EU CONSIDERING MEASURES TO REQUIRE CCS ON ALL NEW COAL PLANTS

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15 january 2013

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EU considers carbon capture laws: draft

Susanna Twindale

Point Carbon - 15.01.13

LONDON, Jan 15 (Reuters Point Carbon) - The EU is considering passing laws setting emission performance standards for new power plants and factories or forcing firms to bury CO2 emissions underground, documents showed on Tuesday, after existing efforts failed to spur investment in carbon capture and storage (CCS) projects.

The draft EU Commission communication, seen by Reuters Point Carbon, said regulation is required to give investors the certainty needed to pump the hundreds of millions of euros worth of investment into CCS schemes that the violate carbon market has so far been unable to provide.

“With (carbon) prices well below the estimated necessary 40-70 euros/tonne carbon dioxide (CO2), and without any other legal constraint or incentive, there is no rationale for economic operators to invest in CCS,” the draft public consultation document said.

The draft proposes sector-specific emission performance standards limiting CO2 emissions per unit of electricity production.

Alternatively, the EU should create a scheme forcing companies to surrender CCS certificates against a portion of their carbon dioxide emissions, allowing early movers in the technology to profit from selling the excess certificates resulting from the companies burying their emissions, the draft said.

To make sure the system does not distort the function of the EU Emissions Trading Scheme, each CCS certificate “would have its equivalent in ETS allowances, which should therefore be withdrawn from the market,” the document said, without suggesting any numbers.

CCS FUNDING SCHEME

The EU Commission last year failed to provide funding to a single carbon capture and storage project, despite setting aside cash from selling 200 million carbon permits in the EU Emissions Trading Scheme.

The money was earmarked to fund at least eight projects, but the Commission raised just 1.5 billion euros - around a quarter of original estimates - after carbon prices collapsed due to a weaker economy.

Lawmakers said this new proposal is designed to rectify the failure of the CCS competition, which they blamed on a lack of willingness by member states to help shoulder the cost of getting the pilot projects off the ground.

“There is a real danger that we could end up with no CCS at all, so the Commission is exploring regulatory options,” MEP Chris Davis told Reuters Point Carbon.

“The proposal is a good thing because once the NER 300 is gone there is no specific subsidy for CCS and a regulatory approach may be the only way forward,” he added.

Davies said the idea of CCS certificates could be a success if it incorporates a provision for effort-sharing, so countries unable to fund schemes in their own regions could earn certificates for contributing financially to projects abroad.

If approved, the paper would require the Commission to prepare an impact assessment and legislative proposals so it could come into effect by 2020.

COAL-HUNGRY

However it is likely to face opposition, notably from coal-hungry member states such as Poland, Davies said.

CCS technology, which captures and stores pollution undergound, is seen both as vital in the fight against climate change and as key in the EU’s goal to cut emissions by 80 percent below 1990 levels by mid-century.

In November, the International Energy Association said CCS could account for 12 percent of emission reductions that scientists said are needed by 2035 to prevent the earth from warming to catastrophic levels.


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