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Driving CO2 capture and storage in Europe

On 16 April 2013, there was a hearing on the future of carbon dioxide (CO2) capture and storage (CCS) in the European Parliament in Strasbourg. The meeting was hosted by Chris Davies, a well known British Member of the European Parliament. The main focus of the meeting was a presentation of the new CCS market incentives report produced by Bellona Europa with the title "Driving CO2 capture and storage in the EU: New policies, new perspectives".

The event was attended by representatives from the major political groups and key stakeholders, including representatives from the Global CCS Institute. A report on the meeting can be found on the Bellona CCS website.

The next few weeks could be a very critical time for CCS in Europe. The European Commission has issued two Communications for consultation: "A 2030 framework for climate and energy policies" and "The Future of Carbon Capture and Storage in Europe". The deadline for comments on these is early July 2013. The Bellona report and the hearing in the European Parliament were very important steps in responding to the Commission's request for feedback. This blog highlights a number of the points made in the report, but it is not a comprehensive summary or review. It is recommended that all interested CCS stakeholders download and study the report before sending their response to the Commission.

I would assume that anyone reading this is already aware of the potential role that CCS could play in meeting the challenge of climate change. I will assume that you also realise that it is presently the only available technology to reduce emissions from major carbon emitting industrial processes and that, when combined with biomass, the only large-scale route for negative carbon emissions. You may also be aware that renewable energies in the European Union (EU) are effectively supported by EU-level policies, but that this is not the case for CCS. As a result, CCS must rely on the EU's Emission Trading System (ETS) as the only incentive to drive its potential deployment. We all know what has happened to the ETS since its launch - and that nobody believes that the present carbon price will incentivise anything!

In the light of this, Bellona recommends a new policy framework for CCS in the EU. This would consist of a dual approach with an overarching EU-wide CCS target and a complementary market incentive scheme that could be established at national level (i.e. within each Member State).

Bellona recommends that the Union adopt a CCS target or milestone along the lines of the 20 per cent by 2020 binding target for renewables in earlier EU legislation. What is proposed is that the EU adopt binding requirements for Member States to capture an agreed percentage of their emissions using CCS by 2030. In this way, CCS deployment could be driven in both the power and the non-power sectors. Adopting the targets would reassure investors of the political commitment to CCS.  A variation on this, especially if adopting specific CCS targets was too difficult, would be to allow a certain percentage of the renewable targets to be met by CCS in the future - or to simple adopt a low-carbon energy target in place of a renewable energy one. Any of these option would help to "level the playing field"  for CCS.

Of the different options reviewed in the report for CCS market incentives, it would appear that the favoured one is an EU-wide CCS certificate scheme. Very basically, a certificate scheme for low-carbon energy in which  a company producing electricity or an industrial product using CCS would receive a number of certificates from its government. Companies producing electricity or industrial product while emitting COwould be required to produce a number of these CCS certificates in order to be allowed to market their product. The only way that they could obtain these would be to buy them from the company that uses CCS. By controlling the number of certificates per unit of good to be marketed over time, the authorities would reduce the carbon emissions.

Sweden has operated its own domestic low-carbon certificate market since 2003 and the UK has a similar scheme with its Renewables Obligation certificates. One possible extension of the scheme might see the obligation to purchase certificates extended, or shifted to the fuel suppliers, including those that import into the EU market. Such a scheme could be administered by the European Institutions, in particular the European Investment Bank, or nationally, with Member States being required to issue the certificates themselves.

The Bellona report also looks into additional action that might be taken to promote CCS in Europe, including emission performance standards (EPS), feed-in tariffs and the very controversial issue of reform of the ETS. It makes three other very specific recommendations: continuing the New Entrance Reserve (NER) grant funding programme; providing priority access into the grid for CCS electricity generation (the same as for renewable energies and cogeneration facilities); and giving consideration to limited border adjustment measures to help specific industrial sectors in danger of "carbon leakage" (unfair competition from companies not having to meet lower emission requirements) should they deploy CCS.

The report also highlights a particular anomaly of the first round of NER300 funding. It would appear that there could have been a far greater CO2 abatement from awarding €330 million to a CCS project than by awarding €467 to 11 renewable projects (see Figure 2 in the report). It is hoped that the same result will not be delivered by the next round of the funding.

As I said above, these are my personal highlights from the report. It is possible that you could have different ones. But you will not know unless you read it! It can be downloaded from the Bellona website.

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