EU plan could lead to power blackouts, say electricity generators

Energy providers have begun a fierce lobbying campaign against new plans by the European Commission to clamp down on industrial pollution, saying they could cause the premature closure of a quarter of Britain's electricity generation capacity and leave the country struggling to keep its lights on.

David Porter, the head of the Association of Electricity Producers (AEP), has written to the Business Secretary, John Hutton, to argue against the imposition of the EU Industrial Emissions Directive (IED), which tightens existing limits on emissions of oxides of sulphur and nitrogen.

Mr Porter claimed the directive threatened the future of coal-fired power stations and could create an unbridgeable "generation gap" in the UK, which is already struggling to bring new generation on line to replace plants slated for decommissioning.

He claimed that to comply with the new emissions limits, proposed earlier this year, would cost the industry £2.8bn, and that suppliers who could not recover the cost of installing the required equipment would have to close.

"This is a scary example of bad regulation," Mr Porter said. "Something that looks appealing to a bureaucrat threatens to have huge unintended consequences. Piling regulation upon regulation so quickly also shows a lack of understanding of business and investment. We are talking to government and looking urgently for a sensible outcome."

The AEP has also taken its case to the Department of Environment, Food and Rural Affairs (Defra) and has begun lobbying the European Parliament via the European trade body Eurelectric. The directive aims to incorporate six existing environmental directives into one piece of legislation. In its current form, it would remove the flexibility written into the current regime as set out under the Large Combustion Plants Directive (LCPD), which took effect on 1 January this year and runs until 2020.

Companies have invested billions in recent years, based on the LCPD parameters, which are taking effect in two stages. Since 1 January, coal-fired power stations have had to use "flue gas desulphurisation" technology to reduce sulphur emissions. The second stage kicks in on 1 January 2016, when stations will need to be equipped with selective catalytic reduction technology to reduce nitrogen oxide (NOx) pollution.

Under the LCPD, the targets are flexible and plants can be phased out gradually, reduced to being used at times of maximum demand as "peaking plants" all the way out to 2020, even if they are not fitted with the required kit.

The IED removes all flexibility: either install the pricey NOx reduction kit or shut down by 31 December 2015, the day before the IED would come into effect. "This would definitely have implications," said a spokeswoman for Drax, operator of the country's largest coal-fired plant.

The first reading of the directive in Brussels, set for later this year, comes against the backdrop of an impending drop-off in UK electricity generation capacity. As a result of the LCPD, six of the UK's 18 coal-fired power plants "opted out" of the required upgrades due to the cost and age of their plants. Three oil-fired plants did as well. These plants, representing about 13 gigawatts, or 15 per cent of UK capacity, now have 20,000 hours of operation – equal to about two-and-a-half years of normal operation – before they must shut down.

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