Facebook LinkedIn Twitter
Shop

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

The Impact of Sulfur Limits on Fuel Demand and Electricity Prices in Britain

Abstract:
By the year 1996, about one-quarter of Britain's electricity will be generated from gas, compared to zero in 1992, displacing coal. This switch is required by 2000 to meet the EC and UN mandated sulfur emissions limits, but was advanced by the imperfect market created by privatisation. This paper examines the economics of Flue Gas Desulfurisation, and argues that without the right to trade emissions permits, FGD may run at only 17% load because of premature investment in gas generation. Tradable permits have a large impact on profits for the generators and British Coal. At present the pool fails to schedule plant on avoidable cost, and electricity prices are likely to be set by the price of gas, not the emissions limits, though gas prices may rise with tighter future limits.

Purchase ( $25 )

Energy Specializations: Energy and the Environment – Air Emissions (other than greenhouse gases)

JEL Codes:
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

Keywords: Sulfur emission limits, UK, FGD, Coal, Environmental policy, CCGT, Electricity prices

DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-2


Published in Volume15, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.