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EU ruling on Aberthaw Power Station set to speed up coal's demise and reset contract terms

A recent ECJ decision against the UK government will change how Aberthaw Power Station operates – and could bring forward plans to decommission our fleet of coal-fired stations.

The European Court of Justice decided last month that the UK had failed to fulfil its obligations under Article 4(3) of the EU Directive on Large Combustion Plants with regard to Aberthaw Power Station in south Wales.

This directive is designed to limit emissions of certain pollutants into the air from large combustion plants such as Aberthaw and requires the fuel used to have a volatile matter content of less than 10 per cent.

The commission questioned the UK about the content of the solid fuel used in the power station between 2009 and 2011. After a response from the UK, a letter of formal notice was sent by the commission complaining of a failure to achieve the emission values required by the directive until 1 January 2016.

Powerful arguments

The UK contended that the argument put forward by the commission – that in order to qualify for derogation a plant must use only those fuels with an average volatile matter content less than 10 per cent calculated over the course of a year – was incorrect.

Their argument hinged on exact wording – the absence of the adverb “exclusively” from a footnote to the directive. That argument was rejected.

“This decision is likely to bring forward any plans which may already be in place to decommission power stations or accelerate the formation of such plans”

Aberthaw Power Station is designed to burn Welsh coal, which tends to produce higher emissions of nitrous oxide. RWE, which operates the coal-fired power station, has made plain that it will comply with the ruling by ceasing to burn large amounts of local Welsh coal and will import it from places such as Australia, the US and Russia.

Thus the immediate consequences of the decision by the court are likely to include job losses in the opencast mines near Aberthaw and wider damage to the environment caused by otherwise avoidable transport of coal from greater distances.

Implications for construction

From the point of view of the construction industry, the government has said it wishes to phase out coal-fired power stations by 2025 as part of a wider campaign to tackle climate change. This decision is likely to bring forward any plans which may already be in place to decommission power stations or accelerate the formation of such plans.

There is little advantage in keeping in existence a power station which requires the use not of locally supplied coal but that imported at great expense from overseas at cost to the environment. Better, it may be thought, to decommission the power stations sooner.

In the context of disputes, a decision such as this is likely to make the government more concerned and thus vigilant about fossil fuel emissions and other pollutants.

We can expect to see government departments being alert to enforce contractual provisions that attempt to control damage to the environment, not only in relation to power stations but factories and all other sources of potential harm to the environment.

It is likely to impact those who negotiate and draft contractual terms as well as those who litigate about the meaning and enforceability of such provisions.

We could see consequences right across the legal world and its relationship to the construction industry, expanding beyond the relatively limited scope of coal-fired power stations in south Wales.

Jonathan Acton Davis QC is a barrister at Atkin Chambers

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