May 28, 2008
With hundreds of new coal-fired power plants planned within and outside Europe in the coming decades, pressure is growing on the EU to commercialise and export carbon capture and storage (CCS) technologies to prevent a massive rise in global CO2 emissions. But difficult financing issues remain unresolved. EU policymakers and key stakeholders met several times this week (26-30 May) to discuss CCS, including at a 27 May meeting organised by the competition service of the Commission, a 27 May Friends of Europe roundtable and a 28 May workshop organised by UK Liberal MEP Chris Davies.
Davies, who wants all existing fossil fuel power plants to be retrofitted with CO2 capture and storage technology by 2025, is calling for a moratorium on new plant construction after 2015 unless the facilities are able to prevent 90% of their CO2 emissions from entering the atmosphere. The MEP has organised a further workshop in the Parliament devoted to CCS financing on 3 June. But this week’s apparent surge in interest in CCS did not produce any signs of a breakthrough on key financing issues. Instead, the discussions revealed a range of diverging views (see positions).
Despite growing concerns about the impact that run-away CO2 emissions could have on the earth’s climate, most industrialised and rapidly developing countries are building and planning massive investments in new coal-fired power plants, widely considered to be the ‘dirtiest’ producers of electricity.
Germany is planning 20 new plants in the coming decades. And China alone is expected to install 800 gigawatts of new electrical power capacity in the next eight years, and will rely on coal for 90% of that effort, according the International Energy Agency (IEA), which points out that 800 gigawatts is equivalent to all of the power capacity installed in the EU since 1945. In this context, there is a growing chorus of support for CCS as the only option to prevent disastrous climate change fallout as a result of what is being called a global ‘flight to coal’.
Europe leading the way?
Many observers claim Europe should be the leader in developing and commercialising CCS, so that the technology can then be exported to developing states like China and
India. But EU member states have made little progress towards realising their March 2007 pledge to build 10-12 CCS demonstration projects by 2015, with most progress coming from non-EU member Norway, which already has one CCS plant up and running and is constructing a further two. Norway’s Minister of Petroleum and Energy Åslaug Haga and EU Energy Commissioner Andris Piebalgs agreed on 29 May that
Norway’s three CCS projects “could be defined as part of the 12 projects the EU intends to develop in order to prove the viability of this technology”. The announcement was made as part of the energy dialogue between the EU and Norway, which is rich in fossil fuel reserves and is the second largest supplier of oil and gas to the EU.
The money conundrum
While the EU’s budget is ‘locked’ until 2013, there are several ideas about how and by whom CCS could be financed, including:
- Counting the CO2 that is sequestered, or captured, through CCS as double within the EU Emissions Trading Scheme;
- Public financing, possibly by a select group of member states that rely on coal for a large part of their energy mix;
- A special fund with proceeds obtained from CO2 permit auctions in the EU ETS and/or funds diverted from the Common Agricultural Policy (CAP), and;
- Letting industry foot the bill, with the argument that the investment presents a future ‘business opportunity’.
From EurActivAuthor : EMI