Generators warn of power shortages from CO2 targets
Apr 01 - Guardian, The
Britain will suffer a 10% shortfall in electricity output from next year under the government's current plans for carbon dioxide emissions trading, executives at Drax, the country's biggest coal- fired power station, warned yesterday.
His comments came as the government missed today's deadline for submitting
its national allocation plan to Brussels for combating greenhouse gases under a
new EU trading scheme. This comes into effect on January 1.
Industry has warned ministers that their plans to cut CO 2 emissions by
16.3%, far beyond the Kyoto targets adopted by other EU countries, will damage
competitiveness.
The 4,000MW Drax station, in Yorkshire, accounting for 7% of UK power needs,
is Britain's biggest emitter of CO 2 . But Dr Burdett warns that, even as the
most efficient coal-fired plant, it could be "short" of 7.6m MWh a
year.
Coal accounts for a third of UK generation but Drax has told ministers that
it is "inequitable" for the sector as a whole to be singled out for
all the planned cut-backs in CO 2 - 5.5m tonnes.
"The proposed allocation process assumes that the industry will
restructure and buy any allowances necessary to deliver around the same number
of output hours as it now does," he has written to environment department
officials.
Ministers, he adds, assume that generators will purchase CO 2 allowances
under the EU scheme but Drax will only generate more if power prices rise enough
to cover the extra cost of carbon. The government assumes this will initially
trade at euros 10 (pounds 6.60) a tonne, but analysts point to higher prices.
The concerns at Drax come as the power industry sees little or no case for
building new plants other than wind farms. Alistair Buchanan, chief executive of
energy regulator Ofgem, said last week there could be a "pinch-point toward
2010".
He told the Business Council on Sustainable Energy: "If no plant has
been commissioned by, let's say, 2006, and prices are substantially above new
entrant price, then Ofgem will have to think carefully about its
situation."
National Grid Transco has pointed to a substantial shortfall of gas
deliveries for power stations by 2008, but Mr Buchanan insisted that the market
would find a solution promoting more generation.
Stephen Timms, the energy minister, said last week that the UK scheme would
contain "significant alterations" when it is submitted to Brussels -
probably at the end of April - but refused to give details.
* Research by energy group Powergen found 86% of British consumers were aware
of the environmental impact of CO 2 but only 39% were ready to change their
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