Promoting Innovation through Policies:

The Clean Coal Tech sector in Spain

In-Company Project Final Presentation

ESADE Business School

November 7, 2013 - Barcelona, Spain

Agenda Intro

• The Company • World Energy Outlook • Project Background

3 min.

Methodology 1 min.

Findings 7 min.

Recommendations 7 min.

Conclusion 2 min.

20 min.

The Company

KIC InnoEnergy

“Promote innovation in the field of sustainable energy”

World Energy Outlook 40% of energy demand growth covered by Coal

Project Background

Innovation Drivers

Value Chain

Innovative Procurement

Policy

Policy

Tech.

Market

Methodology

Interview Insights

Qualitative Interviews Secondary Sources

Government Industry

Stakeholders Analysis

8 Findings

9 Interview Insights

4 Recommendations

COAL IS VILIFIED Finding #1

“Coal is Dirty!”

Coal has come a long way

• New technology safer, cleaner

• Environmentally friendly practices

Coal’s bad stigma is outdated

THE RENEWABLES HYPE

Finding #2

A good start, but there’s still work to do

• Ballot-Friendly Topic

• Carbon-Unfriendly World

CO2 Emissions

Energy Mix by World Region Renewables only account for 4.7% of world energy

COAL: A PARTNER IN ENERGY SECURITY

Finding #3

Europe is a net coal-importing region

Spain imports coal despite available local deposits

MtCO2 / year

Top 3 Coal Exporters to Spain

Price of Energy Production: Coal vs. Gas

Coal price: Cheaper and more Stable

CLEAN COAL TECH: NO CLEAR WINNER YET

Finding #4

Main equipment at a Power Plant Many options for retrofitting and modernizing

NOx treatment still expensive

HELE Technologies High-Efficiency and Low-Emissions is possible now

Zero-Emissions, “not viable”. Partial capture, “OK”

CCS Efficiency Penalty: 5 - 10%

NO SPANISH TECHNOLOGY PLAYERS

Finding #5

Major Clean Coal Technology Players

Few Spanish High-Tech firms

Multinationals are preferred because they

can handle financial risk

Unwilling to share name of local partners

POLICY BENCHMARKING: MODERNIZE PLANTS AND INCREASE R&D FUNDING

Finding #6

6 Trends in Clean Coal Policy Power Plants: Build Big and use the Latest Technology

Clean Coal

Policy Trends

Invest more in HELE

technologies R&D projects

Invest more to demonstrate CCS projects

New power plants should

have the latest technology

Favour the instalation of large capacity power plants

Reduce production from small,

old, inefficient power plants

Put market incentives in

place to create the desired

actions

GOVERNMENT FUNDING: CLEAN COAL IS LOST IN THE SHUFFLE

Finding #7

MINETUR Aid Programs 2008-2011 Clean Coal barely makes an appearance

CDTI Approved Projects 2010-2013

• 2,799 approved projects analyzed

• Only 6 related to Clean Coal (<0.3%)

Concerns exist about the process to certify a purchase as “innovative”

Little Innovative Procurement Aid for Clean Coal

PLAN NACIONAL DEL CARBÓN: ALLEVIATING THE SYMPTOMS, NOT CURING THE CAUSE

Finding #8

Plan Nacional del Carbón Aid Less money for the same things

Doubts about how to “enforce” innovative procurement

Results so far: Nothing to smile about

The Spanish Coal Sector is slowly dying

Government must act swiftly if they wish to influence companies decisions

SPECIFIC AID PROGRAMS FOR CLEAN COAL TECH

Recommendation #1

Leveling the playing field for Coal

• Implement Communication campaigns to inform the public of the benefits and role of Coal (Industry & Government)

Increase aid for Clean Coal to reflect its true role

Require companies to specify R&D requirements with time in advance

INNOVATION MUST TAKE PLACE IN THE ENTIRE VALUE CHAIN

Recommendation #2

Coal Sector Value Chain Innovation

Many improvement options lay outside generation

ADD A 4TH “20” TO THE 20/20/20 INITIATIVE: COST

Recommendation #3

Reduce Energy Cost by 20%

• Renewables are still more expensive

• Coal has a strong cost incentive

If Energy Cost is given higher priority, Coal will help

Current initiatives leave out cost from the equation

Emissions by 20%

Renewables to 20%

Energy Efficiency by 20%

Current 20/20/20 Initiative

TRANSITION TOWARDS ALTERNATIVE USES FOR COAL

Recommendation #4

Coal as a transition source of Energy

Emerging Technologies New Technologies allow non-traditional solutions

CO2-to-Plastics

CO2 capture in Concrete

Coal-to-Liquids

CONCLUSION Findings & Recommendations

Coal is not going anywhere

A Change in Paradigm Redefine the problem. It’s not Coal

Shut down inefficient plants

Increase R&D

HELE Technologies CCS Projects

Alternatives uses of Coal CO2-to-Products

Summary of Recommendations

1. Create specific aid programs for Clean Coal

2. Innovate in the entire Clean Coal Value Chain

3. Add a 4th "20" to the 20/20/20 initiative

4. Transition towards alternative uses of coal

Q&A Thank you

Special thanks to: