The birthplace of coal power generation announced the end of an era as it shut down its last remaining coal plant. The U.K. is the first G7 member to phase out of coal reliance in a world transitioning to net-zero carbon.
The first coal-powered station was built in London in 1882, reported the BBC, and the U.K. quickly grew to rely on the heavily polluting energy source for power. As recently as 2012, coal still comprised 39% of all power generation in the U.K.
The introduction of gas in the 1990s and renewables later in the 2000s lead to the eventual tipping point of phasing out coal. That, coupled with a supportive regulatory framework — dedicated to moving the U.K. away from coal over a period of a decade — resulted in the monumental moment on Monday. With over half of all power derived from renewable energy this year, the last coal power plant at Ratcliffe-on-Soar shut down.
The Coal Phaseout: Regulatory Support & Carbon Tax
Among the supportive measures that allowed for the transition away from coal, the “carbon price floor” was introduced in 2013. This put a price on carbon dioxide emissions derived from fossil fuels. In essence, it created incentive via pricing pressure to transition to low emissions alternatives. There’s no real agreement as to whether the CPF actually contributed to emissions reductions. However, it’s worth noting that coal use declined from 40% in 2012 to 22% in 2015, reported Carbon Brief.
The U.K. is currently ramping up renewable energy buildouts, aiming to quadruple capacity in some cases. It joins Sweden, Belgium, Portugal, and Austria as countries that successfully transitioned away from coal power reliance.
“The biggest lesson is that, once the commitments and policies are clear, then rapid, large-scale clean power transition is possible, and it lays the groundwork for future economy-wide decarbonization,” Frankie Mayo, senior energy and climate analyst at Ember, told Carbon Brief.
See also: UK Allowances Prices Rally, Buoyed by Investment Funds
As the U.K. continues on its journey to net-zero emissions, investors currently can only access its carbon market through one fund. The KraneShares Global Carbon Strategy ETF (KRBN ) was the first of its kind to offer an investment take on carbon credits trading. The fund tracks the S&P Global Carbon Credit Index, which follows the world’s most liquid carbon credit futures contracts.
This includes contracts from the European Union Allowances and California Carbon Allowances. It also includes the RGGI markets and the United Kingdom Allowances. KRBN carries a management fee of 0.79%.
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