Energy in a Competitive Market

Energy in a Competitive Market

Essays in Honour of Colin Robinson

Edited by Lester C. Hunt

This fine collection of original essays is in recognition of Colin Robinson, who has been at the forefront of thinking in energy economics for over 30 years. Energy in a Competitive Market brings together both prominent academics and practitioners to honour his outstanding and unique contribution. The authors cover a wide and fascinating selection of topics incorporating the whole spectrum of energy economics. In doing so, they examine the belief that markets are the key to the effective allocation of resources, a notion which arguably applies as much to energy as it does to any other commodity.

Chapter 6: UK coal in competitive energy markets

Mike J. Parker

Subjects: economics and finance, competition policy, energy economics, public sector economics


Mike J. Parker INTRODUCTION: LONG-TERM TRENDS1 Over the 1980s and 1990s, a substantial body of literature was devoted to the effects of policies of UK governments to liberalize the operation of energy utilities by the promotion of competition and privatization. While these developments were to have an impact on the UK coal industry, the case of this particular industry is distinctive, not least because of the importance of politics. This was an industry whose deteriorating fortunes were the outcome of the complex interaction of politics and economics, often in ways unexpected by the players involved. However, the decline of the UK coal industry and, in particular, its deep mines, also needs to be set in a longer-term context (as illustrated in Table 6.1). UK coal consumption fell by more than 70 per cent between 1960 and 2000. By the time Margaret Thatcher came to power in 1979, the coal industry had lost the whole of its market in gas production and most of its sales in the industrial and domestic markets as a result of competition from oil and gas, technical changes, the decline of the ‘smokestack’ sector and domestic clean air legislation, with these losses only partly offset by substantial gains in power generation. Table 6.1 UK coal consumption (m. tonnes) Power stations 1960 1970 1980 1990 2000 Source: Other markets 147 80 33 24 13 Total 200 157 123 108 59 53 77 90 84 46 Various issues of the UK Digest of Energy Statistics (DUKES)...

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