European pressures and emission prospects

UK policy on acid rain European pressures and emission prospects

Jim Skea

The UK has come under strong pressure from some of its European partners to curb acid emissions. This paper examines the extent to which the UK's international position may be explained by historic and expected future trends in sulphur dioxide emissions. The electricity supply industry's contribution to UK emissions is examined in some detail. The development of the EEC negotiations on sulphur dioxide emissions is analysed and the early conclusion of these, based largely on the confirmation of Member States' existing emissions abatement plans, is suggested. The possible effect of electricity privaUzation on power plant investment and associated acid emissions, and the implications for UK compliance with international agreements, is also discussed. Keywords: Environment; Electricity; Policy

Dr Jim Skea is with the Energy Policy Programme, Science Policy Research Unit, Mantell Building, University of Sussex, Brighton, BN1 9RF, UK. The research underlying this paper was supported by a grant from the Joint Research Committee of the Economic and Social Research Council (ESRC) and the Science and Engineering Research Council (SERC). The paper was written with the support of the ESRC through its Designated Research Centre on Science, Technology and Energy Policy in British Economic Development at the Science Policy Research Unit (SPRU) at the University of Sussex. The author would like to thank his colleagues, Professor John Surrey and Dr Sonja Boehmer-Christiansen, for their continued on p 253

252

In 1970, the UK was the largest emitter of sulphur dioxide (SO2) in Western Europe, a position it holds today despite major reductions in emissions. In terms of nitrogen oxides (NO×), the UK is also one of Western Europe's leading emitters, though West German emissions are roughly 50% higher. In view of the rising concern about environmental damage caused by air pollution in general, and acid rain in particular, the U K has come under growing pressure in various international bodies to curb its emissions of those acid gases. Pressures have been applied particularly strongly through the machinery of the European Economic Community (EEC) and the United Nations Economic Commission for Europe ( U N E C E ) . The UK's position has been a key factor influencing the course of negotiations on internationally-based efforts to curb acid rain. Initially, the UK's response to these pressures took the form of uncompromising resistance. The significant declines in UK SO2 emissions which took place between the peak year of 1970 and the mid-1980s were cited as a justification for taking no actions as was the incomplete scientific evidence relating to some aspects of the acid rain phenomenon. The UK government's position was summarized succinctly in the following terms: Pollution is dealt with by political action, but it is explained by science, Science is dynamic, and the policies of this and other Governments must evolve to meet new evidence about the environmental situation. What is durable within this framework of change is the Government's overall policy: that action against pollution shall rest on the best scientific evidence, the best technical and economic analysis, and the best possible assessment of priorities. The last sentence identifies another major element of the government's position, which has been that unacceptably high abatement costs would be incurred if major action were taken to curb acid emissions. While these costs are unquestionably high (£2.3 billion), the clean-up bill for the UK would amount to rather less than the Deutschmark 20 billion being spent over the period 1983-88 in West Germany. 2 As time has elapsed since concern about acid rain in the UK was at its 0301-4215/88/030252-18503.00 © 1988 Butterworth & Co (Publishers) Ltd

UK policy on acid rain

continued from p 252 helpful comments on an earlier draft. A series of extremely useful discussions with officials of the European Commission, the UK Government, the Federal Government of West Germany and the Central Electricity Generating Board is also acknowledged. However, the responsibility for any errors or points of interpretation lies with the author alone.

1Department of the Environment, Acid Rain: The Government's Reply to the Fourth Report from the Environment Committee, Cmnd 9397, HMSO, London, UK, December 1984, paragraph 1.4. 2The UK figure refers to the capital cost of installing enough control equipment to comply with the EEC Commission's draft Large Combustion Plant Directive. It was quoted in a CEGB memorandum printed in House of Commons Energy Committee, The Coal Industry: Volume I, HC 196-1, HMSO, London, UK, November 1986, p 103. The German figure comes from M. Hildebrand, 'Rauchgasreinigung bei Kraftwerken: Aktueller Stand und Ausblick', Energiewirtschaftliche Tagesfragen, Vol 37, No 2, 1987, pp 149-157. 3Nitrogen oxide (NOx) emissions have been increasingly linked to some types of damage attributed to acid rain. The largest sources of these are vehicles which have been dealt with through separate international negotiations. 4Convention on Long Range Transboundary Air Pollution, Geneva, 13-16 November 1979, Cmnd 7885, HMSO, London, UK, May 1980. 5Proposal for a Directive on the Limitation of Emissions into the Air from Large Combustion Plants, Commission of the European Communities, COM 83(704) final, Brussels, 15 December 1983. 6A thorough discussion of the events leading to the signing of the LRTAP Convention is given in G.S. Wetstone and A. Rosencranz, Acid Rain in Europe and North America: National Responses to an International Problem, Environmental Law Institute, Washington, DC, 1983.

E N E R G Y P O L I C Y June 1988

peak in 1984-85, the position of the government, and that of the Central Electricity Generating Board (CEGB), has softened, although the fundamental rhetoric remains unaltered. It is argued in this paper that the policy positions of the key actors in the acid rain debate in the UK may be at least partly explained with reference to the factors which underlie historic trends in acid emissions, and by those actors' perceptions of how acid emissions, and hence abatement costs, might evolve in the future. This paper focuses on SO2 emissions which have had the highest priority in international negotiations~ and, in particular, the question of emissions from the electricity supply industry (ESI). The nature of the political pressures on the UK to reduce acid emissions, recent trends in emissions, the effects of economic growth and specific policy measures on future emissions levels, and the ways in which these factors have helped to determine the UK's position in negotiations with European partners are examined. In addition, the ways in which the prospective privatization of the ESI might affect future SO2 emission levels and the implications for the UK's ability to comply with international obligations are discussed.

International framework The UK's position on acid rain abatement has evolved in response to two specific sets of international proposals to curb acid emissions. The first has been the '30% club' initiated by a group of signatories to the UNECE's 1979 Convention on Long Range Transboundary Air Pollution (LRTAP), 4 while the second has been the European Commission's proposal for an EEC Large Combustion Plant (LCP) Directive aimed at reducing emissions from most categories of industrial combustion equipment with an output capacity in excess of 50 MW(th). 5

The 30% club The UNECE LRTAP Convention requires members 'to endeavour to limit and, as far as possible, gradually reduce and prevent air pollution' and to use the 'best available control technology economically feasible'. The Convention has 34 members, mostly from Western Europe, but also includes some Eastern bloc states plus the USA and Canada. The LRTAP Convention had been vigorously promoted by the Scandinavian countries and Canada which were concerned about the effects of acid deposition on their lakes and streams in ecologically sensitive regions. ~ Scientists in these countries had identified the large industrialized nations, such as the UK, West Germany and the USA, as major contributors to acid deposition in sensitive areas. Swedish and Norwegian delegates to the Convention had pressed for specific standstill clauses (preventing SO2 emissions from increasing) and rollback clauses (specifying fixed percentage reductions for aggregate national emissions) but had failed because of opposition from the UK, the USA and West Germany. The Scandinavians were not satisfied with the watered-down and, arguably, ambiguous Convention. In 1982, Norway and Sweden proposed that signatories should undertake to reduce SO2 emissions 30% below their 1980 levels by the year 1993. Support for this proposal grew and, in March 1984, an informal group of LRTAP countries met in

253

U K policy on acid rain

Ottawa to initiate the '30% Club'. By July 1985, 21 LRTAP countries had signed a Protocol to the original Convention promising to cut their SO2 emissions by 30%. These include a group of Eastern bloc states which felt able to join on the basis of an undertaking to cut 'transboundary fluxes' of air pollution by 30%. The 30% Protocol became binding in September 1987 when it was formally ratified by 16 of the signatories. 7 The USA and the UK remain the most prominent of the 13 non-members of the '30% Club'. Given the position of the UK government, and the fact that the objectives of the Protocol must be achieved within the next five years, there can be no realistic possibility of the UK giving the necessary undertaking.

European Economic Community While international conventions and protocols such as LRTAP and the 30% Club may be binding under international law, they are essentially unenforceable. The EEC is unique as an international body in that it has acquired from its Member States supra-national powers to enforce its Directives and Regulations. s For that reason, and because of the broader implications of EEC membership, the negotiations on acid emissions reductions conducted within the EEC Council of Environment Ministers have been of paramount importance to the UK. In June 1984, the Council of Ministers approved a 'framework' Directive on the combatting of air pollution from industrial plants. 9 The objective was 'to provide for further measures and procedures designed to prevent or reduce air pollution', it being anticipated that a series of 'daughter' Directives would follow with more specific emissions reductions proposals. The 'framework' Directive simply established the requirement that specified categories of industrial plants (including fossil fuel power stations and larger industrial boilers) should require prior authorization and that this authorization should be granted only if the best available control technology, not entailing excessive costs, were applied. As there is no specific reference to environmental policy in the original Treaty of Rome, the legal basis for the 'framework' Directive was the catch-all Article 235 which allows that 'if action by the Community should prove necessary . . . and the Treaty has not provided the necessary powers, the Council shall . . . take the appropriate measures'. 10 rENDS Report 152, Environmental Data Services Ltd, London, UK, September The most important Community initiative on acid emissions has been 1987, p 24. the Commission's proposed LCP Directive which was issued in 8EEC environmental policy and its effect December 1983, in anticipation of the 'framework' Directive being on the UK is discussed thoroughly in N. Haigh, EEC Environmental Policy and approved. The LCP proposal leant heavily on German domestic Britain: An Essay and a Handbook, Enlegislation, the Grossfeurungsanlagenverordnung (GFAVo), or Large vironmental Data Services Ltd, London, Firing Installation Ordinance, which had become Federal law earlier in UK, 1984. e'Directive on the combatting of air pollu1983. The German legislation set emission limits for SO2, NOx and tion from industrial plants', Official Journal particulates for all new combustion plant sized greater than 50 MW(th) of the European Communities, L188, 16 and, in addition, required that all existing plant either meet the limits July 1984. 1°Following modifications to the Treaty of after a period of five years, ie by 1988, or shut down. The GFAVo has Rome which came into force in July 1987, resulted in a massive programme of flue gas desulphurization (FGD) EEC environmental policy has been placed on a more secure legal basis. See retrofitting in the German electricity industry, covering some 37 000 'Single European Act', Bulletin of the MW(e) of capacity at a cost of Deutschmark 20 billion. In addition, European Communities, 2/86, Brussels, some 12 000 MW(e) of older plant is to be shut down. 11 1986. The European version of the German legislation proposed by the I~M. Hildebrand, op cit, Ref 2. 254

ENERGY POLICY June 1988

U K policy on acid rain

Commission adopted the emission limits set for new plant,12 but took a rather different approach for existing plant. The draft Directive proposed that each EEC Member State should, by 1995, reduce its aggregate LCP emissions by specified percentages below the 1980 levels. The required reductions were 60% for SO2, 40% for NO× and 40% for particulate matter. For the UK, the reduction proposed for SO2 was far more demanding than the 30% Protocol target. By the end of 1987, the Council of Environment Ministers had been debating the Commission's LCP proposals for four years without resolution. The UK led the opposition to the Commission's proposals, which were backed principally, though not exclusively, by Germany. From early 1986 onwards, initially under the Dutch presidency of the Council, a more imaginative set of aggregate SO2 emissions reductions proposals emerged which served to clarify the positions of individual Member States (by then including Portugal and Spain) and to identify possible bases for agreement. The UK's influence on, and reaction to, the progress of these negotiations in relation to the government's expectations about future emission levels is discussed below. Although at the time of writing this paper no agreement on the LCP proposals had been concluded, there is some optimism that a solution can be achieved during the German Presidency of the Council in the first half of 1988.

Historic UK SO2 emissions 12The precise formulation of emission limits for new plant has been the subject of serious discussion since the UK Presidency of the Council in the second half of 1986. However, this issue has proved less intractable than that of aggregate S02 emissions and will not be pursued further in this paper. 13Department of the Environment, Digest of Environmental Protection and Water Statistics No 9, HMSO, London, UK, 1987 and Statistical Bulletin (87)1: Air Quality, Department of the Environment, London, UK, 1987.

The 1980 baseline for the SO2 emissions reductions adopted by the 30% Club and proposed by the EEC Commission has been described by the UK government as being unfair to the UK given the pattern of SO2 emissions in the recent past. This is shown in Figure 1. Between 1970, the peak year for emissions, and 1980, the quantity of SO2 produced in the UK fell by 23% from 6.09 million tonnes/year to 4.67 million tonnes/year. Between 1980 and 1984 a further reduction of 24% took place leaving SO2 emissions at 3.54 million tonnes/year, some 42% below their peak level. However, during 1985 and 1986, SO2 emissions began to increase again. 13 It has been asserted that 1970 would be a more equitable baseline from which to calculate emissions reductions

=

Other Domestic

~x~

Refineries

6

04

Figure 1. Historic UK S02 emissions. Source: Digest of Environmental Protection and Water Statistics, Department of the Environment, London, UK, 1987.

E N E R G Y P O L I C Y June 1988

01960. . . .

19651. . . .

19170'''

'19175' ' ' '19180' ' ' ' '1985 I

255

UK policy on acid rain

targets for the UK.~4 On this basis, the UK would have achieved the 30% Club target by 1981. However, most of the emissions reductions have been from smaller emitters and emissions from large combustion plant, as defined by the European Commission, have fallen by less than 10% over the same period. The government and the CEGB tend to emphasize the UK's 'achievements' in reducing SO2 emissions over the period 1970-84. But what were the factors which actually led to these significant emissions reductions? Figure 1 shows that emissions other than those from the ESI fell by 69% between 1970 and 1984, while ESI emissions have increased slightly. ESI emissions attained a peak of 3.10 million tonnes in 1979. A diverse set of factors underlies the major falls in non-ESI emissions:IS • • • • •

• •

the declining use of solid fuels for household heating purposes; the trend since the late 1960s for sulphur-free natural gas to replace fuel oil and coal in industry and commerce; the substitution of coal and oil in electricity generation by nuclear power; the momentum for energy conservation which has built up as a result of the two major oil crises of 1973 and 1979; the effects of the industrial recession of the early 1980s when the output, and hence the energy demand, of the heavier sectors of UK industry fell significantly; the collapse of the industrial fuel oil market in the early 1980s; and the declining sulphur content of fuel oil.

This latter factor has been most commonly attributed to the use of low-sulphur North Sea crude oil in UK petroleum refineries in preference to the higher sulphur Middle East crudes previously used. While this undoubtedly played a part, the changes in refinery mix associated with the collapse of the fuel oil market in the early 1980s, leading to the use of high-sulphur fuel oils as a feed for cracking plant and the retention of greater quantities of sulphur in the refinery system, has been of greater importance in reducing the average sulphur content of fuel oil. ]6 Some of these trends may continue to exert a downward pressure on SO2 emissions in the future. A falling demand for household coal and a greater efficiency of energy use are likely. A greater use of natural gas is also possible. However, the possibilities for SO2 abatement arising from industrial restructuring and a declining sulphur content of fuel oil are now virtually exhausted. Industrial growth has now resumed and contributed to increases in SO2 emissions from manufacturing industry in 1985 and 1986. In addition, the drop in the price of crude oil in 1986 stimulated a (temporary) surge in industrial fuel oil demand at the 14CEGB memorandum published in House expense of gas. of Commons Environment Committee, The principal conclusion from this analysis is that a variety of factors, Acid Rain Vo/urne I1: Minutes of Evidence, unconnected with environmental policy, brought about the major falls HC 446-11, HMSO, London, UK, July 1984, in non-ESI SO2 emissions between 1970 and the mid 1980s. As a result p11. lSThese factors may be identified from of these, the ESI, which accounted for about 40% of UK SO2 emissions trends shown in Department of Energy, Digest of UK Energy Statistics, HMSO, in 1970, is now responsible for over 70%. Consequently, the future evolution of UK SO2 emissions is now dependent primarily on demand London, UK, annual. 16Su/phur Dioxide Emissions from Oil Refor electricity, the decisions which are taken in order to meet this fineries and Combustion of Oi/ Products in Western Europe in 1979 and 1982, Report demand, and the extent to which SO2 abatement equipment is installed. These topics are explored in the following section. 10/84, CONCAWE, The Hague, May 1985. 256

E N E R G Y P O L I C Y June 1988

UK polkw on acid rain

Future SOz emission levels Future SOe emission levels are subject to a range of uncertainties deriving from several sources. First, emission levels depend on underlying energy trends which are, in themselves, notoriously hard to predict. Second, in order to derive emissions projections from energy projections it is necessary to make assumptions about the qualities of fuels which are going to be burned. Finally, assumptions must be made about the amount of emission abatement technology which will be installed. To simplify matters, a single set of assumptions about fuel quality is used in this section. However, the implications of different energy futures and different SO~ abatement strategies are explored. Expectations in the early 1980s

The UK Department of Energy ( D O E ) has not published any energy forecasts since 1982 when it prepared evidence for the Sizewell B Pressurised Water Reactor (PWR) Public Inquiry. ~7 While the C E G B has since published forecasts of electricity demand through to the mid-1990s, the D O E ' s Sizewell evidence remains the most recent comprehensive set of energy projections available for the UK. An Acid Rain Working Group under the auspices of the Watt Committee on Energy produced, in 1985, a set of SO~ emissions projections based on a modified version of the D O E ' s Sizewell projections.~S The modifications included allowance for a greater use of natural gas than previously anticipated and an allowance for the effects of the industrial recession of the early 1980s. The major assumptions behind the Watt Committee SO2 projections we re: •

• • •

~TDepartment of Energy, Proof of Evidence for the Sizewell B Public Inquiry, London, UK, October 1982. ~°The author was a member of the Watt Committee's Remedial Strategies SubGroup which produced the emissions projections. The projections were based on the same methodology used by the Warren Spring Laboratory to estimate historic SO2 emissions. The modified Sizewell projections were coupled with assumptions about the likely sulphur contents of fuels discussed with the coal, oil and electricity industries. The projections will appear in Air Pollution, Acid Rain and the Environment, Watt Committee on Energy Ltd, Elsevier Applied Science Publishers Ltd, 1988.

ENERGY

POLICY

June 1988

electricity demand growth varying from - 0 . 1 % to +1.7% between 1980 and 1990, and from 0.3% to 3.2% between 199(I and the year 2000; a major construction programme of PWR nuclear reactors leading to as many as 12 such plants installed by the end of the century: no F G D retrofit units to be installed; no F G D fitted to new coal-fired power stations.

Figure 2 shows the Watt Committee SO2 forecasts. These show a range of possible emission levels predicated on different assumptions about the level and composition of economic growth and the general level of energy prices. After the long period of decline, SO~ emissions were expected to rise again, reaching a peak in the mid-1990s by which time the commissioning of large numbers of nuclear power stations similar to the proposed Sizewell PWR would begin to displace coal and reduce associated SO2 emissions. Figure 2 also shows the 3(1% Club and draft LCP targets for SO~ reductions. From the perspective of the early 1980s, the 1993 30% Club target lay just within the band of possible emission levels and might, therefore, have been achieved with very little in the way of positive abatement measures, or, under an adverse set of economic circumstances encompassing low growth and high energy prices, with no active abatement at all. The E E C 60% reduction target by 1995 appeared to require the installation of between 8 and 15 retrofit F G D installations at major coal-fired power stations at a capital cost of £1 500-£3 000 million. The expected 'hump' in SO2 emissions in the mid 1990s represented 257

UK policy on acid rain •---[3"---- Upper range

range

I X l

Lower

~

30% Clubtarget EC comrn=ss=on

~3

-2

Figure 2. Watt Committee SO2 projections 1985.

0

I 1985

i

198(

I 1990

I 1995

I 2000 Year

I 2005

I 2OI0

an additional reason why the UK government felt unwilling to agree to the European Commission proposals. This choice of target date was the worst possible in terms of abatement requirements as it was set just before the start of a major power station commissioning programme which was expected to lead to major emissions reductions. The new stations were expected to consist of either nuclear plant, which does not emit any SO2, or coal-fired plant fitted with FGD equipment which would remove about 90% of the SO2 from chimney gases. The causes underlying the emissions 'hump' can, in fact, be traced back to the pattern of power station ordering in the UK over the last three decades. Thus, the UK's international position on acid emissions was determined to a large extent by the historic pattern of investment in the state-owned ESI.

S02 emissions and the ESI Figure 3 shows the five year moving average of power plant capacity commissioned in England and Wales (the area covered by the present CEGB system) since the early 1960s. This is superimposed on SO2 7OOC

560C ~

retrofitting

Z

420C

g_ 280C

1400

Figure 3. Power plant commissioning and SO2 emissions. Sources: See Ref 19. Note: Dates are five year moving averages. 258

~

0 1960

I

1965

1970

1975

~,l

1980

,

I

i

1985

i

i

,

II~',

1990

I

,

I

f

1995

,

,

J

20OO

E N E R G Y P O L I C Y June 1988

U K policy on acid rain

emissions from the ESI in all parts of the UK. ~9 The trends are projected forward to the year 2000 on the basis of the analysis described below. The figure shows clearly the 'feast and famine' cycle of power plant procurement which has characterized the ESI for many years, and the way in which this cycle may be expected to continue. The first, and largest, wave of power plant ordering shown, which peaked at almost 4 GW(e) of capacity/year, covered the early 1960s to the mid-1970s. During this period, electricity demand was growing rapidly. Most of the plant commissioned was coal-fired, and hence SO2 emissions rose in line with the increased level of coal use. This period also includes the commissioning of the UK's first generation of nuclear plant, the Magnox reactors. However, since these plants account for less than 3.8 GW of sent out capacity, the impact of the entire programme on SO2 emissions has been relatively small, reducing them by approximately 300 000 tonnes/year. In the year 1960s, two oil-fired power stations were also completed, but these have been little used due to the high price of fuel oil since 1973. During the mid-1970s, power plant SO2 emissions dropped substantially. This may be attributed to two factors: • •

the faltering growth of electricity demand; the use of substantial quantities of natural gas, up to 3.8 million tonnes of coal equivalent, in power stations.

In the late 1970s, coal burn in the UK ESI reached an all-time high of 90 million tonnes as oil and gas use fell to levels which were as low as technically possible, and as electricity demand rose sharply. In the absence of any major power plant commissioning, SO2 emissions reached 3.1 million tonnes in 1979. From the beginning of the 1970s, SO2 emissions show a clear negative correlation with the rate at which new power stations have come on line. The second wave of commissioning covers the late 1970s and the 1980s and includes only one coal-fired power station, the 3 750 MW Drax station in Yorkshire. It also includes 5.4 GW of oil-fired capacity ordered before it became an established belief that oil prices would remain well above those of coal. Of this 5.4 GW, 3 GW has been placed in reserve, while the remainder is close to the bottom of the CEGB's plant merit order and is used at very low load factors. The remainder of the plant to be commissioned during the 1980s is nuclear, comprising the Advanced Gas Cooled (AGR) reactors which are no longer favoured by either the government or the CEGB. While 6 GW of A G R capacity was ordered, beginning with Dungeness B in 1966, the performance of these reactors, in terms of both construction and operation, has been extremely disappointing. Although Hinkley Point B was commissioned successfully in 1976, the first unit at Dungeness B was not commissioned until 1985, 19 years after the order was placed. The remainder of the A G R programme should be complete by the end of 1988. Falling electricity demand in the early 1980s, 19The analysis in this section is based on coupled with the completion of the A G R programme late in the decade, information from the Science Policy Re- should ensure that 1990 emissions are considerably lower than those in search Unit Power Plant Database, Brighton, UK, the Electricity Council's annual 1980. Handbook of Electricity Supply Statistics, Since no power plants will be commissioned in the early 1990s, it has London, UK, the CEGB's Annual Report been expected that SO2 emissions might rise again until the first of the and Accounts, and the Department of the Environment's Digest of Environmental CEGB's proposed new 'family' of PWRs, Sizewell B, comes on line in Protection and Water Statistics. 1994 or 1995. At this point, however, SO2 emissions become acutely ENERGY POLICY June 1988

259

U K policy on acid rain

dependent on decisions taken about active pollution abatement measures. The upper line in Figure 3 is based on the assumption that new plant emits either no SO2 (nuclear) or very little (coal fitted with FGD). The lower line supposes, additionally, that 6 000 MW of existing coal-fired capacity will be fitted with FGD. The following section examines the factors affecting SO2 emissions from the ESI in the light of the many perceptions which have changed since the early 1980s.

Current expectationsfor S02 emissions

2°F.P. Jenkin, CEGB Proof of Evidence on the Need for Sizewell B, CEGB P4, London, UK, November 1982. 21Electricity Council, The Electricity Supply

Industry in England and Wales: Medium Term Development Plan 1982-89, London, UK, July 1982. 22Described in the CEGB's Annual Report and Accounts 1986/87, London, UK, 1987, p 27.

The policy agenda for the ES! has changed radically during the last year, with its prospective privatization now being the dominant concern. How (or whether) privatization might affect power station emissions is discussed in qualitative terms below. Another factor which has changed is the expected future level of electricity demand. In the early 1980s, when the CEGB was arguing its case for Sizewell B, it had established a consistent record for over-estimating demand. Sizewell B was justified in terms of economics rather than capacity need, and the supporting evidence was relatively conservative about future demand prospects. 2" While the range of future electricity demand covered by the Board's five main scenarios was very wide (see Figure 4), the central case, Scenario C, incorporated practically no demand growth during the 1980s and a growth rate of 1.1% during the 1990s. The Electricity Council's forecast adopted in the financial year 1982/83 was consistent with Sizewell Scenario C. 2~ However, as Figure 4 shows, electricity demand growth over the period 1982-86 has been strong, averaging 3.3%/year. This has been driven largely by demand from customers in the service sector which is growing at 6.5% annually. For the first time, the ESI has underestimated demand growth for several consecutive years. As a result, the medium-term electricity demand forecast adopted by the Electricity Council in 198622 was considerably more optimistic than the one adopted four years previously. Figure 4 shows that sales are now expected to increase by about 1.6% annually until the mid-1990s, on a growth path roughly mid-way between Sizewell Scenario C and the CEGB's extreme case, Scenario B. 400

o n x

Sizewell'B' Sizewell 'E' SizewelI 'C'

350

3O0

25O

20C

Figure 4. CEGB electricity requirement forecasts. Sources: See Ref 22.

260

150

I

1980

i

z

I

I

I

198.5

i

[

[

I

I

1990

I

I

I

t

I

1995

i

t

~

i

I

2000

ENERGY POLICY June 1988

U K poli 0, on acid rain

231bid, p 28. 24This exercise used the same methodology as that underlying the Watt Committee projections, except that a more sophisticated sub-model of the ESI, describing the contribution of individual power stations to S02 emissions, was available.

The Sizewell Inquiry itself, and the Inspector's deliberations, took much longer than had been anticipated and permission for the CEGB to go ahead was granted only in early 1987. Thus, by 1987, the CEGB was faced with rapidly growing electricity demand and a delayed investment programme. The CEGB (and the government) now believe that 13 GW of new power station capacity is needed by the year 20(10.2~ Given the Sizewell delay, the scope for meeting this from PWRs is now more limited than the CEGB would have hoped. The CEGB has applied for planning permission for a further PWR (1.1 GW) at Hinkley but, in addition, has announced the intention of building two new 1.7 GW coal-fired power stations at Fawley and West Burton in order to meet expected peak demand. To meet the remainder of the 13 GW capacity shortfall, the CEGB has identified five further possible PWR sites and six further coal station sites from which it could select. The change in expectations about energy demand and required investments in energy supply since the early 1980s has had a significant change on prospects of SO2 emissions. Figure 5 shows the difference between total UK emissions in the central case of the 1985 Watt Committee projections discussed above and in a more recent set of projections made by the Science Policy Research Unit in late 1987.24 The initial assumption underlying the new projections is that, as in the past, coal-fired power stations will not be fitted with FGD. The greatest difference between the 1985 and 1987 projections is in the medium-term future as a result of higher electricity demand and a delayed start to the PWR construction programme, both leading to higher coal use. Towards the end of the century, the projections converge as significant contributions from nuclear power lead to lower SOz emissions. The 1987 projections assume, further, that up to 5 GW of new coal capacity would be burning low-sulphur (0.7%) imported coal (as opposed to domestic coal with an average sulphur content of 1.6%) by the end of the century, leading to further SO2 reductions. A major consequence of the change of expectations has been to put the 30% Club target abatement level in 1993 well beyond reach. In 1985, one retrofit FGD or a mixture of individual abatement measures 5 I-"

~ ~

,

1985 forecost

. - - x ~ 1987 forecost 30% Club

4

x

.~0

EEC

o g

Figure 5. Higher electricity d e m a n d forecasts and SO 2 emissions.

ENERGY POLICY June 1988

0 198(

I 1985

I 1990

[ 1995

I 2000

I 2005

I 2010

Yeor

261

UK policy on acid rain

each with a relatively small effect might have been expected to get the UK into the 30% Club. (Though perhaps not enough to keep it there throughout the 1990s). It has been reported that the Department of the Environment (DOE) argued in 1984 for membership of the 30% Club, 25 perhaps on the basis of projections similar to the lower set in Figure 5. On current expectations, the 30% reduction target looks quite unobtainable without at least speeding up, and probably augmenting, the CEGB's retrofit FGD programme which is discussed below. However, the government has indicated that it is 'aiming at a reduction of 30% from 1980 levels by the end of the 1990s',26 anticipating a drop in emissions from the mid-1990s onwards. S02 abatement measures

25ENDS Report 113, Environmental Data Services Ltd, London, UK, June 1984, p 3. 26Department of the Environment, Acid Rain: The Government's Reply to the Fourth Report from the Environment Committee, Cmnd 9397, HMSO, London, UK, December 1984, paragraph 3.65. 27Health and Safety Executive, Health and Safety: Industrial Air Pollution 1981, HMSO, London, UK, 1982, paragraph 198. 281ndustrial Air Pollution Inspectorate, Future Emissions Limits for Large Boilers/ Furnaces, London, UK, 1986. 29Department of the Environment, News Release 484, 11 September 1986. Although the decision was apparently made in the middle of the summer of 1986, the public announcement was made in September, coinciding with a visit to Oslo by the UK Prime Minister.

The no-FGD assumption underlying Figure 5 is now obsolete. The exact time at which UK policy in this area changed is hard to pinpoint, given the decade-long gap between the final commissioning of Drax in 1986 and that of the next coal-fired power station in the 1990s. The Industrial Air Pollution Inspectorate (IAPI) hinted at requirements for FGD on new coal-fired power stations in its 1981 Annual Report 27 but has had no opportunity to put such a policy into practice. Although the Inspectorate did circulate a consultation paper on best practicable means for large boilers and furnaces in mid-1986 which envisaged FGD for power station sized oil and coal boilers, 28 the official change of policy came with a joint CEGB/DoE announcement in September 1986, which declared that all future coal-fired power stations would be fitted with FGD 'to the requirements of the IAPI'. 29 This decision was taken on the initiative of the CEGB, rather than as the result of government pressure. The possible effect of this decision on future SO2 emissions is shown in Figure 6. As might be expected, the emissions reduction following from such a policy increases with time. The impact on medium-term SO2 prospects is dampened by the likelihood that some new coal-fired power stations may burn low-sulphur imported coal, limiting the scope for abatement.

~, I~

Figure 6. Pollution controls and S02 emissions.

262

1980

~, ~

I 1985

I

1990

No controls New plontcontrols Retrofit controls

I

I

I

I

1995

2000 Yeor

2005

2010

ENERGY POLICY June 1988

UK policy on acid rain

The most emphasized, and most widely reported, aspect of the 1986 CEGB/DoE joint announcement was the decision to retrofit FGD units to sufficient existing coal-fired power stations so as 'to ensure that taking one year with another SO2 emissions will steadily fall between now and the end of the century'. 3° In practical terms, this meant the retrofitting of 6 000 MW of coal-fired capacity. In mid-1987, it was announced that the target stations would be Drax (the first stage in 1993, the extension by 1995) and Fiddlers Ferry (by 1997), leading to an annual SO2 abatement of 360 000 tonnes. The effect of such a retrofit programme is also shown in Figure 6. A major consequence of this is that the UK will be able to achieve its 'policy aim' of a 30% reduction in SO2 emissions below 1980 levels by the end of the century. However, the retrofit programme will neither be rapid enough, nor large enough, to enable the UK to comply with the terms of the 30% Protocol.

SO2 emissions and international negotiations As noted above, the negotiations conducted within the framework of the European Community on the Commission's proposed LCP Directive have been of vital importance in shaping the UK's international position on SO2 emissions. These negotiations have dragged on for four years since the proposal was introduced in December 1983. 31 The UK found the Commission's original proposal for a 60% reduction in emissions from LCP between 1980 and 1995 completely unacceptable and led the resistance to the draft Directive within the Council of Ministers. The UK's position was supported by Luxembourg, Greece and Ireland, in the case of the two latter countries because they anticipated major expansions in coal use. During the fruitless discussions which took place during 1984-85, the Commission attempted to isolate the UK from its supporters by holding out to them the possibility of 'derogations', whereby they would not need to comply immediately with the letter of any Directive which was approved. This strategy became untenable when Portugal and Spain, with its large and growing coal use for power generation, entered the Community on 1 January 1986. From that point onwards, the individual countries holding the Presidency of the Council of Ministers seized the initiative from the Commission and put forward a series of innovative proposals which, after some setbacks, appear to offer the prospect of an early solution to the LCP logjam. Dutch proposals

The Netherlands held the Presidency for the first half of 1986 and proposed a less stringent set of emissions reduction objectives than 3°CEGB, Press Information PR 29/86 PC, those set out by the Commission. For the EEC as a whole, a 45% SO2 11 September 1986. reduction by 1995 was proposed, with achievement of the 60% target 31The analysis of the negotiations in this section is based on the excellent coverage being postponed until 2005. in the monthly ENDS Report, EnvironmenIndividual Member States were asked to contribute towards the 1995 tal Data Services Ltd, London, UK, and on target according to a set of 'objective' criteria which took account of: discussions with officials of the European Commission, the West German Federal contribution to total emissions; use of thermal plant per capita; GDP Ministry for Environment, Reactor Safety per capita; trade in transboundary pollution; the state of economic and Consumer Protection, the UK Department of the Environment and the UK development; and the use of problematic indigenous fuels. The Permanent Representation to the Euro- allocation of abatement by the year 2005 was put to one side. The pean Communities. emissions reductions likely under existing policies in some Member E N E R G Y P O L I C Y June 1988

263

U K policy on acid rain

States (Belgium, Germany, Denmark, France and the Netherlands) were expected to exceed those determined using the 'objective' criteria. These countries were not asked to increase their efforts. Member States with a low per capita energy use were asked to have a standstill on SO2 emissions (Greece, Ireland, Luxembourg and Portugal) or a 10% reduction (Spain). The two remaining countries, Italy and the UK, were asked to increase their emissions reductions to 40% by the year 1995. Figure 7 compares the future level of UK SO2 emissions with the various proposals put forward within the framework of the EEC between 1983 and 1987. The Dutch proposal was even more demanding in abatement terms than the 30% Club proposal which the UK had already rejected. The emissions projections in Figure 7 allow for FGD on all new coal-fired power stations plus the 6 000 MW retrofit programme. There is therefore little question that the UK would have found the Dutch proposal unacceptable had it been put to the test. However, the Dutch compromise had served to expose the differences between the UK and other countries, notably Ireland and Spain, which had allowed the UK to take the lead in opposing the Commission's original proposal. The Dutch compromise foundered because Ireland and Spain revealed, for the first time, that they found the whole principle of limits on their total sulphur emissions unacceptable. In the other camp, Germany and the Commission completely opposed the idea of a 'three-speed' Europe. The UK thus saw the Dutch proposal founder without having to raise any of the detailed objections which it undoubtedly had.

UK proposals The UK had the Presidency of the Council in the second half of 1986 and used the Dutch proposals as the starting point for a new compromise. This time, the proposals were for an EEC-wide 30% SO2 reduction from all sources (not just from LCP) by 1995 and a 45% reduction by the year 2005. The UK abandoned the idea of objective criteria for distributing these reductions round individual Member States and based its detailed proposals, somewhat optimistically, on the ----,4El---. Projected emissions ~x~

3 0 % Club Commission proposol

~3~

•

x ~ ' ~ , ~

Figure 7. SO2 emissions and the Brussels negotiations.

264

) 1980

I 1985

I 1990

I 1995

I 2000

Dutch proposal ( 1986i )

~

UK proposol (1986ii)

~

Belgion proposol (1987i)

I 2005

I 2OI0

Yeor

ENERGY POLICY June 1988

UK policy on acid rain

principle of political acceptability. In practice, this meant an even wider range of abatement levels for different countries by 1995. These ranged from emissions standstills for Greece, Ireland, Luxembourg and Portugal, through a 28% reduction for the UK, up to a 91% reduction for France. 32 The tabling of the UK proposals in November 1986 had followed the public announcement of the major retrofit FGD programme in September. As Figure 7 shows, it was the emissions reductions expected from this programme which allowed the UK to make its proposal, which incorporated a 28% reduction for the UK by 1995 and a 52% reduction by the year 2005. In the event, the UK compromise failed because of the same fundamental difficulties which had undermined the Dutch proposal. Belgian proposals

The Belgian Presidency of early 1987 produced an ingenious proposal which appears to have sown the seeds which may lead to the LCP negotiations being concluded. Belgium secured agreement from Spain and Ireland to 'contribute' to a solution to the LCP logjam, then went back to the drawing board with an aggregate 60% reduction for each Member State by 1998, plus an interim reduction of 40% by 1993. However, to address the problems of Spain, the UK and Ireland, two important modifications were introduced. First, the 1980 baseline emissions were adjusted in proportion to any net additions to the LCP stock which had occurred between 1980 and 1987. In addition, the emissions resulting from any post-1987 plant could also be added in, assuming that this plant had employed 'best available technology' (ie FGD for power stations). This modification allowed Spain and Ireland to accept the principle of aggregate emission limits for the first time. Second, a credit was provided for countries which had reduced their SO2 emissions prior to 1980 (ie the UK). Thus, the Belgians had succeeded in constructing the skeleton of a workable solution. The details of the Belgian proposal were, however, still not universally acceptable. Figure 7 shows that, for the UK, the Belgian proposal still required more active emissions abatement than had been set in hand under current policies. Danish proposals

32Given its large nuclear power programme, France was finding it very easy to go along with the Commission proposals. Only an extraordinarily high level of emissions reductions, such as that suggested by the UK, could have required any active abatement measures in France.

ENERGY POLICY June 1988

The final set of proposals which had been tabled by the end of 1987 came from the Danish Presidency. The Danish proposals are for a 34% EEC-wide reduction in SO2 by 1993, 48% by 1998 and a huge 77% reduction by the year 2010. The UK contributions to these targets entail 22%, 33% and 80% reductions respectively. Figure 7 shows that, for the UK, this is very close to an acceptable solution, though it would require a little more than the current FGD retrofit programme to meet the specified targets. The reductions suggested by the year 2010 may prove unacceptable to several Member States, but perhaps serve to make the earlier abatement targets seem more reasonable. The Danish proposals did not lead to the conclusion of the LCP negotiations at the December 1987 meeting of the Council of Environment Ministers where there was, in any event, a crowded agenda which did, however, lead to an agreement on motor vehicle emissions, another topic of long-standing dispute. 265

UK policy on acid rain Future prospects

The high priority given to the LCP proposal by the Danish Presidency is likely to be continued by the West German Presidency in early 1988. There is now considerable optimism that, after more than four years, the LCP negotiations can be concluded. This optimism is based on three factors: •

•

•

the fact that the proposals now on the table do little more than to codify the current abatement plans of most Member States. As Figure 7 shows, the distance separating the Danish proposals (Denmark being among the strongest supporters of tighter controls) and those advanced by the UK a year previously are now quite small. The likely trajectory of future SO2 emissions in the UK lies comfortably within the relatively small range bounded by these two proposed compromises; West Germany is keen to conclude the negotiations since it was, in many respects, the 'father' of the LCP Draft Directive and it would like to be able to bring a successfully concluded agreement back home during its Presidency, although the compromise which could be reached is unlikely to satisfy the German government's green critics; and the Presidencies following that of Germany belong to Spain and Greece. Neither would be likely to push the LCP proposal hard, thus adding urgency to Germany's desire to reach an agreement.

While many national negotiators will be relieved to put the LCP negotiations behind them, the unhappiest participant may be the European Commission. Over a four year period, it has seen a radical proposal taken over and the negotiations driven by the Council of Ministers, possibly resulting in an agreement, like many others concluded at the international level, which does little more than to codify the existing plans of Member States. In principle, the Commission could undermine the whole negotiating process by withdrawing its original proposal at the last minute. However, this would be a risky strategy for the Commission to adopt and would infuriate all Member States regardless of their individual approaches to the acid rain problem.

The future of the ESI The earlier discussion about future SO2 emission prospects, and the UK's negotiating position, was based on the underlying premise that the type of investment programme favoured by a centralized, state-owned utility would be carried through. As mentioned above, the prospective privatization of the ESI now dominates all other considerations about its future. The privatization raises many issues relating to the public interest of which the environment is certainly not the one attracting the greatest attention. Nevertheless, the effects on environmental emissions and policy resulting from such a massive shift in industry structure and ownership deserve some attention. How would the type of investment favoured by a privatized ESI affect SO2 emissions? The choice of new generation facilities is unlikely to affect the level of emissions in any substantial way. All new plant will be subject to strict controls which will result in a relatively low level of emissions, regardless of the type of plant chosen. However, the rate at 266

ENERGY POLICY June 1988

U K p o l i c y on acid rain

33There are already signs of such a trend establishing itself. The CEGB has indicated that it is involved in discussions with half a dozen companies about outside generating projects including the possible refurbishment of a 114 MW station closed by the CEGB, a 300 MW gas-fired unit, and a 1 200 MW coal-fired station. See Business Outlook, The Independent, 19 November 1987. 34See for example D.G. Streets, 'Clean coal technology vs retrofits in acid rain precursor control', Power Engineering, Vol 91, September 1987, pp 42-48.

which new plant is commissioned will be of critical importance, as the expectation of future rapid reductions in UK SO2 emissions is based on the assumption that a large volume of uncontrolled coal-fired plant will be replaced from the late 1990s onwards. What if the new ESI does not see this as being in its interest? The critical question here is whether a privatized ESI will use a higher rate of return to appraise the profitability of new investment. This would tend to lead the industry away from capital-intensive plant such as nuclear and very large coal-fired stations which entail long lead-times and financial commitments many years in advance of commissioning. Thus, during the 1990s and beyond, it is likely that a more diverse range of generation options, perhaps including gas turbines, combined cycle plant, combined heat and power, and smaller coal-fired stations may be considered. 33 From the environmental point of view, the most important factor may be the new incentives for a utility (or utilities) which are reluctant to commit capital to retain old plant in service for a longer period than currently anticipated. For the CEGB or its successor(s), selling old plant to smaller generating companies may be an attractive option as the tricky task of refurbishing, and perhaps retrofitting pollution controls, would then be passed on to others. In the USA, considerable attention has now focused on the possibility of power plant life extension, whether it be achieved by a major, once-off replanting project or by less pervasive, enhanced maintenance programmes spread over several years. The principal advantage of the latter approach is that it is less likely to attract the attention of regulators who would be keen to see strict emission controls imposed on plants to which extensive modifications have been made. US analysts have now been considering lifetimes as long as 60 years for coal-fired power plant compared with the 40-year book life used by the CEGB. 34 Figure 8 shows what a 60-year lifetime for all coal-fired units with a capacity in excess of 100 MW would do to future SO2 emissions in the UK, assuming that life-extended stations were not regarded as new plant for the purpose of establishing emission controls. Beyond the end of the century, this outcome would raise SO2 emissions

I

0

x~

40 yeor life 60 year life

g =

Figure 8. Power plant life extension and SO2 emissions. ENERGY POLICY June 1988

2

t

0

1980

I

I

I

I

1

I

1985

1990

1995

2000

2005

2010

Year

267

UK policy on acid rain

very considerably, perhaps by as much as 1 million tonnes in the year 2010. This outcome might have interesting consequences should the UK accept the 80% SOe reductions proposed by Denmark in the EEC Council of Ministers. Such an agreement would be based on a prognosis of SO2 emissions based on the preferred investment programme of a large state-owned utility. Should a privately owned ESI, perhaps divided into several generation companies, adopt a very different type of investment policy, it is conceivable that the UK, some years ahead, could find itself forced to introduce stricter environmental controls on existing plant in order to comply with its commitments under EEC law, having effectively negotiated itself up a blind alley. The UK air pollution control system could meet this challenge through the re-definition of 'best practicable means' for abating SO2 from power stations by the responsible regulatory body, HM Inspectorate of Pollution. A viable solution to this problem would be to adopt the type of measures in the West German GFAVo, requiring plants to close after a specified number of hours of operation unless the emission standards for new plant are met. However, it would be ironical if pollution controls were imposed in this way given the tenacity of the UK's past resistance to such measures on the grounds that the environmental benefits did not justify the financial costs.

Conclusions This discussion of the SO2 emission prospects underlying the UK's position on acid emissions and the conduct of international negotiations has revealed a number of useful insights. Going one step beyond these, some more fundamental explanations for the particular course which events followed are offered: •

•

•

• 268

the difficulties involved in securing workable solutions to international problems such as acid rain are enormous. These difficulties are heightened because the solutions which were being searched for involved changing the pattern of emissions from existing sources, particularly power stations. This generated strong, influential opposition from the major emitters; because of the requirement to reduce emissions from existing sources, the only basis available for EEC action, harmonization of the laws of Member States and removal of barriers of trade, became very tenuous. While Germany could argue that 'spreading the misery' of tight air pollution controls to the rest of the EEC would lead to more equal terms of competition, others, notably within the UK, could argue that basing EEC law on the concerns of a single Member State would effectively level the comparative economic advantages which are the engine of international trade in the first place; because of the nature of the acid rain problem, the EEC Commission's influence on the course of negotiations within the Council of Ministers waned, and negotiations soon evolved into a pattern of horse-trading more commonly associated with international organizations not possessing the EEC's supra-national powers; as a result of this, the solution likely to be adopted will, in practice, ENERGY POLICY June 1988

UK policy on acid rain

do little more than to codify the current emissions abatement plans of Member States; and in spite of this, it can be argued that the international pressures on the U K have, to some extent, induced a change of policy. While the 6 000 MW FGD retrofit programme has been attributed to the CEGB's reading of the best available scientific evidence, it can fairly be asked whether the intense political pressures to which the UK government and the C E G B were subjected actually induced a more thorough examination of the links between the UK's acid emissions and environmental damage sustained abroad.

ENERGY POLICY June 1988

269