Climate votes offer missing piece in Chinese coal puzzle

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MEPs have voted in support of a multi-billion euro fund to drive the construction of CO2 capture and storage demonstration plants. Coal-dependent China is said to be waiting for Europe to move on the issue, but EU governments are yet to formally back the financing plan.

The Parliament’s environment (ENVI) committee yesterday (7 October) supported two separate reports that contain landmark amendments related to the financing and commercial development of CCS technology (EURACTIV 08/10/08).

MEPs endorsed an amendment, tabled by Irish Christian Democrat MEP Avril Doyle, that recommends the free allocation of up to 500 million CO2 emissions allowances to select CCS demonstration plants. The allowances are normally reserved for new entrants to the EU Emissions Trading Scheme (EU ETS).

Equivalent to approximately €10 billion at current carbon market prices, this allowance-based financing scheme was bolstered further when MEPs endorsed a separate amendment that would set a CO2 output limit on power generating facilities. 

The amendment, tabled by UK Liberal MEP Chris Davies in his report on the Commission’s proposal for a legal framework on the geological storage of CO2 in the EU, is meant to oblige power generators to invest in CCS technology to meet the CO2 limit requirements, notably for their coal-fired power stations. 

Coal-fired dragon 

For China, EU efforts to develop commercially viable technologies that can neutralise the CO2 output of coal-fired power stations are of great interest.

China accounted for 40% of the increase in global primary energy demand in 2007, and most of that demand was met with coal, according to BP’s 2008 Statistical Review of world energy, released last week in Brussels.

Most analysts agree that world’s most populous country’s reliance on coal is unlikely to decrease in the foreseeable future. Beijing has few alternatives for meeting the challenge of constantly rising domestic energy demand that results from continued high levels of annual GDP growth, says Fabian Zuleeg, senior policy analyst at the European Policy Centre in Brussels.

But the continued burning of coal is having a tremendous impact on the climate and on the environment, both within China and globally. Decreased run-off from Himalayan glaciers, coupled with higher water demand, has led to annual declines in water levels in key rivers like the Yangtze, which acts as the lifeblood of millions of Chinese. 

Chinese leaders are taking the problem seriously and are “very willing” to reduce the CO2 impact of their economy, Doyle told journalists in Brussels yesterday. Beijing has also been pressing EU leaders to provide clearer answers on when and how the 10-12 CCS demonstration plants will be completed, she said.

Crunch time

Whether the Council will endorse the Doyle-Davies amendments on CCS as part of an eventual deal on the climate package before the end of the year remains to be seen. But EU countries should either back the Parliament on the issue or propose a realistic alternative, says Davies, who yesterday challenged the Council to “match fine words with some good deeds”.  

 

Carbon capture and storage (CCS) is a process involving the separation of carbon dioxide from the gases produced by large stationary power plants. The CO2 is then compressed, transported and stored in geological formations, either on land or in the ocean (see EURACTIV LinksDossier).

The Commission backs CCS as an essential part of its CO2 reduction efforts and put forward a Communication on a legal framework for storing CO2 as part of its climate and energy package of 23 January. In March 2007, EU member states also pledged to get 10-12 CCS demonstration plants up and running by 2015.

But CCS technology is expensive and decreases the average efficiency of power plants by up to 20%. Neither member states, the Commission nor the private sector have thus far pledged any significant funding to drive the development of the demonstration plants.

A number of EU countries, including new member states like Poland, remain heavily dependent on coal for power generation.

  • End 2008: The Council, Parliament and Commission to negotiate a deal on the climate package;
  • March 2009: End of Parliament's legislature and alternative date for finalising the climate package;
  • 2015: Deadline for completion of 10-12 CCS demonstration plants.

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