Commentary on Sections Part 2: Electricity Market Reform Chapter 8: Emissions performance standard Section 57: Duty not to exceed annual carbon dioxide emissions limit
308.This section places a limit on the amount of carbon dioxide that a “fossil fuel plant” may emit within a year. Those operating a “fossil fuel plant” are placed under a duty not to exceed the emissions limit. The limit is calculated using the formula in subsection (1) by reference to an individual plant’s installed generating capacity (of the electricity generating station), a statutory rate of emissions and a load factor of 85%, (expressed in the formula as 7.446, see further below for an explanation for how this is derived).
309.To calculate the limit, a plant’s capacity in Mega Watts (MW) is multiplied by the statutory rate of emissions expressed in g/kWh (grams per kilo watt hour) and 7.446. The figure of 7.446 represents 85% of the total operating hours available in a year (8760) divided by 1000, which provides that the annual limit is expressed in tonnes of carbon dioxide.
310.By virtue of subsection (2) the statutory limit is set at 450g/kWh until the start of 2045. This “grandfathering” of the emissions limit under which a new plant is consented provides regulatory certainty for investors about the regime under which their assets will operate, consistent with the time needed to achieve a return on an investment in a new plant.
311.The emissions limit duty is applicable to a “fossil fuel plant” that is built pursuant to a “relevant consent” provided on or after the date that subsection (1) comes into force. Subsection (3) defines a “fossil fuel plant” whilst “relevant consent” is defined in section 61(1) as one which is granted under the Planning Act 2008, section 36 of the Electricity Act 1989 or Article 39 of the Electricity (Northern Ireland) Order 1992. This means that the emissions limit duty will only apply to plant at or over 50MW electrical capacity that are given development consent by the Secretary of State (in England and Wales), Scottish Ministers (in Scotland) or the Department of Enterprise, Trade and Investment (in Northern Ireland).
312.“Fossil fuel plant” is defined in subsections (3) and (4). Subsection (3) makes clear that a fossil fuel plant includes any associated gasification plant or Carbon Capture and Storage plant and which satisfies the conditions in subsection (4). The conditions in subsection (4) are that the plant is constructed pursuant to a “relevant consent”, see previous paragraph, and uses fossil fuels or fuel produced by gasification plant.
313.Subsection (5) subjects the emissions limit duty in subsection (1) to any regulations which the Secretary of State makes under subsection (6). Under subsection (6) the Secretary of State may make regulations regarding interpretation of the emissions limit duty (under subsection (1)) and for extending the application of the emissions limit duty or modifying it in respect of the types of case mentioned in Schedule 4.
314.Paragraph 1 of Schedule 4 allows the Secretary of State, when making regulations under section 57(6)(b), to bring existing fossil fuel plant consented prior to this legislation into the regime where that plant replaces a main boiler or installs an additional main boiler. This sort of provision may be necessary in order to prevent existing fossil fuel plants from being refurbished with replacement boilers, effectively extending a plant’s technical lifetime consistent with that of a new plant, thereby circumventing the emissions limit duty.
315.Paragraph 2 of Schedule 4 allows the Secretary of State to modify the emissions limit duty such that it does not apply to facilities that generate electricity solely for the purposes of self-supply. Paragraph 3 allows the Secretary of State to apply the emissions limit with modifications where gasification or CCS plant is “associated” with more than one generating station at a fossil fuel plant. Paragraph 4 allows the Secretary of State to provide different limits to generation plant which enters, or ends, commercial operation part way through a calendar year.
316.Subsection (7) illustrates the type of further provision which the Secretary of State may make in regulations under subsection (6)(a). Subsection (7)(a) taken together with Schedule 5 Paragraph 3 allows the Secretary of State to make provision in respect of “associated gasification plant(1)” for the purpose of ensuring that the emissions limit regime can be suitably applied in circumstances where a generating station uses fuel produced by a gasification plant that is either integral to, or remote from, the generating station, as well as where the gasification plant provides fuel to more than one generating station.
317.Subsection (7)(c)(ii) makes provision for application of the emissions limit duty in respect of electricity generating stations that only make incidental use of fossil fuel for safety, start-up or stabilisation purposes (such as biomass plants).
318.Regulations under subsection (7) can also include provisions to determine the emissions from fossil fuel plant, to include or exclude emissions by reference to regulations implementing the EU Emissions Trading System (subsection (7)(g)); and to exclude emissions associated with the supply of heat to customers from combined heat and power plants (subsection (8)).