The UK had an estimated 243 million short tons (Mmst) of recoverable coal reserves in 2003. The country produced 30.6 Mmst in 2003, the fifth-most in the EU. Coal production in the UK has declined steadily and dramatically over the past several decades. Decreasing domestic consumption and a surge of low-cost imports have been the principle causes of the production decline. According to DTI, the UK now imports more coal than it produces domestically, with South Africa and Australian representing the principle source of these imports. In order to meet its obligations under the Kyoto Protocol, the UK likely will continue to phase out coal consumption and production. Nevertheless, the UK government continues to provide financial support to the industry. In June 2003, the UK government launched the Coal Investment Aid program, with a budget of up to $111 million. The goal of the project is to create or safeguard jobs in the UK coal industry by encouraging coal producers to enter into investment projects that maintain access to reserves.
The UK had installed electricity generation capacity of 74.0 gigawatts (GW) in 2003. Also in 2003, the UK generated 369.9 billion kilowatthours (Bkwh) of electricity while consuming 346.1 Bkwh. Most electricity generation comes from conventional thermal sources (74 percent), followed by nuclear (23 percent), other renewables (2 percent), and hydroelectricity (1 percent). The UK has a privatized electricity sector, where generators and distributors trade electricity on a wholesale market. The largest power producer in the country is British Energy (BE), which controls most of the nuclear power capacity and generates about 20 percent of the total electricity supply. Other important generating companies include E.ON UK, RWE npower, Scottish and Southern Energy (SSE), and ScottishPower (SP). Twelve regional monopolies control electricity distribution in the UK, most of which are owned by the leading generation companies. NGT owns and operates the national transmission system in England and Wales, whereas SSE and SP operate the grid in Scotland, and Northern Ireland Electricity (NIE), a subsidiary of the Viridian Group, operates the grid in Northern Ireland. The UK has slowly integrated the formally-separate electricity markets of its component parts (England, Northern Ireland, Scotland, and Wales). The British government formed the New Electricity Trading Arrangements (NETA) in 2001 to integrate the electricity markets of England and Wales. In 2005, the British government extended NETA to Scotland as the British Energy Transmission and Trading Arrangements (BETTA). There are plans to eventual incorporate Northern Ireland in to the BETTA. In addition, SP and SSE have increased the transmission capacity between England and Scotland to allow them to sell more electricity to English and Welsh customers.
As mentioned above, conventional thermal plants provide the bulk of the electricity supply in the UK. According to DTI, conventional thermal generation in 2004 consisted of natural gas (53 percent), coal (44 percent), oil (2 percent), and other (1 percent). One of the largest power plants in the UK is the Drax facility in North Yorkshire, which consists of six coal-fired units with total capacity of 4,000 megawatts (MW). The long-term trend in UK power generation has been a move from coal-fired plants to combined-cycle, gas-fired turbines (CCGFT). As a result, according to DTI, electricity generation from CCGFTs increased from zero in 1989 to 137.7 Bkwh in 2004.