Significant progress has been made this week towards achieving the UK's target of phasing out coal-fired power by 2025. As the most carbon-intensive fossil fuel, a global transition away from unabated coal use is necessary (amongst a range of other measures) in order to meet the goals outlined in the Paris Agreement, which was adopted at the Paris climate conference (COP 21) in 2015.
On Tuesday, FTSE 100 energy company SSE announced that it had closed the Fiddler's Ferry power station, its remaining coal plant in Warrington, Cheshire after 47 years in operation. This single plant, which originally had a generating capacity of almost 2000 MW, produced over 830,000 tCO2e of Scope 1 emissions in FY 2018/19, representing almost 10% of the company's total Scope 1 emissions. SSE has cited both economic and environmental reasons for the closure, noting that the plant was operating at a loss and could not compete with modern gas plants and renewables. The move is in line with the company's target to reduce the carbon intensity of the electricity it generates by 50%, as well as tripling its renewable energy output by 2030 (from baseline year 2018).
On the same day, the German utilities firm RWE closed its last UK coal plant at Aberthaw in Wales. The company will continue to operate coal-fired plants elsewhere in Europe but has made a commitment to stop generating electricity from coal by no later than 2038.
In February, FTSE 250 company Drax Group confirmed that its commercial coal generation is expected to end in March 2021, with formal closure of the last two coal units in September 2022 at the end of existing Capacity Market obligations. The group has already converted four of the six generating units at the Drax power station to run on wood biomass and will do the same for the remaining units.
There are now just five coal-fired power plants left operating in the UK (compared to 14 in 2015); the West Burton A and Ratcliffe-on-Soar coal plants in Nottinghamshire, the Kilroot coal plant in Northern Ireland and the two units at Drax in Yorkshire. The latest closures clearly signal that both the country and the electricity sector are moving in the right direction in terms of meeting their climate targets but significant concerns remain.
Whilst SSE is the UK's leading generator of renewable energy, it also continues to depend heavily on other fossil fuels, predominantly natural gas, which represented around two thirds of its overall generating output in 2018/19. Although the company is in the process of upgrading to more highly efficient, gas-fired plants, the ongoing reliance on carbon-emitting fuels is problematic. Environmental groups welcome the move away from coal but are discouraged by the UK's current focus on gas with one senior campaigner from Friends of the Earth stating; "Switching from coal to gas is like an alcoholic switching from two bottles of whisky a day to two bottles of port."
There are also concerns surrounding the burning of biomass, which as Drax has found, is a useful source of energy but one that needs to be produced sustainably in order to adequately mitigate the environmental impacts of the combustion process. If the final destination is a zero-carbon future (which it surely must be) then the energy industry still has plenty of distance left to travel.
Ethical Screening offers four fossil fuels criteria, in addition to our existing qualitative environmental assessments and ESG data. These criteria cover coal (mining and power station operation), unconventional oil and gas (split by location and by resource/technique allowing the exclusion of companies involved in the Arctic, deep water, oil sands or shale gas), or the option of excluding all conventional oil and gas exploration and production. These choices enable clients to lower the exposure of their portfolio to fossil fuels, exclude for involvement in specific activities or fully divest from fossil fuels. These criteria are being developed further as part of the continuous evolution of our data research and analysis.
Juliana Burden, Ethical Research Manager
April 2020