The UK government spent over £6.8bn of taxpayers money last year subsidising the fossil fuel industry despite pledges at the G7, G20 and the UNFCCC levels to phase out such payments. This study focuses on the payments to the operators of diesel power electric power facilities as part of the UK's capacity market programme.
It analyses the emergence of a new business that the capacity market has made viable - the operation of small-scale, highly polluting, diesel-powered generating facilities, in receipt of up to £260m over the next few years. This study assesses this start up sector in detail and how it has turned a climate-motivated government policy to its advantage to distort markets and reap outsize returns for both the operating companies and investors.
This report was updated on Friday 10th December 2016 following the capacity market auction results. Diesel companies received less payments than anticipated, due to the withdrawal of capacity market bids in the weeks before the auction and/or not entering bids at a winning price.