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Dutch climate ruling may see EUR 4 power price surge – study

CO2Power

26 Oct 2018 10:25

Oslo

26 Oct 2018 10:25

(Montel) Exiting coal or introducing a carbon price floor to reduce Dutch emissions in line with a recent court ruling could see a “near term [power] price surge” of EUR 3-4, analyst Aurora Energy Research said on Friday.  

The measures could also lead to so-called carbon leakage, prompting higher imports from Germany, which still relied on its significant fleet of coal-fired, polluting plants to meet demand, said the Oxford-based firm in a new study.  

Its conclusions come just weeks after the Court of Appeal upheld a ruling from 2015 that the state must ensure it reached its climate targets, ordering it to cut carbon emissions 25% on 1990 levels by 2020.

In October 2017, the government said emissions cuts by 2020 could be as low as 19%.

“Given the time constraint, the question holds as to whether or not the [the Dutch government] will take immediate action,” said the study. 

If the government adhered to the court ruling, the power sector must reduce an additional 14m tonnes of CO2 by turn of the decade, “assuming other sectors are unable to ramp up decarbonisation efforts”. 

Emissions gap
The Netherlands emitted 193m tonnes of carbon in 2017 and while Aurora expected emissions to fall to 180m by 2020, there was a gap of 14m to reach the stipulated target of 166m. 

“Given the slow-moving nature of emissions reductions in transport and industry, the power sector is likely to become the key driver of efforts to achieve the 25% reduction target,” it said. 

A closure of the least efficient coal plants – Vattenfall’s Hemweg 8 (650 MW) in Amsterdam and RWE’s Amer 9 (643 MW) in Geertruidenberg – would only reduce emissions by 3m tonnes, Aurora said.

However, a full coal exit would curb emissions by 17m tonnes but lead to a hike in power prices of EUR 3-4, it added.

Net power imports would also jump by almost a third, Aurora added.

A unilateral carbon price floor at EUR 37/t would increase carbon leakage “to 98%” from current levels and net electricity imports by 36%. 

“A full coal ban and a higher carbon price floor both increase annual wholesale power prices, hurting energy-intensive industry. Both measures raise utilisation of the thermal fleet in neighbouring markets… resulting in carbon leakage,” it said. 

The Netherlands has an installed coal-fired capacity of 4.6 GW, according to TSO group Entso-E.  

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