Published: 16 January 2017
Area of Law: Environmental
DEFRA and Welsh Government aim to tackle emissions from diesel and gas generators with new limits
In November 2016 the Department for Environment Food and Rural Affairs (DEFRA) and the Welsh Government issued a consultation paper entitled Consultation on reducing emissions from medium Combustion Plants and generators to improve air quality. The consultation will close on 8 February 2017.
The consultation has two main aims. The first is to set out proposals for implementation of the Medium Combustion Plant Directive (MCPD) which will bring in emission controls for combustion plants in the 1-50 MWth range (MCPs). The second is to impose emission limits to stem the growth of small (mainly diesel) flexible generators which provide reserve power in the Capacity Market (CM).
Medium Combustion Plant Directive
The MCPD will apply to new MCPs from 20 December 2018. Operators of MCPs which are affected by the MCPD will have to obtain an environmental permit under the Environmental Permitting Regulations. In the case of existing MCPs (i.e. those in operation by 20 December 2018), permits must be obtained by January 2024 in the case of MCPs above 5 MWth and by January 2029 in the case of MCPs between 1-5 MWth.
Subject to some limited exceptions, all MCPs which operate on average more than 500 hours per annum will be required to comply with emission limit values set out in the MCPD. All MCPs firing sold fuels, regardless of the number of operating hours, will be required to comply with emission limit values for dust.
Emission controls for generators
The government is concerned at the growth of small (mainly diesel) generators in the last few years whose emissions are currently largely unregulated. The CM auction that has just taken place has demonstrated a significant growth in these plants. The governments considers that these plants have an unfair advantage in the CM auctions in comparison to larger plants in that the smaller plants do not have to incur costs in regulating their emissions. The proposal is that, subject to some limited exceptions, all generators with a rated thermal input of 1-50 MWth will have to obtain an environmental permit and comply with new emission limit values. This proposal therefore includes MCPs but is wider in scope and includes plants that fall outside the scope of the MCPD.
In addition to compliance with emission limits, generators affected by the new rules would be obliged to comply with standard environmental permitting conditions. These conditions may limit operating hours and may require dispersion equipment (e.g. stacks) or abatement equipment to be installed.
Plants which obtained a CM agreement under the 2014 and 2015 auction would be exempted from the requirement to obtain an environmental permit for a specified period. The exemption applies until 2025 for plants with a rated thermal input of 5 to <50 MWth and with an emission <500mg/Nm3 and plants with a rated thermal input of 5 to <50 MWth and operating <50 hours per year ; and until 2030 for plants between 1 to <5 MWth. The same exemptions apply to plants for which a feed-in tariff preliminary accreditation application has been received by Ofgem before 1 December 2016 (this relates to anaerobic digestion plants); and to plants which came into operation before 1 December 2016.
The government is under an obligation to implement the MCPD but is proposing to take more stringent measures in an attempt to curb the number of small generators (in particular diesel generators) obtaining capacity agreement in the CM. Much criticism has been directed at the government, at a time when it is abolishing or reducing subsidies for clean energy such as solar and onshore wind, to be providing subsidies instead to diesel generators. Moreover, diesel generators are coming on stream at a time when coal-fired plants are closing which makes little sense in environmental terms.
The suggestion that new emission limits for diesel generators would be introduced was mentioned as long ago as March 2016, in a consultation paper issued by the former Department of Energy and Climate Change.
Although temporary exemptions have been given for plants which participated in the 2014 and 2015 CM auctions, plants which participated in the 2016 auction will have no exemption. Of course, the government can argue that, as mentioned above, the proposal to consult on new emission limits was flagged up in March 2016 so developers who participated in this year’s auction had been put on notice of the intention.
As the CM agreements are granted for fifteen years, this will impact on plants which obtained agreements under the 2014 and 2015 auctions, so these plant operators will need to consider how they can retrofit the plants in time to meet the expiry date of the exemptions (assuming of course that the proposals are implemented as outlined in the consultation document).