Europe’s failing plans to encourage the burial of carbon dioxide emissions underground should be boosted by new laws for emissions performance standards or mandatory carbon capture and storage (CCS) certificates, according to a draft EU communication seen by EURACTIV.
If approved, the paper would require the Commission to prepare an impact assessment and legislative proposals “before the end of the current mandate,” in 2014, so that CCS can be deployed after 2020.
The communication, which is intended to launch a public consultation, says that performance standards of the type being considered for Britain’s electricity market reform, could give “certainty” to investors dismayed by wild plunges in the carbon market in the last year.
These would set mandatory and perhaps tradable limits to emissions from energy firms, which could also cover energy-intensive industries.
“One of the best things about regulation is that it is not susceptible to volatile price fluctuations so it gives a much better price signal to investors, and that’s a good way forward,” said Sanjeev Kumar, a senior associate at the E3G environmental consultancy.
In Norway, which is outside the EU, no new gas power plant can be built without CCS. The country currently hosts two of the world’s 20 demonstration CCS projects.
Currently, the EU draft is being debated within the European Commission, where it faces resistance from officials in the climate directorate, who contend that the Emissions Trading System (ETS) should be the primary driver of CCS investment.
But with EU carbon allowances currently trading at around €6.4 per tonne, this seems an unlikely proposition to many. Even the Dutch energy giant, Shell, which has pioneered the case for market intervention to support CCS, now favours a more flexible approach.
Shell spokesman Wim van de Wiel told EURACTIV in an emailed statement that the company remained “strongly supportive” of the ETS – and its NER300 scheme, which had been intended to distribute funds to CCS projects, but was stymied by a lack of member states willing to stump up their required 50% of investments.
“Given the current carbon price, it is timely for policymakers and industry to debate whether and what time-limited additional measures may be needed to progress CCS in Europe,” van de Wiel told EURACTIV.
Another policy option flagged in the draft communication is for a mandatory CCS certificate system, which would be “perfectly aligned with the ETS system,” and the ‘polluter pays’ principle.
The idea has already been implemented in the American state of Illinois, where, from 2015, power utilities are required to get 5% of their electricity from a clean-coal power source, rising to 25% by 2025.
Plants operating before 2016 could qualify as clean coal, so long as at least half of their CO2 emissions are captured and sequestered underground. But the idea has given rise to concerns that certificates might only be mandated of new plants.
“We need CCS and we need it now but it only becomes beneficial if it is applied to all existing, as well as new installations,” Kumar said.
A robust carbon price had been expected to entice investments in CCS technology, but without prices of €40-€75 per tonne, “there is no rational case for economic operators to invest in CCS,” the EU paper makes clear.
Unless ETS reforms change this situation, “it is unrealistic to assume that industry will commit the appropriate investments to CCS projects,” it says. “Resolution action is therefore necessary,” it adds, “if fossil fuels are still to be used.”
Fossil fuels currently account for over half of the EU’s electricity mix – with coal taking a 25% slice, gas holding a 23% share, and oil, mostly used for transport, making up another 2.6% of the total. But electricity use is not the only planet-warming activity in Europe.
Heavy-emitting industrial processes such as steel and cement account for around 20% of the continent’s annual CO2 output. If fossil fuel burning continues at anything like this level, the EU will be unable to meet its target of full decarbonisation by 2050 without CCS.
But carbon capture has faced public hostility in Europe, partly because of the perceived risks of carbon leakage. Opposition has been fiercest in Poland and Germany, where protests delayed transposition of the 2011 CCS directive.
An EU report will be published later this year, detailing the number of member states yet to ratify the law into their national statutes.
Environmentalists are also sceptical of the technology’s current widespread use for enhanced oil recovery (EOR), or the pumping of liquefied carbon into depleted oil and gas fields to extract remaining reserves.
Enhanced oil recovery
CCS companies have confirmed to EURACTIV that the practice is currently dominant in the CCS market. But the EU’s draft says explicitly that “EOR can never be the main driver for CCS deployment”.
“EOR is a short-term side issue,” Kumar said. “We only want to use CCS for reducing our climate impact. We are looking at safely storing the CO2, and proving that thre technology works. Then we can sell it to major developing countries like the Chinese and India.”
The EU GeoCapacity project estimates that the continent anyway has geological storage capacity equivalent to 300 billion tonnes available for sequestered CO2, enough to warehouse all Europe’s carbon emissions for decades to come.
For now though, the CCS industry’s first step remains the hardest, with even the EU’s minimal 2007 pledge to have 12 CCS demonstration plants up and running by 2015 acknowledged by the draft as “unrealistic”.
“It will be an even greater challenge to realise a smaller number of projects,” the paper says.