- Promoting CCS
The Commission's 23 January proposals endorse CCS by removing a number of important obstacles that previously blocked the development of the technology.
First, the EU's guidelines on when member states are permitted to subsidise industries were expanded to allow for the potential inclusion of CCS. Although the Commission says it is "too early" to set specific guidelines for CCS support, Brussels "will have a generally positive attitude towards state aid" for CCS projects, according to the revised guidelines, expected to enter into force in mid-February.
Second, CO2 that is captured and stored will be credited as "not emitted" under the EU Emissions Trading Scheme (EU ETS), a provision many firms consider crucial in order to justify the investments necessary.
The draft proposal also stipulates that existing EU rules on pollution from large industrial facilities should be updated so that "all combustion plants, for which the original construction licence or the original operating licence is granted after the entry into force [of the CCS Directive], have suitable space on the installation site for the equipment necessary to capture and compress CO2".
CCS is also one of the six technologies favoured by the Commission in its Strategic Energy Technology (SET) Plan (see EurActiv 23/11/07).
- The CO2 calculation
A major element of the controversy surrounding CCS is whether or not it is a cost-effective solution for reducing CO2 emissions. The Commission admits that CCS will only be deployed when the "price per tonne of CO2 avoided by CCS is lower than the carbon price".
The McKinsey Global Institute (MGI) predicts that after 2020, 85% of all new coal-fired power plants will be equipped with CCS, leading to a reduction of carbon emissions at a price range of between 20 to 30 euros per tonne of CO2 saved. According to this scenario, by 2030 CCS could save 3.1 gigatons of CO2 annually at a global level.
The current price for CO2 under the EU Emissions Trading Scheme (EU ETS) is around 25 euros per tonne, but is widely expected to increase, indicating that CCS could become cost-effective over the decades to come.
In its own impact assessment, the Commission estimates that by 2030, CCS can account for up to 15%, or 160 million tonnes, of the EU's required CO2 reductions.
- 'Low hanging fruits'
Energy efficiency improvements in the buildings and transport sectors - which carry no net costs due to the resulting energy cost savings - could produce annual CO2 reductions of nearly seven gigatons by 2030, according to MGI, which is much more than even the most optimistic projections for the more expensive CCS.
But improving energy efficiency in buildings and transport involves the regulation of a high number of small emitters and the coordination of numerous fragmented standards and practices - a more difficult task for policymakers than reducing the CO2 intensity of large power-production facilities.
Efforts by EU legislators to tighten efficiency standards in passenger cars, for example, have met with stiff resistance from industry. And EU member states' performance on energy efficiency has been mixed, with implementation of EU legislation for increased energy efficiency in buildings "disappointingly slow" despite some modest improvements, according to a new report by EnR, a voluntary network of European energy agencies.