Government forced to shut billion-pound loophole for old coal - Greenpeace

The government was forced today to pledge to close a loophole in a power
sector subsidy scheme that could allow billions of bill payers’ money to go to
polluting old coal plants, Greenpeace can announce today.

In a statement issued earlier today the Department for Energy and Climate
Change (DECC) said it plans to amend the latest draft of the capacity market
rules to ensure existing coal plants are excluded from lucrative 15-year contracts
potentially worth billions of pounds. [1]

The announcement was made after journalists approached DECC officials with
analysis by Greenpeace showing proposed rules could see subsidies worth up to
£10.5bn handed out to old coal-fire powered stations. This level of state aid
would keep these ageing plants in business for decades to come, undermining
government efforts to cut carbon emissions.

The move comes as new government data published today shows energy imports,
including coal, have reached a record high
last year [2]. A separate Greenpeace investigation published today shows the UK
is now spending nearly a billion pounds each year buying coal from Russia, with
the money going to a small clique of energy firms with ties to the Kremlin [3].

While the original draft of the capacity market rules excluded existing
power plants from bidding for long-term contracts, the latest version opened up
the auction to any power stations spending more than £500 million on upgrades –
the kind of investment energy companies are already considering in order to
meet tougher air pollution standards.

A Greenpeace analysis shows that under the new rules coal plant operators
would be able to bid for a total of £1.5 billion per plant over 15 years. As
there are seven coal plants large enough to be eligible for these
contracts, about £10.5 billion could be made available to the
companies running them.

If the government follows through with today’s pledge, existing coal plants
won’t be eligible for multi-billion-pound deals but would still be allowed to
bid for 1-to-3-year contracts worth tens of millions.

A 2013 report by the Health and
Environment Alliance
showed pollution from coal plants is
responsible for 1,600 premature deaths a year, as well as other health damages
leading to more than 360,000 lost working days each year. [4]

Commenting on the statement from DECC, Greenpeace UK energy analyst
Jimmy Aldrige said:

“The idea that super-polluting old coal plants should
get billions in subsidies for the next 15 years is
so indefensible that the government has little choice but to close
this loophole. If it's true that no one at DECC was aware of it, this
raises serious questions about who's really writing our energy policy.

"One colossal waste of bill payers' money has now been ruled out,
but the government is still offering ageing coal
plants other subsidies worth hundreds of millions, putting our
climate ambition at risk and locking us into more years of dependence
on coal, the dirtiest of all fuels.

"A much better use of this money would be to invest in clean,
sustainable ways to help keep the lights on such as cutting energy waste
and building interconnectors with Europe, storage, and smart demand



[1] DECC’s statement quoted in the Guardian:

“We have been clear throughout the development of the
Capacity Market that only new plants will be eligible for 15 year agreements,
while existing plants undertaking refurbishment can access a maximum of 3 year
agreements. We are going to amend the Capacity Market Rules to clarify without
any doubt that only new projects can access the 15 year maximum term. We will
be consulting on this shortly.”




Contact: Stefano Gelmini, m 07506 512442

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