Reforms to the Carbon Price Floor

From 1 April 2015, the proposed Government reform to the Carbon Price Floor (CPF) will come into force. This will mean that the additional UK element, Carbon Price Support (CPS), will increase from £9.55 per tonne of CO2 to £18 per tonne of CO2.

It is a low carbon legislation designed to reduce greenhouse gas emissions from electricity generation. The legislation has been in place since 1 April 2013 and acts as a top up tax. It exists to bolster the existing EU price of carbon by placing a minimum price on how much power generators have to pay to pollute in the UK. Overall, the CPF is designed to provide an incentive to invest in low-carbon power generation

This reform has been further cemented by the cross party joint climate change commitment highlighted in a recent BBC article, which aims “to accelerate the transition to a competitive, energy efficient low carbon economy and to end the use of unabated coal for power generation.”

 

 

The CPS rate per tonne of carbon dioxide (tCO2), the UK-only element of the CPF, will rise from £9.55 to £18 and then capped at a maximum of £18 from 2016 -2017 until 2019 -2020  This will significantly increase the financial cost of using coal as a fuel for heat and power generation.  With 30 per cent of the UK’s electricity still dependent on coal fired processes, the current CPF trajectory increases in the urgency to find reliable renewable fuels to replace coal. 

Implications are significant for UK’s coal fired power stations, particularly in financial terms, and it is expected that there will be a significant reduction in movement of both imported and indigenous coal within the UK after 1 April.

 

How can ESG help you in regard to this new reform to the legislation?

 

ESG is already supporting several key clients in this area who are looking at alternative fuel sources such as biofuel and RDF/SRF. These changes are supported by Government incentives to move to renewable fuels such as Renewable Obligation Certificates (ROCs) and Renewable Heat Incentive (RHI).

ESG already has experience of assisting and advising key operators within the energy sector in making the change from coal to renewable sources and can offer:

           

  • Fully accredited sampling and analysis of a range of solid fuels including biofuels made from recycled wood or energy crops and RDF/SRF
  • A review of existing sampling methodology and advice on new sampling requirements/methodology for alternative fuels
  • Port inspection and sampling of imported fuels

 

ESG is also supporting renewable fuel producers in both the waste management and manufacturing sectors.  This will help renewable fuel producers to ensure that they are producing high quality and reliable fuels that meet the specification and requirements of the end users.

At ESG, we have a vast amount of technical expertise in order to assist key operators in making the change from coal to renewable sources. George Bradley, business manager, Energy, ESG, is the UK principal expert representing BSI on ISO /TC 238 Solid Biofuels working group committee.

Recent statistics have been published by the Department of Energy and Climate Change which suggest that generation from coal stations in January was 17.7 per cent lower than in January 2014. Conversely, biomass was up by 89.7 per cent and wind generation was also up by 17.5 per cent.    

If you are considering the switch from coal to alternative solid fuels and would like advice on testing and analysis, please contacts us at sales@esg.co.uk.