Ed Miliband, climate change and energy secretary, the decision by E.ON to shelve its plans for a giant coal-fired power station at Kingsnorth in Kent, may in fact present a golden opportunity to put in place a truly effective coal policy.
Put bluntly, Miliband simply does not have the money to pay power companies to build the carbon capture and storage (CCS) equipment he has demanded to trap and bury some of the emissions from the new plant. The technology is unproven at this scale and would be very expensive. For its part, E.ON simply faces far too many uncertainties to plough billions into a new power station with any confidence.
Having tied himself in knots to fit around the huge new Kingsnorth plant as his coal policy centrepiece, Miliband now has a blank sheet upon which to set out the emission reductions, CCS trials and regulatory frameworks needed and what he does with his – not very much – money.
The report due on Monday from the Committee on Climate Change, which advises the government, is likely to push for even tougher controls on emissions, especially from the power sector. Having removed the millstone of Kingsnorth, he should set out plans that see no emissions at all from any new coal plants and a fixed date by which all existing plants are retrofitted with CCS.
So why did E.ON postpone its Kingsnorth plan? The company cites the global recession, and the consequent cut in energy demand, but says it still supports CCS. Clearly, risk and uncertainty for the plant has ballooned as the government has dithered over its policy and Greenpeace activists climbed an E.ON smokestack two years ago. The economic environment is uncertain; the global emissions environment is uncertain before the UN climate talks in Copenhagen; the costs of CCS are uncertain; in the UK, a new government may be elected, and the Tories have said they support limiting the emissions from power plants, although those limits are not yet known.
Yet I am still confused by the decision. E.ON has always been comfortable with grandstanding to get what they want. Why not sit it out until they got it? Perhaps it is brinkmanship: give us the funding for CCS and we will give you the big new plant you need to keep the lights on. Miliband may even try to give them what they want, but this would only intensify the protests over Kingsnorth and the Treasury is very unlikely to offer any more money. Another factor could be gas: prices have fallen and gas-fired stations are quicker and cheaper to build. They also provide much more flexible back up than coal for renewable energy supplies which wax and wane with the sun and wind – a safer bet for the future?
Another potential bonus for Miliband is that he has more opportunity to offer a CCS trial to Longannet power station in Fife. This would be a retrofit – adding CCS to an existing plant – not a new build like Kingsnorth, and as such it should be cheaper and would cut, not add to emissions.
The bluff of coal appears to have been blown away: E.ON because they didn't know what costs were and the government because they didn't have enough money to help. Coal power provides security of energy supply but a truly sustainable and secure system has to have another characteristic – minimal carbon. Miliband now has to take the chance that E.ON's withdrawal offers.