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3.4 The impact on energy producers“The Large Combustion Directive is forcing us to close our coal powerstations… increasing energy prices.”- Owner of a medium-sized manufacturing business based in the East MidlandsIn addition to raising energy bills, EU policies have already had a direct impact on firmswhich generate energy. A quarter of the UK’s current electricity generating capacity is dueto close by 2020. Of these power stations, half (including all of the coal and oil stationsscheduled for closure) are closing to comply with the Large Combustion Directive (2001/80/EC). The stations that have closed, or are scheduled to close are presented in Table 4:Table 4: Power plants that have closed or are due to close to comply with Directive2001/80/EC and lost capacity 135Station Capacity (MW) Closure DateGrain A 1300 Dec-12Kingsnorth 1940 Dec-12Cockenzie 1152 Mar-13Didcot A 1958 Mar-13Fawley 968 Mar-13Tilbury 750 Aug-13Ferrybridge C units 1 & 2 980 To close by end 2015Ironbridge 600 To close by end 2015Littlebrook 1370 To close by end 2015In total this represents a loss in capacity of over 11GW (UK daily demand is just under 40GW)and it is estimated that over 1000 jobs will be lost as a direct result of these closures. This raisesserious concerns about the UK’s energy security. The House of Lords has recently warnedthat they are concerned about “the imminent closure of large numbers of coal plants acrossthe EU due to environmental rules.” 136 We must also take into account the impact of theIndustrial Emissions Directive (2010/75/EU) which will place additional restrictions on theoperation of some existing coal and older CCGT stations post 2016/17.These policies have been criticised by many different groups. In a recent report, Ofgemwarned that the “risks to electricity security of supply over the next six winters haveincreased.” 137 It put the reduction of capacity down to plants using up their allotted hoursmuch quicker than expected and having to close to comply with the terms of the LargeCombustion Plant Directive (LCP Directive). Likewise LCP Directive opted-out oil plantsEnergy Policyand the EU135 Freedom of Information request from Business for Britain to the Department of Energy and Climate Change. Furtherinformation can be found at and 136 House of Lords European Union Sub Committee, No country is an energy island: securing investment for the EU’sfuture, 2 May 2013, p.5, found at 137 Ofgem, Electricity Capacity Assessment Report, pp. 9-12, 27 June 2013, found at 40
were also closing faster than expected. 138 The report also warned that LCP Directiveopted-in plants which were converting to biomass had reduced capacity. 139 The LCPDirective is a good example of how the UK is unable to adapt its energy policy in response tochanging circumstances because it is, in effect, locked into poorly planned EU regulations.Changing investment patterns3.5It is difficult to calculate the exact impact that EU energy laws have had on investmentpatterns. There are numerous factors that influence investment, not least the decline ofnatural resources, however the EU’s own studies have noted:“It can be concluded from a general observation of public information andinterviews with industry that there are indications for investment relocationfrom the EU to the rest of the world in certain sectors… Based on the limitedinformation available so far, carbon cost may be one factor thatcannot be excluded.”- Carbon Leakage Evidence Project 140There are various reasons why investors are investing in countries beyond the EU;attractive growing economies, promising demographic trends and different approachesto education have all informed investment decisions. However it is felt by trade bodies,including the Intensive Energy User’s Group, that EU regulation has made a substantialimpact on investment decisions. 141 While the Commission has calculated that €13.8trillion of assets is theoretically available, the CBI has warned the House of Lords that itis hard to attract high levels of investment into the UK and EU energy’s infrastructure. 142There is little doubt that the EU and UK have found it harder to secure investment; since 2008the share price of European utilities has declined dramatically (as can be seen in Figure 23).138, 139 Ofgem, Electricity Capacity Assessment Report, pp. 9-12, 27 June 2013, found at 140 Ecorys, Carbon Leakage Evidence Project, p.13, 23 September 2013, found at 141 Interview between author and Intensive Energy User’s Group.142 House of Lords European Union Sub Committee, No coutry is an energy island: securing investment for the EU’s future, p.9, 2May 2013, found at 41
Page 2: Business for Britain exists to give
Page 9: In a recent letter to the President
Page 14 and 15: in the US. While this would be conc
Page 16 and 17: This divergence is not confined to
Page 18 and 19: Commission has itself acknowledged
Page 20 and 21: 2.4The rising costs of EU energy re
Page 22 and 23: It is important to note that many o
Page 24 and 25: 3.1The impact of high energy costs
Page 26 and 27: MetalsTOTAL UK EMPLOYMENT471,000 in
Page 28: Chemicals and chemical productsTOTA
Page 31 and 32: INDUSTRY CASE STUDY 3.1.3Figure 14:
Page 39: “Energy discussions play a major
Page 43 and 44: Increased energy dependence3.6Anoth
Page 45 and 46: Despite these problems, the EU’s
Page 47 and 48: 41 per cent of British manufacturer
Page 49 and 50: genuine, efficient and effective in
Page 51 and 52: The EU should also make it clear th
Page 53 and 54: should be considered: were the UK t
Page 55 and 56: Conclusion5The EU’s energy policy
Page 57 and 58: Table 8: All energy Impact Assessme
Page 59 and 60: IA TitleImpact Assessment: Amendmen
Page 61: “Energy Policy and the EU is a ti

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