UK global leader in power sector emissions reductions

Britain sees largest reduction in carbon intensity of any major power producer over last four years

The UK has emerged as a global leader in emissions reductions over the last four years, shooting up 13 places to become the world’s seventh cleanest major power producer.

The carbon intensity of electricity generated in Britain plunged by 47 per cent between 2012 and 2016 – the biggest fall seen by any of the 33 most power-hungry nations.

The ranking was produced by Imperial College London in collaboration with Drax for the latest edition of their quarterly Electric Insights publication. The report describes the pace of decarbonisation in the UK power sector as “unrivalled”.

“The most any other country has moved was eight places by the Netherlands,” it adds, “and that was in the wrong direction.”

Imperial College London sustainable energy lecturer and report co-author Iain Staffell said: “Britain is reducing its carbon emissions from electricity faster than any other major country, and this has happened because the carbon price and lower gas prices have forced coal off the system – the amount of coal-fired power generation in Britain has fallen 80 per cent between 2012 and 2016.

“In the Netherlands, coal-fired electricity output has risen 40 per cent over the same period as generators only have to pay the much lower European carbon price.”

France achieved the second biggest fall in emissions (33 per cent) followed by Sweden in third place (24 per cent). The report notes that the six countries with lower carbon electricity than Britain benefit from “substantial hydropower resources or, in the case of France, a heavy reliance on nuclear”, meaning the UK will struggle to rise further up the league table.

Source: Electric Insights, Imperial College London and Drax. Note: Covers the 33 countries producing at least 100TWh of electricity annually

It also warns that weakening or scrapping the carbon price “could see Britain slide back down the table just as fast as it climbed.”

Drax Power chief executive Andy Koss said the analysis “shows quite clearly the impact Britain’s carbon price has had in terms of helping to ensure we produce cleaner power for the UK’s homes and businesses.

“It’s therefore vital that we maintain a meaningful carbon price when the chancellor announces the autumn budget, if we are to meet our commitments on climate change,” he added. “Without it we could see a reversal of the impressive results achieved so far – look at what’s happened elsewhere.”

UK generators pay the European carbon price, which stands at almost £7 per tonne, and the Carbon Price Support (CPS) top-up. The CPS was introduced to ensure that generators paid a minimum price for carbon emissions known as the Carbon Price Floor (CPF).

The CPS rate has been capped at around £18 per tonne until 2020/21 to ensure that British businesses remain competitive with their European rivals. In its clean growth strategy published last month, the government said it plans to target a total carbon price and promised to provide “further details on carbon prices for the 2020s” in the upcoming autumn budget.

The cap was introduced in response to the growing gap between the CPF trajectory and the European carbon price, which has been undermined for years by a surplus of allowances. Reforms to the EU Emissions Trading System to remove the surplus were finalised last week following months of negotiations.

The report raises concerns about the potential “offshoring” of emissions through interconnector imports, highlighting the disparity between the carbon price and transmission costs paid by UK and European generators.

“Together these exemptions give European generators an estimated £10/MWh advantage over domestic generators, around a fifth of the market price,” it states. “The UK must therefore come up with a feasible way to ensure electricity flows efficiently between borders to keep down costs and carbon emissions.

“If the markets either side of an interconnector have different charging arrangements, the outcome cannot be efficient.”

The report says applying a levelling border tax, as by suggested Dieter Helm’s cost of energy review, would be “administratively difficult” but argues that transmission charges should be charged to consumers through their suppliers to ensure there is no disparity between domestic generation and imports.

“This may prove easier than requiring European generators to pay TNUoS [Transmission Network Use of System] charges, as it is unlikely the EU would allow a single country to levy charges on European generators,” it adds.

Last week Ofgem revealed plans to levy the residual element of TNUoS charges solely on suppliers instead of both suppliers and generators as is currently the case.