London (Platts)--23Apr2009

The UK government said Thursday that the building of new coal-fired power
stations will only be approved if they are part-fitted with carbon capture and
storage technology.

     The government also announced it will consult on whether there should be
a strict emissions limit for any plant that is not retrofitted with the
technology.

     The plans, announced by energy and climate change minister Ed Miliband,
follows a statement in Wednesday's budget from UK finance minister Alistair
Darling of funding for up to four CCS demonstration projects.

     The projects will be funded by an incentive mechanism, the details of
which are still being developed.

     CCS is a type of carbon abatement technology in which the carbon dioxide
produced by fossil-fuel burning power plants is trapped and then stored
underground. It is so far unproven on a commercial scale.

     Miliband said all new coal plants built from now would have to retrofit
CCS on the whole plant within five years of the technology being independently
judged, most likely by the Environment Agency, as technically and commercially
proven, which the government expects to happen by 2020.

     He said the government will also seek views on whether it should
introduce a performance standard for power plant emissions as an alternative
way to encourage plant operators to fit CCS technology. 
    
     He told MPs in the UK's lower parliament that coal's future in the UK's
energy mix "poses the starkest dilemma we face." 

     "It is a polluting fuel but is used across the world because it is cheap
and it is flexible enough to meet fluctuations in demand for power.

     "In order to ensure that we maintain a diverse energy mix, we need new
coal-fired power stations but only if they can be part of a low carbon
future," Miliband said.

     "With a solution to the problem of coal, we greatly increase our chances
of stopping dangerous climate change. Without it we will not succeed." 

     He said the proposals signal that the "era of unabated coal is coming to
an end, and a new low carbon future for coal with CCS can begin." 

     The proposals form part of a consultation that will be released in the
summer, alongside an environmental report.

     Decisions on any applications to construct a new coal power station will
be taken once this consultation process has been completed. That includes E.ON
UK's planned 1.6 GW coal-fired power station at Kingsnorth, Kent, which will
be the first new coal-fired plant built in the UK for 30 years.

     In an accompanying statement, the DECC also laid out plans for clusters
of power stations, in areas such as the Thames, Humberside, Teesside, Firth of
Forth and Merseyside, so that new pipeline infrastructure can be shared,
reducing costs.

     The government also laid out its approach to carbon capture readiness.

     Any application to build new gas, oil, biomass, waste-to-energy and coal
power stations over 300 MW will have to show that there is sufficient space
available to retrofit CCS, as well as identify a suitable potential offshore
area to store carbon dioxide.

     Applications will also have to map a feasible potential transport route
from the power station to the storage area and show that there are no
foreseeable barriers to retrofitting CCS.

     Together, these criteria will prove a power station is "carbon capture
ready."

     The chair of the Committee on Climate Change, Lord Turner, said the
proposals were consistent with the recommendations in his December report.

     "These proposals are a very positive contribution to required
decolonization of UK power generation in the period to 2030," Turner said.

     "We were clear in our report that there can be no role for conventional
coal generation in the UK beyond the early 2020s. This should be reflected by
a very tight emissions limit being placed on any non-retrofitted plant beyond
the early 2020s.

     "We will work with the government to ensure that the detailed proposal to
be set out later in the year includes a tight emissions limit," added Turner.

Similar stories appear in Platts European Power Daily.
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