CCS in deep trouble
At the end of 2012, the European Commission had at its disposal €1.2 billion for funding clean-energy projects. The money had come from the auctioning of emission allowances under the European Union’s emissions trading scheme (ETS) – the NER300 programme. But when the deadline came for decisions on which projects would receive money, there was no carbon capture and storage (CCS) scheme among them, because no member state was ready to put up the necessary matching funding for a CCS project that would secure the EU money.
The disappointment in the Commission was enormous. CCS has been feted as a promising means to render conventionally ‘dirty’ hydrocarbon sources of energy environmentally acceptable. But the technology has to be tested and demonstration projects were deemed necessary. The NER300 funding was supposed to deliver them.
The idea behind CCS is that the carbon dioxide emitted when fossil fuels are burnt would be captured, dissolved into liquid and that liquid would be stored underground in what are effectively reservoirs. In some scenarios, the liquid would be pumped into bedrock to replace (even force out) the reserves of oil being extracted.
While there are some CCS projects already working round the world, the demonstration projects would provide much-needed information about the process such as the amount of energy used, the suitability of certain types of rock, and the emissions savings.
Given the difficult economic climate and the straitened public finances in most member states, it is perhaps not surprising that governments are reluctant or unable to put forward public money for the construction of very expensive CCS projects.
Connie Hedegaard, the European commissioner for climate action, is still hoping that further projects may be put forward later in the year. “The good news is that there will be a second chance [for CCS] in the second call of the NER300 programme in December,” she said.
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But there are indications that the Commission believes that the NER300 will need reinforcing.
An internal document leaked from the Commission in January observed that the current low price of carbon is not incentivising development of CCS projects. The carbon price would need to be between €40-€70 per tonne of carbon dioxide to stimulate investment, it concludes. The price is currently less than €5 per tonne.
The document shows that in order to boost development of CCS the Commission is considering mandatory emissions performance standards for the power sector, or a CCS certificate scheme. If a certificate scheme were to be adopted, power plants and fuel suppliers would be required to purchase CCS certificates corresponding to the amount of their emissions and the proceeds used to fund the projects’ development. The leaked paper suggests that the Commission is considering requiring member states that are heavily reliant on coal, such as Poland, to develop national CCS strategies.
All of the scenarios in the Commission’s energy roadmap for 2050 assume that CCS will be implemented in some form or another. One scenario does look at the possibility that the deployment of CCS will be delayed, and suggests greater use of nuclear energy as a solution to bridge the gap. That looks politically improbable at present. Either the roadmap must be re-drawn or the Commission has to get the development of CCS back on track. The fate of CCS will have a big effect on the future use of fossil fuels in Europe.