BELLONA CALLS FOR EU-WIDE CCS CERTIFICATE SYSTEM

Tamar Hallerman
GHG Monitor
5/17/13

PITTSBURGH—The best way to accelerate carbon capture and storage deployment in Europe is through the creation of a tradable certificate system, Paal Frisvold, chairman of the environmental group Bellona Europa, said in a speech here at the 12th Annual Carbon Capture, Utilization and Sequestration Conference this week. Frisvold presented a new working paper from the Oslo-based Bellona that aims to “push the restart button” on CCS in Europe. “We propose a pan-European certificate system for CCS-provided electricity that is tradable and flexible so you can complement it well with a cap-and-trade system,” Frisvold said.

Under such a scheme, as outlined by Bellona, the European Union would issue tradable certificates to CCS power plants for the electricity they produce. Utilities would be required to obtain a certain number of certificates for the CO2 they emit, which they could earn by either installing CCS on power generating or industrial units or purchasing credits from other facilities that capture and store their CO2. The 36-page working paper argues that such a certificate system should have a clear, legally-binding target for CCS deployment. The report also calls for additional “targeted support” for CCS from individual European countries that could supplement such a certificate scheme, such as feed-in tariffs, grant schemes, loan guarantees and purchase contracts. “The key goal is to build effective and complimentary incentive frameworks at both the EU and national levels to facilitate the commercial deployment of CCS, allowing the technology to compete with other low-carbon generation,” according to the report.

Frisvold said that current incentive policies in Europe have left CCS as an energy “loser.” “CCS is obviously at a critical stage. It’s a steep curve we’re trying to climb right now,” he said. EU incentive policies to date have focused largely on renewables such as wind, solar and biomass, according to Frisvold. As a result, CCS has been forced to depend on the EU’s emissions trading system to drive deployment, which has led to an anemic market to date, according to the report. “Because the CO2 price in the EU has been much lower than anticipated, the current EU policy framework is not simply trying to pick winners but effectively picking CCS as a loser,” the report says.

CCS in Europe Remains in Flux

Bellona’s working paper comes as EU lawmakers continue to reevaluate the continent’s currently existing CCS incentive policies. That review comes after no large-scale CCS projects received funding during the first round of the European Commission’s clean energy funding competition and carbon prices on the EU’s emissions trading scheme crashed to an all-time low in recent months. The European Commission, the executive arm of the European Union, released a white paper earlier this spring that asks stakeholders for recommendations to incentivize CCS projects. In addition to suggesting a CCS certificate system, the document recommends a European-wide greenhouse gas emissions performance standard for coal plants as a possible policy step forward.

Other European-based organizations have suggested similar solutions to ramp up CCS deployment on the continent and elsewhere. “Our top-ranked action for the next seven years is creating a business case for CCS,” the International Energy Agency’s Juho Lipponen said in a May 15 speech here. The IEA is gearing up to release an updated CCS deployment roadmap in the coming weeks that will also call on governments to create a mix of short- and long-term incentive policies to drive CCS such as grants, feed-in tariffs and production tax credits. “The important message that we want to convey is that this isn’t about CO2 reductions per se, it’s really about technology learning, and that’s why the policies we have in place should reflect that,” Lipponen said.