A directive on the geological storage of carbon dioxide, due to be presented by the Commission in January, is to focus on the safety aspects of the technology and the removal of regulatory barriers to its widespread use.
- Inclusion in EU emissions trading scheme (ETS)
"CO2 captured and stored will be credited as not emitted under the Emissions Trading Scheme," says a draft of the directive, seen by EurActiv.
The decision could come as a dissapointment for energy firms. Another option would have been to count the buried CO2 as an emission and grant it allowances that can be traded under the scheme but it appears to have been discarded at this stage.
Speaking to EurActiv earlier this year, Bill Spence, CO2 Vice-President at Royal Dutch Shell, said he expected returns for CCS investment in the form of carbon credits under the EU ETS. "The reward will have to be in the allowances after our investment," said Spence, adding that "if the promise of three credits is made, in the future we will put the capital upfront" (EurActiv 24/10/07).
However, the Commission seems to have made up its mind. "The January package will confirm CCS as a legitimate emission-mitigation technology fully recognised under ETS", said the Commission's energy spokesperson Ferran Tarradellas. He added that "additional incentives may be necessary to address the currently unfavourable economics of the CCS technologies".
Arve Thorvik of the Norwegian oil and gas firm Statoil, which was the first to develop a CCS project in cooperation with Shell, told EurActiv this could come in the form of EU funds, or an "opening" of state aid rules.
- Storage permits to be issued by member states
The draft proposal outlines the legal framework for CO2 storage, including the division of responsibilities between the EU and member states.
Citing the principle of subsidiarity, the Commission appears to favour a more hands-off approach in terms of storage site approval: member-state authorities would draft storage permits based on a previous site impact and risk assessment conducted under existing EU environmental impact assessment rules.
The Commission would then review the draft permits within six months, and the member-state authorities would have to take the Commission's opinion into consideration, and "justify any departure from the Commission's opinion", when finalising the permits.
There is no indication in the draft that the Commission's opinion would be legally binding on member-state authorities.
- Rules for new installations
Rules for CO2 capture would be governed by existing Integrated Pollution Prevention and Control (IPPC) rules, which the Commission may strengthen. The draft contains seven amendments designed to update existing legislation for both capture and transport of CO2.
The draft also stipulates that any large fossil fuel combustion plants built after the entry into force of the directive must "have suitable space on the installation site for the equipment necessary to capture and compress CO2".
- Environmental risks 'low'
Much like CO2 capture, its transport would be governed by existing rules "on the basis that there is no risk difference between CO2 capture and transport and similar activities already regulated (e.g. natural gas pipelines)", the draft says.
Criteria for assessing the safety of a storage site, including potential risks associated with leakage or other "significant environmental or health impacts", are set out in an annex, which includes guidelines for assessing geological characteristics, for setting up computerised storage simulations and for assessing potential risks.
Operators of storage sites would be responsible for ensuring that the CO2 stream that enters their site consists "overwhelmingly of carbon dioxide", as other "incidental associated substances from the source, capture or injection process" could damage or contaminate storage sites. Site operators would also need to monitor CO2 levels and detect any leakages from the storage facility. Guidelines for site monitoring are contained in an annex of the draft.
The explanatory memorandum mentions that safety concerns were communicated to the Commission in a letter from the University of Science and Technology in Krakow. But the draft says that "there is no consensus on the existence of such risks", and that the special report on CCS by the Intergovernmental Panel on Climate Change (IPCC) expressed "a broad scientific consensus" on the issue. "The risk of leakage, and a fortiori or irreversible consequences, is in fact low," the draft says.
- No mandatory fitting at this stage
To the dissapointment of some environmental NGOs, the Commission decided not to impose CCS technology on coal or gas-fired power plants from a specific date, arguing that the technology is "insufficiently mature to be mandated". "The Commission addressed the economic, social and environmental implications of mandatory CCS in the impact assessment and concluded that at this time a mandatory requirement should not be imposed," the draft says.
One high-ranking Commission official close to the file recently admitted that the Commission "has perhaps been too optimistic" on CCS and that making the technology viable is going to be "more costly and more complicated" than initially thought.
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