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Aside from pushing up the carbon price, there are other options open to policymakers to promote CCS, says the industry. “You need to be offering some sort of revenue for electricity generated from a CCS plant, a feed-in tariff just like for renewables”, says Giles Dickson, Vice President for Government Relations at French engineering firm Alstom. The UK is the first EU member state to be introducing such a tariff through its electricity market reform proposed in July. One or two other member states are reportedly also looking into it. A CCS feed-in tariff could be coupled with a deployment target, Dickson adds. This is what Farley argues for. “We need a 2030 [CCS] target and it must not be too modest”, he says. A CCS target could take the form of a percentage of fossil fuel-fired power generation that must be fitted with the technology, for example, or a gCO2 /KWh target. This could prove more palatable than a feed-in tariff, one policymaker suggests. Others, such as Sweeney, argue for a more general decarbonisation target for 2030, without specifying what the contribution of different technologies would be. But economics is only half the story. The other half is public acceptance. And here CCS faces, if possible, an even higher mountain to climb. “If you do not have a reservoir, you do not have a project”, as Sweeney succinctly puts it. He admits that the industry has perhaps underestimated the role of storage so far, to its peril: politics and public opposition have held up the transfer into national law of the EU directive on CO2 storage in Germany. After being rejected by the German parliament’s upper house (the Bundesrat) in September, a proposal is currently being discussed by a Conciliation Committee. A verdict is due by the end of the month. Germany is not the only country to have missed this summer’s deadline for turning the EU directive into national law – only one country, Austria, had done so by early October. The problem for countries that are hosting CCS demonstration projects, like Germany, is that these projects will not be eligible for EU funds if the directive is not transposed. Wolfgang Dirschauer, Head of Climate Policy at Vattenfall Europe, which is the only utility still leading a CCS project in Germany, says: “The transposition has been delayed to the point that we face a situation where the lack of commitment to CCS in German politics endangers our demo project.” Further delay and the shortcomings of the draft law put all EU funds for the project at risk, he adds, because “it might not be feasible any more to comply with the strict EU timeframe for the demo plants.”

A third important question is how to implement CCS in the industrial sector. For industries such as steel, CCS offers the only way of cutting emissions substantially, as they will be required to do. The capture costs could be comparable, if not lower than, for coal, ZEP says. The fact that the EU ETS exempts most industries in Europe from paying for most of their carbon emissions for the time being – out of concern that they might move their production abroad – explains their low interest in CCS so far. But the IEA predicts that by 2050 half of all CCS will be applied in the industrial manufacturing sector. Meanwhile, for the CCS industry the clock is ticking. The Commission says it will issue policy proposals for a fresh push for CCS next year, which will analyse a potential role for targets, and will look at funding to take demonstration projects to completion, and for infrastructure development. Dirschauer says: “If you believe in a Europe entirely relying on nuclear and/or renewables, CCS will not be needed. Otherwise it is a dire necessity. The alternative is: no ambitious climate policy.” The industry is studying options for offshore storage of CO2, as this would probably lead to less public antagonism than onshore. The problem is that offshore storage is more expensive. ZEP is calling for a risk reward mechanism from policymakers to explore deep offshore saline aquifers. Scotland has half of all EU-27 offshore storage capacity, says David Rennie, Director for Oil, Gas, Thermal Generation and CCS at Scottish Enterprise. He says Scotland should start marketing this storage capacity as an asset. 
 One variation on the offshore option is to pump captured CO2 into depleted oil and gas fields for Enhanced Oil Recovery (EOR). This is already done in the US, but has gained little traction in Europe so far, because offshore is more expensive than onshore EOR. But at least one company, 2Co Energy, which is running the Don Valley CCS demonstration project in the UK, is looking into this. Based on the US experience of one of its two co-founders, Gareth Roberts, the company believes it could recover enough oil to generate some £5-6bn in tax revenues for the UK government. This could halve the cost of CCS to the UK, 2Co says, and create jobs and expertise.

Public acceptance is top of the list for the CCS industry right now and it is looking to successful examples, in Spain for example, where local communities have been brought on board through a diligent engagement campaign. A second priority is to develop a transport infrastructure. A consortium of companies and research institutions has just published a detailed report on what it takes to build a European CO2 transport infrastructure, showing that it is technically and economically feasible but difficult to organise. 45


Communications Report 2011