INTERVIEW WITH GRAEME SWEENEY, CHAIR, ZERO EMISSIONS PLATFORM : "WE NEED A ROBUST REVIEW OF DIRECTIVE ON CARBON CAPTURE AND STORAGE".
What are the expectations from the EU in terms of support, especially financial?
The EU's CCS funding instruments like the NER300 [a demonstration programme comprising CCS and RES projects - Ed] have so far had disappointing results. For CCS, some form of directed support will be needed, along with an ambitious milestone providing a clear signal to investors. The Emissions Trading System (ETS) should remain the central tool of the EU's climate policy, providing a predictable and robust carbon price and a long-term driver for CCS. Transitional support measures for CCS are also vital to cover the incremental costs of demonstration and early deployment projects, such as a CCS fund, feed-in premia and, if carefully designed, CCS certificates. A robust review of the CCS directive that removes the unnecessary burdens, risks and uncertainties on storage providers, which are currently hampering investment, is needed. Regarding transport and storage, we need to make sure that up to six storage pilots are in place by 2020, whereby Horizon 2020 funding will be absolutely key. We also strongly encourage the Connecting Europe Facility to issue a call on infrastructure and development in early 2014. As regards funding for CCS, public grants need to cover both capital and operational costs since capital grants alone are not sufficient to incentivise CCS first movers'. In addition, incremental operating costs for CCS will not be covered at low CO2 price levels.
What is the role of CCS in achieving the EU's climate goals, and how should the ETS be reformed according to the ZEP?
CCS can, in principle, reduce the full life cycle CO2 emissions from fossil fuel combustion at power stations and industrial sites by 65-85%. In the power sector alone, CCS must therefore account for 19-32% of total EU emission reductions by 2050, while industrial applications are expected to deliver half of the global emissions reductions required by 2050 from CCS. Due to the economic crisis and the low price of carbon, CCS has not to come to fruition. However, the carbon price is currently too low to provide this signal to investors. Strengthening the ETS through structural reform is therefore urgently required. A tighter cap on the number of emission allowances flowing through the market out to 2030 and beyond would help the ETS reduce emissions costs effectively while triggering investments in low-carbon technologies, such as CCS. However, as a first step, the ZEP supports EU ETS backloading as a temporary, one-off measure as well as the legislative proposal for a market stability reserve.
The UK is granting aid (Peterhead project). Could this be a problem regarding EU state aid regulations?
For CCS to be on a par with other carbon abatement technologies, it needs to be eligible for both investment aid (capex) and operating aid (opex), through for instance feed-in premium or other support schemes. The ZEP also considers that all studies linked to a CCS project qualify for the same aid intensity rate as CCS (100%), as stated in the guidelines, and therefore CCS projects that are an integrated part of the project development should be eligible to 100% state aid support.
Do you think CCS would work in the UK - and why?
By making transparent the financial support available to investors, the UK government has provided clarity on how power plants equipped with CCS would be run in the future. The government is focusing on premium feed-in tariffs based on the contract difference model, whereby providers could receive additional revenue from their sale of electricity at more or less fixed rates for the production of low CO2 electricity, further appealing to investors. Moreover, as recently highlighted by the release of the TUC-CCSA report, CCS can bring thousands of jobs to the UK economy and enhance energy security whilst achieving the lowest-cost climate mitigation. They have estimated 15-30,000 jobs in the UK by 2030.
CCS is said to be expensive - so when could it become competitive?
Once demonstrated at large scale, CCS will be cost-effective and competitive. The following three phases would be the most effective and efficient way to realise CCS in Europe by 2050: a demonstration phase (2015-2020), a pre-commercial deployment phase (2020-2030) and finally commercial deployment (2030-2050).
Which companies are currently involved in CCS projects?
The key players include Alstom, Drax and BOC, which are partnering to take forward the White Rose CCS project. Shell UK Limited and SSE, formerly Scottish and Southern Energy, have partnered to build the Peterhead project. Another company, Gassnova, has been instrumental in several CCS projects in Norway, including the CO2 Technology Centre Mongstad (TCM) and the development of a CCS pilot project at Norcem's cement plant in Brevik.
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|Date:||Mar 26, 2014|
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