The somewhat mystifying acronym BREF signifies the reference document that sets out the best available techniques to combat pollutant emissions from large combustion plants (LCPs), which was last revised on 28 April. The best available techniques, or BAT, document sets the emission limits for plants covered by the Industrial Emissions Directive (IED).
The revised BREF emissions values under the IED come into force in 2021, and in order to comply with the new emissions limits for SOx, NOx and Mercury, individual plants can: retrofit control technology and continue operating within the limits; apply for a derogation; or do nothing and shut down.
At present, 153 LCPs have been granted a derogation, or exemption, from the IED. This has implications for the options those plants will have to ensure their compliance with the new BREF, and in fact suggests that a hefty chunk of Europe’s lignite and coal-fired power plants now have difficult decisions on whether to modernise or close.
Across Europe, we have identified some 80 GW (56%) among the 142 GW of installed large coal and lignite plants that will struggle to comply with the new BREF. Northwest Europe has 18 GW (27%) at high risk, mainly in Spain and the UK, Central and Eastern Europe has 44 GW (86%) at risk, mainly in Poland (29 GW), while Southern Europe has 17 GW (69%) at risk.
We estimate that on 2016 generation numbers, lignite generation could fall by 121 TWh (52%) in the EU by 2025. Applying the same logic to coal plants results in a power generation dropping off by some 177 TWh from 2016 levels by 2025—a 47% reduction in coal-fired generation. In total, across coal and lignite, this is a drop of some 300 TWh/y of thermal generation.
In regional terms, Central and Eastern Europe appears to be the big loser, with most of its coal-fired power generation at risk of closure as most of its existing plants have derogations, and are not compliant with the prevailing limits. This highlights existing issues over security of supply and questions over the ability of certain markets, particularly Poland, to be able, even in 10 years’ time, to go coal free. Indeed, it is already clear that Poland and the European Commission appear on a collision course over energy mix issues.
If all of the 300 TWh/y of generation is replaced by gas-fired generation, something like 60 bcm would be added to annual European gas demand by 2025. With renewables likely to make up some of that gap, a demand increment of maybe 40 bcm would be more likely. The revised BREF numbers should help make further room for gas in the post-2020 European power market, keeping EU gas hub prices higher and keeping the call on North American gas more robust.