Government ‘allowing coal industry to get green subsidies’

The boss of Centrica says there is an ‘inherent paradox here’

The government have been criticised for allowing “old, dirty coal stations” to qualify for subsidies (Getty)

The boss of British Gas’s parent company has criticised the Government for allowing “old, dirty coal stations” to qualify for subsidies worth hundreds of millions of pounds in a scheme designed to promote green energy.

Sam Laidlaw, the chief executive of Centrica, said the list of power stations which the Government has just cleared to apply for the scheme contains some of the country’s most polluting stations – putting it at odds with its goal of keeping carbon emissions to a minimum.

Mr Laidlaw’s comments came as European leaders finalise a deal that is expected to see the EU agree to collectively cut carbon emissions by 40 per cent compared to those of 1990.

Speaking at a conference in London, Mr Laidlaw said the “capacity market” – a scheme which will pay power generators to be on standby to maintain electricity supplies when there is no wind to turn Britain’s turbines – was designed for gas stations, which are less polluting than coal.

However, in a statement released quietly earlier this month, the Government cleared eight coal-fired stations – including the North Yorkshire plants of Drax and Eggborough – to apply for the subsidies.

“The expectation was that this [capacity market] would incentivise new gas-fired stations. But look through the pre-qualification lists and it is clear that old, dirty coal stations will be paid extra to stay online for longer,” Mr Laidlaw said.

“The cost of this will be levied on customers’ bills, alongside the cost of the carbon price floor [tax on emissions], which is designed to encourage switching away from coal. There’s an inherent paradox here,” he added.

The carbon price floor is levied on big fossil-fuel users such as power stations, who add its cost onto consumers’ bills.

The decision to approve coal-fired plants is concerning because a sharp fall in the coal price has made them cheaper to operate than gas stations.

“Even some of the biggest players in the energy industry think this new policy doesn’t make sense,” said Greenpeace energy campaigner Lawrence Carter. “A big chunk of these new energy handouts will now be used to extend the lifespan of some of Europe’s most polluting power stations.”

A spokesman for the Department for Energy and Climate Change said: “There is no paradox. The carbon price floor and the capacity market work together to ensure we move to low-carbon generation in a way that keeps the lights on at peak demand, at the lowest cost to the consumer.”