This is an experiment in multitasking – can I write a coherent post whilst simultaneously listening to Southampton play Oldham Athletic on the radio? It is already 2-0 to Saints as I sit down. There are two big documents in front of me as well as the radio. These arise from a flurry of activity from the DECC wordsmiths who work in the basement before Christmas, giving all who cared to stagger off with them some meaty documents to digest over Christmas. And they are documents on a meaty subject –energy market reform. Treasury weighed in with a sister document on a carbon price floor. There’s a lot in them to pull out and think about – most notably about the proposed structure for a future energy market in a post free market period. To what extent should markets be shaped to keep the lights on?
The answer is from the consultation documents; quite a lot. That in itself is a relief in view of some of the rather simplistic market-led reforms under way elsewhere in Government and some of the siren calls from right wing think tanks to set a floor price for carbon and leave everything else to market forces. The thrust of the structure of the reforms is right, in my view if we are to amend the mechanisms of a balanced energy market to accommodate the imperatives of a rapidly decarbonised energy economy. But the devil, as so often, is in the detail.
There is one passage in the EMR document in particular that jars a little with the narrative of the rest of it. There is going to be an Energy Performance Standard for new power stations and the government will be consulting on how it will work. There will be one because the coalition document says there will, but here’s an opportunity to set out in detail what it would consist of and how it could work effectively (Southampton 3-0, Guly, 52 minutes, if you’re interested). It’s important to consider what an EPS would do. It would, presumably set out a clear signal about what a decarbonised energy environment would look like – that is, if you are thinking of investing in energy, this is what will not be acceptable in the future. And presumably, if it is considered important, it shapes the low carbon energy environment, bearing in mind what the Climate Change Committee has said about the sort of emissions (in the region of 70 kg of CO2 per megawatt hour of electricity produced by about 2030) that would be compatible with overall emission reduction targets.
There are a number of arguments about whether you should set out targets for emissions in this manner; and they were rehearsed in a rather good debate last February during the report stage of the last Energy bill. Will an EPS choke off new investment? Are there easier ways of limiting carbon emissions by simply declaring that new plants must have Carbon Capture and Storage? Are EPSs justified as a fall back if CCS proves not to work? Should emission levels eventually be retrospective on existing plant? (Southampton 4-0, Chaplow, 69 mins – and while I stopped to look up some figures on emission levels – 5-0 Lambert 76mins)
There is one certainty arising from the consultations this time round on an EPS, however, and that is that gas will never retrospectively or prospectively, be subject to emission standards. This is because the Government states in the document that it is consulting on two possible levels for an EPS: 600 kgCO2/MWh and 450.
You need to know a little about present power station emissions to get why these figures are significant: even at the lower level all likely new gas fired power stations (integrated gasification combined cycle), which come in at about 350kg would always escape. At the higher level, a well designed new coal fired power station will come in at about 750 grams. To be clear of an EPS it might well have to fit only a modicum of abatement through Carbon Capture and Storage (or possibly co-fire an element of biomass within a mainly unabated coal regime): As several of us pointed out during the debate last year, if you are going to have an EPS it has to have some meaningful levels attached to it: an EPS which captures virtually nothing in the future would not be worth the paper it was written on. And that appears now to be the intention: In other words as far as the purpose of an EPS might be seen to be, it’s a consultation about nothing. It is as if you decide that there should be a crackdown on drink driving and then declare that the limit for escaping prosecution is to be six pints.
If an EPS is to be as feeble as this then forget it, frankly: far better to outlaw unabated coal entirely after a specified date, and manage gas emissions by future plant running hours and capacity payment. I’ve said it before but it bears repeating: this looks like opening the door for the future to unabated gas in a way that is almost bound to blow climate change targets off course sooner or later. It is worse, though, that it comes in the guise of introducing limits for emissions with a fanfare of trumpets. (Amazingly, Southampton finish the match 6-0 winners, Barnard 86mins.)
I’ll let you be the judge of whether that was coherent! What I do know is that the EPS proposals as they stand are certainly not. But Saints have just won 6-0 away, so it’s not all bad news. [Those of you with an exceptional knowledge of League 1 football may have noticed that this post was written several days ago, for which I apologise].