Provisional statistics for 2015 show that coal’s share of the electricity generation mix was, at 22.6%, 7.1 percentage points lower than the previous year, which can be attributed to the conversion of a unit at Drax power station from coal to biomass and the temporary closure of some plants due to market conditions. An increase in the carbon price floor from April 2015, as well as lower gas prices, contributed to coal generation becoming less competitive as a source.
The updated statistics from the Department of Energy and Climate Change (DECC), published in April, also show that low-carbon electricity, that is, generation from both nuclear and renewable sources, made up 45.5% of the mix in 2015.
Nuclear generation increased after outages in the fourth quarter of 2014 and renewables generation was higher at 24.7% as capacity increased. In December, generation from wind was at a record high of 4.60 TWh, with offshore wind at 2.45 TWh. The increase in capacity, along with higher average wind speeds, resulted in these record levels being achieved.
The chart below shows that low-carbon generation reached 48% in the fourth quarter of last year.
As the breakdown of the energy mix changes, it affects the levels of emissions being reported by businesses under different carbon schemes once the emissions factors for grid electricity are adjusted accordingly. For example, under the CRC Energy Efficiency Scheme, the grid electricity emissions factor was adjusted from 0.53310 kgCO2/kWh for 2014/15 to 0.49636 kgCO2/kWh for 2015/16. A new factor for 2016/17 reporting is due to be published in June this year and could be adjusted downwards once again given the reduction in coal-fired generation last year. Although the cost of carbon, set as £/tCO2, is scheduled to increase, if the emissions factor is adjusted downwards, an organisation’s actual emissions per kWh consumed will be lower than the previous year. However, a reduction in the emissions factor cannot of course be guaranteed.
CCL rates were recently rebalanced by the Treasury to allow for a change in the generation mix. As well as publishing a hefty increase to the rate of CCL from 2019 to recoup lost revenue when the CRC ends, the Treasury announced in the Budget that “CCL rates will be rebalanced for different fuel types to reflect recent data on the fuel mix used in electricity generation, moving to a ratio of 2.5:1 (electricity:gas) from April 2019.” In the longer term, the government intends to rebalance the rates further, reaching a ratio of 1:1 (electricity:gas) rates by 2025, which it believes will incentivise a reduction in the use of gas, in support of the UK’s climate change targets.
Statistics from DECC also show that the change in generation mix means that carbon emissions from electricity were approximately 4% lower in 2015 than the year before, even though electricity use was higher. Overall, electricity use was 0.2% higher than 2014, which had been a record warm year. In 2015, temperatures were on average 0.6 degrees cooler than in 2014. Consumption by the domestic sector fell slightly by 0.1% despite a slight fall in temperature. Commercial, public administration, transport, and agricultural consumption increased by 1.9%, while industrial use of electricity, including iron and steel, decreased by 1.3%.
Emission figures are yet to be amended to allow for the latest update to the generation mix, but provisional March figures showed that the UK’s greenhouse gas emissions were 38% below 1990 levels at the end of 2015. Different energy sources were taken into account in reaching this figure, including heat and transport, but it is the decrease in coal as a proportion of the electricity generation mix that drove the reduction in emissions.