The climate change package finally agreed by the European Council at its meeting on 11-12 December, and approved by the European parliament on 17 December (see this month’s news), managed to incur the wrath of both big coal generators and environmental campaigners – which may mean that as a piece of pragmatic policymaking it was probably pitched at about the right level.
The package fell short of calling for mandatory CCS – by requiring emissions performance standards – but provided derogations for new member states such as Poland with their very high dependence on coal. Greenpeace said the EU was putting “coal ahead of the climate” and commented that “If Europe’s leaders can’t even bring themselves to rule out new coal plants and accept the emissions targets the science is demanding...they shouldn’t have bothered going to Brussels.” RWE was also negative, saying it “reacted with grave concern to the climate package,” but for rather different reasons. On the way the shift to 100% auctioning of emissions allowances for electricity companies by 2020 is being organised, Johannes Lambertz, CEO of RWE Power, said “the EU has failed to create a level playing field and has greatly weakened Germany as a centre of energy production.” Security of supply calls for a diverse energy portfolio and coal is an indispensable part of such a portfolio, he noted, but “the EU has seriously curtailed its prospects” – which is of course the whole idea, it might be reasonably argued.
Despite the urgent need for coal power plant renewal and new build, “RWE expects that several such projects will now have to be set aside and the modernisation of existing plants delayed,” raising the risk of a power generation shortfall and increasing dependence on gas imports, “since the incentive to build gas-fired plants will be all the greater.”
Nevertheless – and even the likes of RWE accepts this – the climate package can be seen as a major boost to the development of carbon capture and storage, providing a much needed funding mechanism for CCS demonstration projects via the allocation and sale of a large tranche of emissions allowances. The amount mentioned in the package, 300 million allowances, is greater than some of the lower figures that have been bandied about in the negotiation process, but not as much as the 500 million called for by the environment committee of European parliament. There is also the problem that, according to the wording of the “final compromise” agreed by the European Council on 11-12 December, the funding is for “innovative carbon capture and storage technologies and renewable energy sources” – ie not just CCS – and “no project shall receive support via this mechanism that exceeds 15% of the total number of allowances available for this purpose.”
However it would appear that the climate package will one way or the other provide some significant funding for CCS demonstration projects and play a major role in kick-starting CCS technology.
And there is certainly no shortage of would-be CCS demonstration projects in Europe now vying for attention – no less than 43 are helpfully listed in a recent report issued by ZEP (European Technology Platform for Zero Emission Fossil Fuel Power Plants), predominantly post combustion scrubbing but also including a smattering of oxyfuel and a few IGCC, including RWE’s Huerth project in Germany, Powerfuel’s Hatfield in the UK, Nuon’s Magnum in the Netherlands and PKE’s proposed Kedzierzyn polygeneration project in Poland – and the prospect of a funding mechanism is likely to encourage more. The challenge is now to become choose a programme of demonstration projects that delivers the best value in terms of contribution to CCS technology development.
Linkedin
