Carbon sequestration and storage, although “not a silver bullet”, is an essential bridging technology that needs to be deployed fast if Europe and the rest of the world are serious about tackling climate change, argues Paal Frisvold, head of the Brussels office of the Bellona Foundation, a Norwegian environmental NGO.
Paal Frisvold is the chairman of the Brussels office of the Bellona Foundation, a Norwegian environmental NGO.
The NGO community is divided about carbon capture and storage. WWF is supporting it, Greenpeace is not. Why is the Bellona Foundation supporting it? Were you always in favour or were you sceptical at first?
Bellona is from a country which has earned all its wealth from oil. Norway is one of the richest countries in the world because we have exported fossil fuels that other people have burned, and that has led to climate change. We have done that since the mid 1970s.
When you are from a country responsible for close to 3% of global CO2 emissions you cannot remain indifferent. We must therefore use the wealth to invest in technologies that will tackle this problem.
In 1992 Bellona made a decision: if climate change is for real then what do we need to do to reduce emissions? We looked at energy efficiency and renewables. We found that they will not do the job alone.
We then looked for other alternatives such as nuclear. Bellona has been working on nuclear waste and safety since the Chernobyl accident in 1986. We do not see nuclear as being part of the 21st century energy reality. We accept that nuclear will be part of the energy portfolio for some time, but we do not see it as a sustainable option.
So what do we have left? Bellona early on coined the phrase “we are addicted to fossil fuels”. So we asked ourselves how we can develop a technology that will bridge the gap between today’s continuous increase in energy demand and the urgent need for CO2 emissions reduction. And we saw the bridge to a truly sustainable energy chain as being driven by electricity and hydrogen. So we need to produce enough energy for these two energy carriers.
We saw that CCS will be necessary to allow urgent economic growth and wealth creation for the 1/3 of the global population that does not have access to electricity.
Critics of CCS say it won’t get us rid of our addiction to fossil fuels, and what we should be doing is to switch to other, cleaner forms of energy. Also considering the high costs of CCS, which is still in the development stage, why spend so much time, money and effort on something which is not sustainable anyway?
No-one can prove that we are capable to switch to renewables immediately. The challenge is to switch to renewables fast enough to reach 85% emissions reduction given the increase in energy demand. That is why we are saying that CCS is not the silver bullet, although I hate to use that cliché, it’s not a panacea, and it’s not the only solution.
We always advocated the need to use all of the different roads that are open to us. This means energy efficiency, renewables and CCS. We agree with other NGOs that there should be no public money going to power companies using CCS after 2020. But we need to provide incentives for private investment in developing technologies with such huge potential, whether it be CCS, offshore wind or concentrated solar power. CCS should not draw public money from investing in renewables.
So that means no use of environmental state aid guidelines, for example?
Well this is where the situation gets complicated. State aid guidelines do not oblige anyone to spend public money. They set out rules for governments whose political priority is to develop this particular technology. Europe needs to test different capture technologies and build the proper infrastructure for transport and storage of CO2. Demonstration plants built with state aid in form of public investments or financial incentives will give us indispensable information about capture technology and storage options. In the case of Norway, we do not see a problem with using its very large petroleum fortune.
Norway is an exception. In the EU, we do not have large oil revenues. How do you see CCS funding happening in the EU?
We need to provide a very small and targeted incentive to industry to invest in those first demonstration plants. This must be very limited in time and scope and must not lead to any inflation in the ETS [Emissions Trading Scheme for greenhouse gases]. Once these demonstration plants are up and running by 2015, we shall be able to validate the technology and get the cost down.
By 2020, most observers agree the ETS should be able to incentivise CCS on its own, without government support, as it will be more expensive for industry to emit CO2 than to install CCS technology. But in case the ETS is not a sufficient incentive by 2020, a mandatory emission ceiling should be established for power plants, so that no new fossil fuel power plants start operating without CCS after 2020.
But we are talking about a 2020 target date for something that will still cover a fraction of emissions. In the meantime, China is building up coal-fired power plants at breakneck pace….
Absolutely and that is why we are in a hurry. However, we are not talking about 2020, we are talking about 2015 for getting CCS demonstration plants up and running so that by 2020 there shall be no more new coal-fired power plants without CCS.
Some of the demonstration plants should be in emerging economies like China and India – precisely to minimise their lock-in of CO2-intensive power generation while allowing them to continue using their most abundant and accessible energy source. That is why we are in a hurry – we need to get the cost down for this technology.
What is Bellona saying regarding rolling out CCS technology to countries like China?
That is another debate. Our first goal is to get the cost down and validate the technology. Then the question is how do we ensure the technology transfer to China and India.
We expect to get the cost of capturing a tonne of CO2 down to 20 euro by 2020. By building the technology in China, the cost will be even less, because industry is less costly in China.
So we need to ensure we have a global agreement at COP15, the UN climate summit in Copenhagen next year. We need a commitment from China to reduce its growth in emissions and get the rich countries to play a part in the installation of this technology in China. We need to get the industrialised countries to acknowledge that we have polluted this world by exploiting fossil fuels and are not in a position to tell China to stop using fossil fuels.
We should be saying “you have a right to continue using the fossil fuels you have, but we shall together work to help you use the technology that will enable you to do so without accelerating climate change”.
Do you see any signs that such an agreement is actually taking shape in the current negotiations at UN level?
This is a core question. We can see the issue of technology moving up the agenda. At the recent G8 Summit at Lake Tokya, the G8 governments committed themselves to the construction of 20 CCS demonstration plants. We have to introduce technology development to get non-OECD countries to commit to emissions reductions.
In particular to get the US on board, we need to focus on technological breakthroughs. That is what we are striving for. The role of technology in combating climate change is at least as important in the developing world as in the developed countries. OECD countries should finance technology transfer to the developing economies.
What kind of financing? Using a special fund for example?
There are several ways of this can be done. A special fund? Absolutely. We have the Kyoto Protocol’s CDM system which we are not particularly fond of, but it is still there to be used. International financial institutions should step forward – the likes of the World Bank, OECD countries, EBRD and others.
To come back to the financing issue within the EU, there is a report currently being discussed in Parliament on how to finance CCS. The Commission’s initial proposal was to credit the CO2 stored underground as non-emitted, while others argue it should be counted twice – as non-emitted and also as a credit under the ETS. This is a view the Parliament’s rapporteur on the issue is supporting, Chris Davies. Is this the kind of financing that is needed in Europe to help develop CCS?
We have come very far. We have developed the technology, we have identified a policy, we have identified a need for economic incentives. The last part is how to finance all of this. We are in the last leap and there are several ways of doing that.
We have recently heard that there are possibilities to draw from other EU funding: using the Galileo funding model, money could be drawn from agricultural and other budget under-spending. There are also a number of structural funds we could use.
Nevertheless, they are unlikely to be sufficient. One alternative is a feed-in tariff like we have for renewables in Germany. But we are only talking about a few demonstration projects.
We also have the option put forward in the revised directive on the ETS which is to earmark some of the income from the auctioning. That will be difficult as well because the ministers of finance are likely to oppose that.
So we are left with how we can use the ETS in an innovative way. One way is the idea to provide double EUAs [EU Emission Allowance, a permit to emit one tonne of carbon under the EU ETS] for the demonstration projects. The challenge with this is that if the Commission opens up that door, other causes will queue up to benefit from the same mechanism such as the renewables industry and all other kinds of low-carbon technologies.
Which option is most appealing to Bellona then?
I would use the same principles, but I would rely on the reporting guidelines for emissions covered by the ETS. Demonstration projects could benefit from a negative emission factor in the calculation of emissions.
In other words, demonstration projects would reduce the amount of emissions reported under the ETS by a utility. The size of the negative emission factor should compensate for the additional costs of CCS, just like under the double credit proposal. This mechanism would require only a simple Commission decision and not an amendment of the ETS directive.
So if you stored 1,000 tonnes of CO2, it would actually be counted as if you stored 2,000?
So under this plan it is still industry that is footing the bill?
It will be industry that is paying for it. There will be no direct cash from public authorities into a European power company.
The EU’s guideline for environmental state aid have recently been revised so as to allow government support for CCS. Is this something that you oppose?
No because state aid guidelines do not entail any obligation on public authorities to pay for CCS projects. If a country, such as Norway or the UK, would like to invest in this technology on a demonstration basis we believe that is a good investment. It is a necessary investment for us to get this show on the road. We need CCS in Europe to meet our reductions targets, and we definitely need it for the rest of the world.
On storage safety, one of the issues that have been raised is that there are not a sufficient number of geological sites that have been identified as being safe enough. Do you think that will be a big issue, or do you expect it to be easily resolved?
This is why we need a demonstration programme to identify very clearly where we have storage potential. There are several studies indicating that there is enough storage space in Europe.
However, when you store CO2, you don’t just drill a hole and pump it down. What you do is to make very comprehensive environmental impact assessments – as the petroleum industry has been doing for years for exploring and storing oil and natural gas.
In Europe, offshore, we have stored vast amounts of natural gas. Did you know that about half of the gas we take out from the North Sea is actually re-injected into the wells in order to pump up more oil?
Yes, but this is mainly offshore, what about storage sites inland?
Under Berlin lies Europe’s largest reservoir of natural gas. This has been done on an industrial basis for decades. There are existing industrial practices, legislation and monitoring mechanisms to ensure that this natural gas does not leak.
Are there any fears from urban populations that huge amounts of CO2 are being stored beneath them? Do you expect a public backlash against this?
Obviously, we have a huge job explaining to the public what this is all about.
First we have to explain the consequences of CO2 emissions. Then we have to explain what geological storage is. Geological storage of natural gas is currently being done, although natural gas is explosive. CO2 is not.
When you use geological storage sites that are 3km under the ground, you enter into wells that have been safely secured for millions of years. If they had not been secure, there would have been no gas or oil there from the start.
Due to the pressure in these wells, the CO2 would react with the substances down there and turn into a form of stone. So, the more we look into the storage of CO2, the more we look into the geological reactions, the more we are assured that CO2 cannot leak. And we are not accepting any leakage at all, just as is the case with natural gas.
We also have to map out all the locations for storage. In Italy, Poland, Germany and France there is huge storage capacity. In one field in the North Sea, we can store all the CO2 for all of Europe. We have to be realistic and look at it in a very serious way and not jump to conclusions.
The Commission proposal on CCS which is part of the energy-climate package is now going through the legislative process. How do you see things evolving in the Parliament and in the EU Council of Ministers? Do you have a feeling on which option will be chosen?
The battle in the Council and Parliament at the moment is whether or not to make this mandatory. It is already in the Commission’s proposed ETS review to provide credit for the CO2 stored. The question is the financial incentives for demonstration projects, and the mandatory issue.
It will be interesting to see whether it is the double credit mechanism or a percent of that to apply to the demonstration projects. That is the battle that is being fought right now.
Some Greens have been saying “if you are going to do it, then do it all the way”. I am obviously in support of MEP Chris Davies when he says we need this technology to meet our climate change objectives. If we want to use CCS, then the best signal for the market is to mandate all new power plants to use CCS by 2020, and for all existing plants to install it by 2020-30. We still need an incentive to demonstrate, so the solution is to make it mandatory with an initial demonstration phase.
So what you are saying is that the double credit can only last as long as we are in the demonstration phase?
Yes. We are limited in terms of the number of demonstration projects and also limited in time. There shall be no double credit scheme after 2020. That is when all the demonstration projects should be up and running. And that is the end of Chapter 1.
Just to underline: if we are going to take climate change seriously, then we have to act locally. We are not opposed to renewables, but we don’t believe in the mathematics of going straight to renewables. As the cradle of the industrial revolution and the fossil economy, Europe has a moral duty to invest in new technologies. We must enable the developing world to grow out of poverty without jeopardising the climate.