Carbon Capture and Storage – a key path to cutting power sector emissions?

04 December 2007

"Carbon capture and storage - to be or not to be?" EURELECTRIC Secretary-General Hans ten Berge asked some 100 delegates at a EURELECTRIC conference on Carbon Capture and Storage in Brussels on November 29. Fifteen expert speakers and panellists set out the environmental, technical, political, legal, regulatory, financial and competitive issues around this new technology, whose proponents see it as a major solution for enabling continued use of fossil fuels in power generation - and thus helping to ensure energy security - within the carbon-constrained, climate-conscious framework of the coming decades.

By the end of the day, after numerous presentations and votes among the conference delegates had given a generally positive answer to his question, Mr ten Berge was able to announce that he was "very optimistic" that "electricity can be decarbonised" using a broad portfolio of means that includes carbon capture and storage (CCS).

Mr ten Berge referred to EURELECTRIC's recent Role of Electricity project, which showed that it is possible to achieve a 30% reduction in CO2 by 2030 without extensive costs to the economy, on one vital precondition: we must keep open and actively deploy all energy sources and technology options. The Role of Electricity project demonstrates clearly that where certain options are rejected by policymakers, overall "energy and electricity costs will be much more significant".

Participants heard Andy Kelly of Centrica Energy putting CCS into context, exploring how a private company that operates in many markets based on various fuels and technologies manages carbon in the competitive environment. "Managing carbon is much more than simply compliance", Mr Kelly emphasised; carbon prices directly effect everyday operation through the electricity price, which in turn is closely related to the carbon price. In fact, carbon has become a commodity in the market alongside electricity, gas, etc. Given today's significant need for investments in the electricity sector, a key question for a company is determining which fuel and technology to invest in. As combined cycle gas turbine power plants are today the technology of choice, pursuing CCS is, from a competitive point of view, basically "a bet on high gas and carbon prices", Mr Kelly explained.

Piotr Tulej of the European Commission's Directorate-General for Environment brought a new angle on the future of CCS. He revealed that the Commission is expecting to go public with its "green package" - consisting of a set of legislative proposals on renewable energies, emissions trading and carbon capture and storage - on January 23, with a view to guiding the proposals through the EU legislative machine within the lifetime of the current Parliament - ie by spring 2009 - a tight schedule for a two-reading co-decision process, but feasible given the support of the MEPs and the Council of Ministers.

Mr Tulej explained the key features of the planned stand-alone legal framework for the underground storage of carbon dioxide. The audience was particularly interested in hearing that carbon allowances will have to be surrendered by the storage operator should there be any leakage. Mr Tulej explained that there would be no mandatory introduction of carbon capture at power plants at this stage, but all new combustion power plants would have to submit an assessment report to the national authorities when applying for the construction permit, showing they are "capture-ready".

A vote taken among the audience showed around two thirds preferring not to have any legal provisions on mandatory capture-readiness. Delegates were almost unanimous in their belief that state support will be necessary for the demonstration phase (a "flagship programme" of some twelve demonstration plants is being mooted by the EU Zero-Emission Power Plants Platform) and they were similarly convinced that part of the money gathered from auctioning carbon dioxide emissions allowances in the next phase of the European Emissions Trading Scheme (ETS) should be earmarked to support CCS demonstration projects.

A majority of participants believed that the electricity industry has a "moral obligation" to decarbonise electricity production and that the EU should show leadership in carbon abatement even if some key players in the world do not join in the efforts.

During the questions & answers session, some delegates argued that although "all CO2 is the same for the atmosphere", there are essential differences between CO2 reductions through energy efficiency and CO2 captured. With regard to the treatment of the "five energy intensive industries" in Europe under the soon-to-be-revised ETS scheme, Mr Tulej clarified that "no decision has been made yet". Mr Kelly argued that "carbon caps should be visible beyond 2020", as private companies need certainty in the framework rather than in the prices themselves. However, "carbon caps must become increasingly tight in order to reward low carbon technologies", he pointed out.

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