Monday, 24 August 2009

Landfill tax changes could hit carbon capture

In the last budget the government sneaked out a proposal to increase landfill tax on PFA (power station ash) from £2.50 a tonne to £40 a tonne (up to £72 by 2012/13).

The industry is very concerned that this may have an impact on the financial viability of coal power generation at a time when another arm of government is seeking to make the sums add up on carbon capture technology. It is estimated that the proposal alone could increase electricity generation from coal by 5-10%.

The Treasury say that there are now alternative/commercial uses for PFA but the market has been extensively exploited (see Scotash) and it is doubtful there is more capacity.

The consultation is available at

See document page 19 and 20 and paragraph 3.8 in particular.

In addition indigenous coal is higher ash than imported thereby incentivising power generators to import more coal to save on landfill.

Therefore, the UK coal industry will be disadvantaged by

  • The desire to raise more tax

  • Indigenous coal being higher ash than imported coal

  • Deep mined coal being higher ash than UK surface mined and imported coals.

Rather than helping the environment this tax could damage if it.

It seems to be a simple case of the left hand not knowing what the right hand is doing.

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