UK Government’s consultation on the Energy Capacity Market

In response to the "Technical Amendments to Improve Auction Liquidity".

Coal Action Network is concerned by the content of the proposals:

  • Postponement of the introduction of the statutory requirement for independent verification of fossil fuel emissions
  • Amendments to arrangements on mothballed plant to remove a barrier to prequalification for mothballed plants that would otherwise prevent their prequalification for the 2023 CM auctions.

The independent verification of applicants’ fossil fuel emissions was to be introduced to improve the reliability of this important information, and give confidence to the data reported by companies given access to the UK energy generation market. The postponement of this introduction therefore lengthens the doubts cast over the claims made by applicants to the capacity market. The Government claims the reason for the postponement is that there may not be enough independent verifiers in time for applicants to meet this condition. This is a failure in preparation on the part of the UK Government, to rigorously implement the climate policy it created and meet its own targets. We would expect this to be resolved well before the next capacity market auction as non-independent accounting for carbon emissions cannot become normalised or it will risk under-representation of the emissions of the CMUs and the UK overall.

The amendment to allow mothballed plants to bid in the upcoming capacity market auction is concerning where it may increase the potential for recently mothballed coal power plants to come back online and result in a higher proportion of coal within the UK energy mix 2023-24, until the 2024 coal phase-out date begins to have effect. We categorically oppose any move that slows down or reverses the declining use of coal for power in the UK­—including the recent announcement by BEIS to delay the scheduled closure of West Burton coal fired power station. The UK Government states that it is necessary to allow mothballed power stations to participate in the upcoming capacity market auction to increase competition, which it hopes will reduce the cost of electricity generation—particularly when there are greater demands on the grid, such as during the winter months.

If the UK Government invested in renewable technology development and deployment to the same extent that it historically subsidised the fossil fuel industry, competition might realistically be fulfilled by renewable power generators instead. The current challenges are due, to an extent, the policy failure of this government and successive governments to put glib speeches on climate change into action. Moving forward, we urge the UK Government to avert this energy generation challenge recurring with a package of climate-friendly measures, including:

  • the application of a windfall tax on the record profits of some of the largest energy company operations in the UK, and ringfence spending to renewable energy generation and efficiency measures.
  • make mandatory that all new residential developments meet stringent energy efficiency standards to reduce the winter demand for household heating, as well as bills.
  • increase the roll-out of retrospective insulation for Housing Association and Council Housing tenants, reducing the energy bills for those least able to pay them and reducing demand during winter months on the grid.
  • Support the development of community owned, localised smart-grids to reduce reliance on a small group of large centralised energy generators and power stations.

We are concerned that the 2024 coal phase-out date is being used by the UK Government to deflect criticism for its support of using coal up until that date, when what we need is the most rapid phase-out of coal that is possible as the UK careers further from its climate targets. This attitude has been captured in comments made this year by two leading cabinet Ministers, “Net zero is by 2050. We are not at 2050 yet.” – Jacob Rees-Mog, and “Give over. We’re still committed to phase out by Sept 2024.” – Kwasi Kwarteng (in relation to extending the coal powered operations at West Burton).

Finally, as we have commented before in previous consultations, the 2024 phase-out date should be legislated on, to ensure that it happens. As this consultation and other recent moves by this government show, this or any future administration is not currently prevented from taking steps which cast doubt on or undermine that commitment.

Published 28.06.22

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