Energy policy changes will lead to more low efficiency gas power stations

The decision by the Government to allow the construction of more gas fired power stations would merely lead to a greater number of the more inefficient type of gas power station and would probably not make a significant impact on reductions in UK CO2 emissions, environmentalists have told edie.

Earlier this week, Trade and Industry Secretary Stephen Byers announced that in October the Government would lift restrictions on the building of new gas fired power stations, once new electricity trading arrangements come into effect.

Byers also announced that the Government is exploring the possibility of temporary European subsidies of up to £100 million to help the coal industry compete against French, German and Spanish coal.

The restrictions on gas fired power stations were introduced to slow down a rapid switch to gas fired stations in the late 90s. In 1997, the Government announced a moratorium on the construction of large gas fired stations in an attempt to protect jobs in the ailing British coal industry.

In 1998, the Government put forward an Energy White Paper which proposed sweeping reforms of the energy market. Those reforms, which were designed to open the market to greater competition, are now in place with the exception of the new electricity trading arrangements (NETA).

Byers intends to lift the stricter consents policy on gas fired power stations as soon as NETA is in place in October. The lifting of the restrictions would, said Byers, not only lead to greater competition, lower electricity prices and boost the oil and gas industry, but would also “allow new gas stations that are genuinely competitive, including Combined Heat and Power stations (CHPs) to contribute to greater energy efficiency and cut down on carbon emissions.”

But, according to Mark Johnston, Energy Campaigner at Friends of the Earth, CHPs were barely affected by the moratorium anyway.

“The Government wants to promote CHP,” Johnston told edie. “The Government’s target for CHP has doubled from 5GW at the end of the last decade to 10GW by 2010 – a fifth of UK electricity demand – as part of the UK Climate Change Programme announced in March.”

While the stricter consents policy still applies, gas plants producing less than 50MW only need local authority planning permission and emission authorisation from the Environment Agency. However, large power stations of 50MW and above – such as bigger and less efficient Combined Cycle Gas Turbine (CCGT) power stations – require consent from the Trade Secretary. It is this type of gas fired power station that is likely to benefit most from the lifting of the stricter consents policy.

“CHP is half again as efficient for the same amount of gas as CCGT, which is in turn more efficient than coal, nukes, oil stations,” said Johnston. “Gas is always going to be more efficient than coal or oil, but for Friends of the Earth it is still best to use gas in the most efficient way. Therefore we will always prefer CHP over conventional gas power stations such as CCGT.”

The Department of Trade and Industry (DTI), meanwhile, was sticking to the line that the lifting of the restrictions will be good news for CHP. A DTI spokesperson told edie: “Currently, there is an automatic ‘no’ to applications to build new power stations unless they can come up with a good reason. CHPs were sometimes given an exemption from the restrictions, but were often turned down on a whole range of issues. From October there will no longer be an automatic ‘no’ and CHP will be at an advantage.”

“The Government wanted to defend the coal industry,” says Johnston. “They allowed CHP and renewables to fill the gas as they weren’t big enough to be a threat. In addition, the cost of gas is going up at the moment, while the cost of electricity is falling, so CHP has become less attractive.”

The fact remains that a rise in gas fired power stations will lead to a reduction in coal.

What’s more, the German, French and Spanish coal industries get substantial Government subsidies. “I recognise that the ending of the stricter consents policy will create a new market and new challenges for coal,” says Byers. “That is why the Government will now be investigating urgently with the EC a scheme to provide state aid to the coal industry.” Any aid agreed will be temporary and will come to an end in July 2002.

According to Johnston, the Government’s decision to seek European subsidies for coal has been driven by the threats from US-owned AES, which runs the Drax coal-fired power station near Selby, to switch away from UK mined coal to cheaper overseas supplies.