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The future of carbon capture and storage in Europe

In January the European Commission gave a limited circulation to a draft document on the future of CCS in Europe. This text was positively reviewed by a number of organisations and, partly as a result of this reaction, a revised version has now been adopted by the Commission as a "Consultative Communication" (COM(2013)180 final) and distributed together with the new Green Paper on energy and climate policies on 27 March 2013.

In brief, the new Communication looks at the present and possible future role of fossil fuels in the European and global energy mix, (including some industrial processes), examines the state of play of CCS demonstration in Europe, looks at what might be done to influence the future of CCS in the short to medium term and draws a number of important conclusions including that CCS is now "at a crossroads".  The paper also poses a number of questions to which it invites responses as vital input into future policy on energy and climate change.

The world continues to depend very heavily on fossil fuels for its energy. More than 80% of global primary energy use is fossil based and, over the last decade, 85% of the increase in energy use  has been. Two-thirds of the world's power generation comes from fossil fuels. Coal production, in particular, has doubled since 1990 - mainly through increased demand in developing countries. In the EU the picture is somewhat different. Coal consumption had actually been in decline for two decades - though this decline was halted recently, mainly due to the relatively high price of gas in Europe and the increased availability of imports of coal from the USA (resulting from the exploitation of cheaper shale gas in that country).  Coupled with the low carbon price, coal has again become an attractive option (financially) for energy production - which has "negative impacts on the transition to the low carbon economy" in Europe.

The Communication highlights the use of coal in the energy intensive industrial sectors, in particular iron and steel production,  pointing out that the application of CCS to industry could result in dramatic reductions in CO2 emissions. Because of the relatively high CO2 concentrations in the waste gases produced in some industrial sectors, the application of CCS could be economically more attractive than for parts of the power sector and present early deployment opportunities. In turn, because of the clear links to jobs in local communities, such deployment could increase public understanding and acceptance of the technology.

There are, unfortunately,  very few positives that can be taken out of the section of the report dealing with the state of play of CCS demonstration in Europe and the report observes that "despite considerable efforts to take the lead on CCS" none of the eight operating full scale demonstration projects is in the EU and "EU projects are facing major delays due to a number of reasons", five of which the report outlines. They are: lack of business case (in particular due to the low carbon price); public awareness and acceptance (mainly in Germany and Poland where onshore storage was planned); lack of a legal framework (several Member States have not yet transposed the EU's CCS Directive); CO2 storage and infrastructure (more work needed on the former and the absence of the latter); need for greater international cooperation on CCS. Also included in this section is a brief review of why the CCS demonstration projects all failed to be awarded funds during the first round of the New Entrants Reserve (NER300) programme. This was mainly because Member States were "unable to confirm their CCS projects".

In the section on "Moving Forward", the next round of the NER300 should clearly play a key role and the Communication suggests that "it is time to re-assess the objectives set by the European Council and re-orient our policy goals and instruments". It also emphasises that "the need to deploy CCS has not receded and has only become more urgent". It notes that the price of carbon in the Emission Trading System (ETS) is at a much too low a level to incentivise CCS and has, in fact, become increasingly less important for investment decisions by operators. A number of different support or policy measures are briefly reviewed, including a mandatory Emission Performance Standard (EPS), a mandatory CCS certificate system and "contracts for difference".

In its conclusions, the Commission stresses that "revitalising CCS is necessary" as is "an urgent policy response to the prime challenge of stimulating investment in CCS demonstration, subsequent deployment and construction of infrastructure" .  It then poses a number of questions to which it invites contributions from all interested parties. These include:

  • Should Member States that have a high share of coal and gas in their mix be obliged to:
    • develop a clear road-map on how to restructure their electricity generation sector towards non-carbon emitting fuels by 2050?
    • develop a national strategy to prepare for the deployment of CCS technology?
  • How should the ETS be restructured so that it could also provide meaningful incentives for CCS deployment?
  • Should utilities be required to install CCS-ready equipment for all new investments?
  • Should fossil fuel providers contribute to CCS deployment through specific measures that ensure financing for CCS deployment?

This really is a "must-read" document for people working in the CCS sector - and not just those in Europe. Like climate change, ensuring the successful demonstration of CCS and its deployment is a global challenge, not just a regional one. Please don't stop at reading the text - please also react to the Commission as early and fully as possible - especially the perennial question, "What are the main obstacles to ensuring sufficient demonstrations of CCS in the EU?"

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