I hope the noble Baroness knows that I do not like anyone being disappointed, bur it is the realities. I want to acknowledge straight away the concerns that my noble friend and the noble Baroness seek to address through the amendment, and the need for future levels of carbon emissions from coal generation to be consistent with our decarbonisation objectives. However, to plan the EPS in the way proposed by the amendment has certain difficulties.
The amendment would extend the EPS to existing coal plants, which currently—I emphasise “currently”—make up a significant and reliable proportion of our generation capacity, and are needed to play a continuing and important role in the transition to a low-carbon electricity system, which we all wish for. However, the role of coal over the coming years needs to be consistent not only with our decarbonisation objectives but with ensuring that our electricity supplies are secure and affordable. That is why I am happy to repeat for my noble friend that we have a policy of no new coal without CCS, which the EPS reaffirms.
The measures under our electricity market reforms are designed to achieve these objectives. The introduction of contracts for difference will bring forward investment in increasing amounts of low-carbon capacity, with the carbon price floor improving the economics of gas generation relative to coal. The effect of this will be that we see a gradual decline in generation from unabated coal as it is displaced by lower-carbon forms of generation, including renewables and new gas.
The noble Baroness mentioned the 12 existing coal plants. Our gas generation strategy analysis has shown that no more than two of the existing coal power stations will operate beyond 2025, and none by 2030. It also shows that total generation from coal will be 3% by 2025. That indicates what our direction of travel needs to be.
However, by linking the EPS directly to operators’ decisions in respect of the industrial emissions directive, we risk deterring investment in equipment to reduce harmful pollution and undermining the purpose behind the directive; that is, the reduction in harmful emissions.