Generators prepare for long sulfur year

London (Platts)--24Feb2006

European utilities will have to grapple with an extended sulfur emissions year
of 15 months from October 2006 to December 2007 ahead of the introduction of
the Large Combustion Plant Directive (LCPD) in January 2008.

The official sulfur year usually runs from September to October of each year,
but from this September the period will last until the end of December 2007
because the LCPD will come into effect from January 1, 2008.

Some utility sources believe this longer period will bring increased
uncertainty in how they use up their quota of sulfur emission allowances as it
includes two winter periods.

Utilities will receive a pro rata increase in their emissions quota for the
extended period.

"It is going to have an uncertain effect, we will have more emissions
allowances to play with, but they will cover winter '06/'07 and part of winter
'07/'08. If we have a relatively mild winter in '06/'07 we won't emit as much
sulfur," said one utility source.

Drax Power, the UK's largest coal-fired station, recently began trading sulfur
emissions credits. Drax said in October 2005 it had carried out the first
sulfur trade based on standards it had developed that could be used by all
market participants. A new regulatory framework for tradable sulfur allowances
came into effect on Oct. 1, 2005 for UK power stations and Drax believes this
could lead to a UK market in sulfur allowances.

Drax has fitted flue gas desulfurization equipment to its plant and will have
surplus sulfur allowances which could be traded with other generators,
although they will not be transferable outside of the UK.

The LCPD places strict limits on emissions of sulfur dioxide and other
greenhouse gases from coal and other generating plants larger than 50MW. 

Plant operators that have opted into the European LCPD have to fit flue gas
desulfurization equipment to their plants. Plants opting out will be limited
to operating for 20,000 hours per year and will have to close in 2015.

This story was originally published in Platts Coal Trader International.
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