Osborne’s Budget should freeze the UK’s carbon tax and phase out dirty coal

There are just 10 coal-fired power stations remaining in the UK, but they represent a fifth of the UK’s total carbon footprint

 

The UK has a coal problem.

Over the past five years the proportion of UK power supplies generated from burning coal has increased. This rise means that most of the environmental progress from the deployment of clean energy stations like wind farms has been cancelled out because burning coal produces so much carbon pollution.

There are just 10 coal-fired power stations remaining in the UK, but they represent a fifth of the UK’s total carbon footprint.

They are so old and inefficient that to stay online most of them will soon require investment. Before this investment takes place ministers have a unique opportunity to take action to phase-out the UK coal fleet.

This would ensure that the UK meets goals on cutting carbon pollution, whilst reducing costs for households and keeping the lights on through an improvement in the investment case for cleaner power stations.

The government thinks our coal stations will close soon anyhow but this projection is based on some big assumptions. The biggest of these is the idea that a massive increase in the unilateral carbon tax that power stations have to pay in the UK will go ahead.

This would drive up electricity bills for households and would mean that UK businesses were paying substantially more carbon tax than in other European countries.

It would be hugely controversial. For this reason it is very unlikely that such a high carbon price will actually be enforced.

The situation is similar to that of the fuel duty escalator, which has been frozen because of how unpopular it would be among voters. Given this reality, it is far more likely that the carbon tax will be kept relatively low.

The impact of this happening on the amount of coal we would burn would be considerable.

Coal-burning would become significantly more profitable than other, cleaner forms of generation. This would result in an increase in coal generation and consequently a spike in carbon pollution.

IPPR has been investigating whether there could be an alternative way of ensuring that coal generation is limited to ensure climate change commitments are not threatened, but in a way that would not cause energy bills to soar.

Our analysis shows that if the carbon tax was frozen at its current level but a cap was placed on the levels of carbon pollution that any coal station could release each year then coal generation would stop altogether by 2025 but consumers would be able to benefit from a small but welcome annual saving of £8.41.

Investors in new power stations or energy-saving technologies would benefit because once they know that coal is coming offline they will benefit from a bigger market share. This will have the effect of lowering the cost of investments in cleaner power stations, and offering us improved energy security.

Families will save cash and important manufacturing businesses here will become more competitive, and crucially it would send a clear signal to the world that Britain remains serious about playing our part in the international effort to reduce the risks from climate change.

This should be a no-brainer.

Jimmy Aldridge is a Research fellow at the think tank IPPR

11 Responses to “Osborne’s Budget should freeze the UK’s carbon tax and phase out dirty coal”

  1. Godfrey Paul

    Wind is the most expensive and least reliable form of energy.

  2. Leon Wolfeson

    The problem is buying nuclear power from France is expensive, we should build our own.

    The no-brainer is looking at real costs. And not “welcome” in major rises and energy cuts, offset by a small fall.

  3. Guest

    So you’ve got no idea about energy costs then.
    (Tip – It’s another form of renewable energy which is more expensive)

  4. the Prole

    The trouble is, at present there is little viable alternative to coal.
    Forget renewables – apart from hydro, the energy roi’s are pretty laughable, and that’s before we get into the intermittent supply problem (uk peak energy demand usually coincides with cold winter days when the wind isn’t blowing).
    Nuclear could be an option, but currently it’s looking terribly expensive (it doesn’t need to be, that’s a joy of the uk’s gold plated rules and regs), and if we started building new plant tomorrow, we would be well into the 2020s before we saw any power from it.
    Oil is too expensive for anything other than peak lopping, which leaves the only real alternative to coal as combined cycle gas.

    We could throw up loads more CCGT stations, but that’s not an optimal strategy given that we don’t actually have all that much more gas readily available,(and the same folks who want to close all the coal power stations are quite keen we don’t frack to see if we can get some local supplies of the stuff) and any extra we get will be mainly reliant on the Russians being in a good mood. Putting all our power generation hopes into this one basket would seem foolish in the extreme.

    Old king coal is here to stay a while yet if we want to keep the lights on (and if we don’t burn it, the Chinese will).

  5. Guest

    Er, no.

    We’re not in the 1970’s. It doesn’t take 10 years to build a nuclear power plant. 36 months at the outside.

    So you argue for dirty coal, high-priced dirty power. You ignore the fact that China’s investing heavily for a transition away from coal.

  6. sarntcrip

    ABSOLUTELY IT SHOULD BUT THE TORIES ARE IN THE POCKETS OF THE PETRO CHEMICAL INDUSTRY IF A FRACTION OF THE MONEY INVESTED IN NUCLEAR ENERGY WAS INVESTED IN BOTH BATTERY AND RENEWABLE ENERGY WE’D BE RUNNING ON RENEWABLES BY NOW INSTEADTHEPLANET IS BEING DESTROYED BY VESTED INTERESTS OF PETRO CHEMICALCOMPANIESMANY OF WHICH AVOID PAYING THEIRTAX

  7. sarntcrip

    IF A FRENCH NUC STATION GO UP AS UP LIKE JAPAN WE IN THE S.E.ARE HISTORY ANYWAY!
    JUST BECAUSE CHINA IS NOW DOING WHAT WE’VE DONE SINCE THE INDUSTRIAL REVOLUTION DOES NOT MEAN WE SHOULD CONTINUE TO DO WHAT WE KNOW BEYOND DOUBT IS DESTROYING THE PLANET ON WHICH WE LIVE!

  8. sarntcrip

    IF YOU WARP THE FIGURES, NOT ONCE THE INFRASTRUCTURE IS IN PLACE
    ADVANCING BATTERY TECH WILL ALLOW EXTRA ENERGY FROM VERY HIGH WIND CAN BE STORED AGAINST LESS WINDY TIMES

  9. Leon Wolfeson

    Oh, so if a nuclear power plant “goes up” (i.e. there’s a minor radioactive release), you’ll bomb us all? I see. You have no idea about nuclear power.

    And I see, clean power is destroying the planet. Right.

  10. Leon Wolfeson

    So if a tiny sum was invested, because of the low investment in nuclear, we’d all be saved. Hyperbole more?

    And yes yes, actual clean power generation would kill us all. The reality is that people would have to run with the sort of unreliable energy production you want – to and from work, for instance. And forget home power for most.

    (The costs ramp up VERY sharply over 35% renewable power, as Germany is showing, and it’s all near-100% gas backed anyway!)

  11. Arcanum Arcanorum (虚空)

    I am close to accepting the fact that humanity, and the biodiversity of the planet, will be destroyed by greedy elites. Despite what we do to save ourselves, our children, and future generations, the rich have decided that their extra yachts are more important.

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