Regions in the EU CCS Demonstration Programme?

Jesse Scott, E3G

1 July 2010

What role for CCS in regions’ energy planning?

6-16 CCS demonstration projects (EERP, NER300, UK competition, Netherlands programme)

3 scenarios for the demonstration result:1) CCS technology and storage are a success and can become cost

effective= with a higher carbon price and/or mandation, many commercial

plants will be built/retrofitted2) CCS technology and storage are a success, but very expensive

= CCS is used only for power retrofit (if mandatory), industrial emissions (steel, cement) and biomass

3) CCS technology or storage fail= alternatives are needed

Choices and stakeholder preferences about the balance between CCS and other low-carbon energy sources

Some key questions are becoming clear, even if there is still uncertainty about most of the answers…

Key short-term issues: what to expect at EU-level?

The EU-level has set a target for mass deployment in 2020, but cannot drive forward CCS on its own…

Finance

Regulation

Infrastructure planning

Public opinion

How can regions (efficiently) monitor the proposals and decision process at EU-level and assess what more/less they can ask the EU-level to do to help?

How can regions best contribute their expertise and successfully lobby for their policy preferences?

What finance to expect at EU-level?

Demonstration phase finance (now within the SET-Plan)• NER300 phase I (2011)

– 8 project competition for CCS, includes 2 industrial projects

• NER300 phase II (2012-13)– 100m Allowances, but the Commission has not yet defined the split between

CCS and RES or the project types

Post-demonstration finance• ETS carbon price?

– The current ETS cap is set to decline to zero in 2070, but the EU has a 95% emissions reduction target for 2050…

– Possible ETS revision in light of a proposed move to an EU 30% by 2020 emissions reduction target (October 2010)

• EU Budget (2014-20)– Structural Funds and/or new low-carbon budget lines?

• Budget Review (Autumn 2010)• Commission proposal (Spring 2011)• Member State and European Parliament negotiations (Autumn 2011)

What are the debates and options on regulation?

Implementation of the Geological Storage Directive (June 2011)• Commission draft Guidance documents (June 2010)

– Guidance document 1: CO2 storage life-cycle approach to risk management– Guidance document 2: Specific approaches to key stages of the CO2 storage

life-cycle (Selection of the storage site; Composition of the CO2 stream; Monitoring of the storage site; Corrective measures)

– Guidance Document 3: Transfer of responsibility (Art 18)– Guidance Document 4: Financial security (Art. 19) and financial transfer (Art. 20)– Stakeholder meeting takes place 15 July (registration by 2 July)– Written feedback deadline 30 July

• Debate about the adequacy of CCS Readiness requirements to ensure that current and future site designs do not lock-out retrofit

Options for mandation• EU-level policy debates led by the European Parliament propose 2020

requirement for CCS on all new coal (maybe also gas) and 2025 for retrofit, but there are no definite legislative proposals

– Commission can conduct a CO2 review under Article 73 Integrated Emissions Directive

• UK Emissions Performance Standard requires CCS on all new coal• Land Brandenburg coalition agreement requires CCS on all new coal

= “a level playing field” or lots of diverse experiments?

What EU infrastructure planning to expect?

EU Energy Infrastructure Strategy (Winter 2010)• Main focus on “known needs” of gas and electricity interconnectors/super-

grid…• Commission DG ENERGY (Units B3 and B1) sees CO2 transport needs as

“yet to be defined”, but recognise urgency to scope the issues “in principle” – where will hub-and-spoke or corridor structures be more suitable?

– what common standards?

– what role for the North Sea Basin?

• The role of the SET-Plan European Industrial Initiative on CCS re advising the Commission about infrastructure is yet to be defined, NB SET-Plan debate on Member State clusters…

• ZEP input

Permitting• Mostly decided at regional/local levels

– Brandenburg require 10-15 years between the permit application and starting construction

– Brussels is worried about long delays (Piebalgs)

Public opinion?

So far the EERP and UK projects have encountered diverse public opinion and debates

– safety

– opposition to new infrastructure (also applies to big onshore RES, grid etc)

– opposition to all coal

– opposition to giving public money to wealthy companies

Stance of environmental organisations varies (e.g. Greenpeace UK and Greenpeace International)

1) Arguments about the role of CCS in fossil fuel emissions under climate change are general, not local

– the key issue is not “why CCS?” but “why here under my back yard, why not do it somewhere else?”

– The ideal answer (Yorkshire, Castilla) is that CCS will contribute to the local economy, protecting or creating jobs… but is there any evidence? Could a joint study be undertaken?

2) Maximum transparency– due process and full consultation about costs/benefits

– reassurance that safety problems will not be covered up

– evidence that public money is buying public value

Working together in order to optimise engagement with Brussels

• Opportunity to form a “lead regions group”? Both for engagement toward the EU and joint branding toward the public and industry

• EU engagement– “learning by doing” on a tight timetable, working with numerous processes and actors:

division risks failure through chaos; united you can succeed…– joint thinking and joint positions from the regions will have great value to the EU as providing

“pre-consensus”, and will therefore have big influence– on some issues other stakeholders will also be able to join a pre-consensus (industry,

NGOs)

• Engaging through membership in EU bodies– SET-Plan EII for CCS (with ZEP)– DG ENERGY CCS Network

• Engaging through lobbying toward the EU institutions– Geological Storage Directive (DG CLIMATE)– NER300 Phase II definition (DG CLIMATE and EIB)– EU Energy Infrastructure Package (DG ENERGY)– EU Budget 2014-20 (DGs BUDGET, ENERGY, REGIO, European Parliament)– ETS (DG CLIMATE, European Parliament)– Mandation (DG CLIMATE, European Parliament)

• Lessons from setting up the governance, finance and planning for CCS can provide models for other low-carbon technologies

6 EERP projects + 2 UK FEED projects, of which 5 are around the North Sea… Common challenges and many common interests…