Utility Week

UTILITY WEEK | 9TH - 15TH NOVEMBER 2018 | 11 Policy & Regulation posed to have increased to £30 per tonne by 2020 and then accelerate aer that. Marshall says: "That would have provided investors with the certainty they need." This lack of certainty about the direction of the carbon price will increase the cost of capital for new-build generation projects bid- ding to enter the capacity market, he warns, ultimately ending up with what the govern- ment has been so keen to avoid – higher energy bills for businesses and households. However, the current chancellor hasn't gone far enough to help hard-pressed manu- facturers with their energy bills, counters Warren. He points out that the increase in the EU ETS over the past year has pushed up the total carbon price level from around £25 per tonne at the time of the last Budget to £35-36/ tonne. He says: "We are extremely unhappy that no action was taken on that and the impact that is having on long-term wholesale prices. "He's kicked the can down the road: we want immediate action to reduce the cost of carbon in the UK." But any cut to the carbon price would set back efforts to drive coal off the electricity generation mix, warn environmentalists. The reduction in coal's share, which shrank to zero for whole days during the past year, has been widely viewed as a success story. Aurora conducted research in the run- up to Budget day that modelled the relation- ship between the mix of fuels on the energy system and the carbon price. This showed that the more the carbon price is squeezed, the longer coal will remain in the mix. Any short-term revival of coal on the sys- tem won't change the fuel's ultimate fate given the UK government's commitment to phase out its use for electricity generation by 2025. The gradual retirement of coal stations is likely to continue, says Marshall: "You would expect coal to carry on at the margin and not being used too much." However, any slowdown in its reduction is nevertheless a cause for concern, says Court. "We need to be hitting targets conse- quentially and the carbon price is one of the important measures we have to change that behaviour. "The coal ban is going to come in in the 2020s, but obviously every carbon tonne saved until then is also important." Budget-watch in brief '"Given the government has just asked the CCC (Committee on Climate Change) to review measures for 1.5C, you would have thought there would have been something on climate change and more on energy." Richard Howard, head of research at Aurora Energy 8 mentions of gas power Don't mention it… £16 Price per tonne of CO2 that will be set under a new tax if the UK leaves the EU ETS in the event of a no-deal Brexit 5 mentions of nuclear power withdrawal 0 mentions of climate change £35.36 The carbon price per tonne on the EU ETS on Budget day – at last year's Budget it was £25 2020s The period during which the coal ban is going to take effect in the UK It was the longest Budget speech in nearly 20 years, at one hour and 11 minutes. "They said we've got 12 years to make a difference and we've now got 11." DR DAVID WILLIAMS, CHIEF EXECUTIVE AT RENEWABLE ENERGY DEVELOPER ECO2

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