Q4 2019: What drove Britain’s decarbonisation?

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by Dr Iain Staffell – Imperial College London

Many things have helped to reduce Britain’s power sector carbon emissions: coal phase-out, new renewables, rising carbon prices and falling demand. 

But how much did each of these contribute, and what was their impact on the cost of generating electricity?

Two-thirds of coal power stations have retired since 2010 due to clean air laws, conversion to biomass, or because they were simply no longer profitable. These have been replaced by over 30 GW of new renewables. Carbon prices have trebled,1 as prices on the EU Emissions Trading Scheme eventually rose and the UK government added an extra £18 per tonne of pollution. All the while, international fuel prices have surged and collapsed, and the economy has shifted in ways which are beyond anyone’s control.

A national electricity system is not a laboratory, so it is not possible to re-run history with some of these changes ‘switched off’ to find out how important each one was. Similarly, each change didn’t happen in a vacuum, they were all happening together and interacting to amplify or constrain one another. The IDLES research programme at Imperial College is developing a suite of computer models of the power system which allows us to investigate what if scenarios. What if carbon prices had remained flat; or what if all the retired coal power stations were still running?

By testing each possible combination (some 16,000 of them) we find out the influence of each change, and its ‘interaction’ effects from combining with other changes. For example, without the rise in carbon prices, coal would be cheaper to burn than gas, and without the coal retirements and conversions we would be able to burn much more coal. The two changes put together have more impact than each could have done alone.

The waterfall charts below show how emissions and wholesale power prices changed between 2010 and 2019, and how they were influenced by several factors. Five changes stand out as having a major effect: carbon prices, coal retirements, coal-to-biomass conversions, wind capacity and demand reduction.

It should be of little surprise that carbon pricing, coal and wind were big drivers. However, these were all dwarfed by reductions in demand – reinforcing the often-overlooked mantra that efficiency is the ‘first fuel’ that should be considered. But, whereas carbon prices and coal retirements pushed up wholesale power prices; renewables and efficiency improvements reduced them. Demand reductions genuinely pushed down both prices and environmental impact: a rare win-win.

This analysis shows us what worked in the past. In the decade to come, the power system will change in new and different ways. One thing is clear though, there is no single silver bullet that delivers the radical change required; many changes in many areas must all work together.

The factors influencing the changes seen in Britain’s power system over the last decade, showing how much emissions were increased or reduced (left), and how wholesale electricity prices were raised or lowered (right). Note: Cap.= capacity

1: From £12.40 per tonne average in 2010 to £37.90 per tonne average in 2019 (£18 of which is from the UK’s Carbon Price Floor).

2: Ofgem conducted a similar analysis for their State of the Energy Market report: but it only considered one policy change at a time, and so misses these important interactions.

3: This is not the same as saying that wind, solar and biomass reduced retail prices (which householders pay), as the cost of subsidising renewables is passed onto consumers, adding an extra component to bills.

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