10/06/2008 - Brussels CCS Communication « Supporting Early Demonstration of Sustainable Power Generation From Fossil Fuels » Krzysztof BOLESTA Policy Officer.

10/06/2008 - Brussels

CCS Communication

« Supporting Early Demonstration of Sustainable Power Generation From Fossil Fuels »

Krzysztof BOLESTAPolicy Officer - Coal and Oil UnitEuropean Commission

EUROPEANCOMMISSION

| 2CCS COMMUNICATION

Content

.EU Policy Context: Energy and Climate Change

.Deploying CCS in Europe» Legislative Framework» Long Term Economic Viability

.Financing CCS demonstration projects

.Polish case


Background

. The use of fossil fuels in power generation leads to approximately 40% of all CO2 emissions in the EU

. Fossil fuels will remain important part of the EU and global energy mix but solutions addressing carbon footprint needed

.CO2 Capture and Storage – obvious choice. Technology present – but not scale

.With large scale demonstration CCS economically viable in 10-15 years + learning curve cutting costs in half


Story so far

. 2007 Spring European Council» target of 20% cut in greenhouse gas emission by 2020» enabling low-CO2 power generation from fossil fuels by

2020» up to 12 CCS demonstration plants in operation by 2015

. November 2007: Strategic Energy Technology Plan» R&D efforts to focus on low carbon technologies » CCS one of strategic technologies: large-scale demos

next priority

. 23 January 2008: Commission adopts a set of proposals including the CCS Communication and the CCS Directive


Policy goal

.Policy goal = CCS commercially feasible by 2020: » CCS in retrofits and newly build thereafter» capture-readiness in the meantime

.Delay of demonstration by 7 years would mean extra 90 Gt of CO2 emitted globally by 2050


Costs and benefits of CCS

.Costs:» R&D (€1bn) and demonstration (€10-20bn) by 2020» Further investment to roll out CCS on a wide-scale

.Benefits:» 20-28% of the achievable global CO2 emission reductions by

2050 (IEA) » solution for both power generation and energy intensive

industries» for managing future CO2 emissions of dynamically developing

coal users (China, etc.)» Keeping coal in energy mix


Obstacles / EC Proposals

.Legislative Hurdles• CCS Directive

.Non legislative Hurdles» Long term economic viability

» Industrial Scale CCS Demonstration Projects (all main technology routes (Pre-, Post-, Oxyfuel-Combustion))

» General and Industry Awareness » Public Acceptance


CCS-Directive - 1

. Enabling Framework» Member States determine whether and where CCS will happen» Companies decide whether to use CCS on the basis of conditions in the carbon

market

. Objectives and Principles» Legislative Framework for managing environmental risks» Overcame existing legal barriers» Use existing frameworks where possible

. Focus on Storage» Capture regulated under IPPC Directive » Transport regulated as for natural gas transport (by Environmental Impact

Assessment and at Member state Level)

. Novel element is CO2 storage, main focus of proposes directive


CCS Directive - 2

. Content» Site Selection» Authorisation for Storage » Monitoring plan to confirm expected CO2 behaviour» Liability measures in case sites do leak» Transfer of Responsibility to the state» Access for third parties

. CCS-not mandatory, but member states need to » assure, that enough space is available on site to retrofit

plant with capturing and compression facilities» verify, if storage capacities and transport facilities are

available and retrofitting is technological feasible • CAPTURE READINESS



.Legislative Hurdles• CCS Directive


• Emission Trading System (ETS)




EU Emission Trading System

. ETS Phase III proposal» from 2013 full auctioning of CO2 certificates for the power sector

. CCS under the ETS: » CO2 captured, transported and safely stored considered as not emitted» no allocation to capture, transport and storage» ETS allowances must be surrendered for any leakage» monitoring and reporting guidelines under preparation

. ETS auctioning revenues » major potential source of funding for CCS demonstration projects» EC suggestion: 20% earmarking to low-CO2 technologies


Economic viability of CCS under ETS

Additional Cost for CCS, per ton CO2

time20202013

50

AverageAvoidance costs

CertificatePrice

2015



. Legislative Hurdles• CCS Directive


• Emission Trading System (ETS)



• CCS Communication


CCS Communication Key Points

.Demonstration in power generation - next milestone

.Outline of initiatives to stimulate early large-scale CCS demonstration projects:

» EU structure to support CCS demonstration projects

» catalyzing the finance for CCS demonstration• industry commitment• Member States’ involvement• EU-level financing

» preparing infrastructure needed for wide-scale deployment


EU structure to stimulate demonstration of CCS power plants

.SET-Plan: proposes European Industry Initiatives (EII) in technologies needed for a decarbonized baseload

.Commission action:

» proposes launching EII on CCS

» will launch a support action under FP7 to establish « project network »



.Added value to the first movers: » Coordination of demonstration projects» Exchange of information and experience» Identification of best practises» European logo / market brand» Consulting services» Taking care of public acceptance» International cooperation



.Timeframe

» Call for tender to be published: June 2008» Deadline for submission: Early fall 2008» Project network start: 01/01/2009



Closing the gap in CCS financing

» Industrial commitments• ETP-ZEP: commitment to spend ca. € 11.5 bn• still needed: clear, early and decisive commitments by

individual players to concrete large-scale demonstration

» Member States’ involvement• MS-level crucial given budgetary reality and size of

challenge• Commission guidelines facilitate state aid to CCS• ETS revenues + structural policies hinted as suitable

» EU-level financing• FP7 + EU structural funds• EU financial institutions for specialized cases• Communication on financing low-carbon technologies


Early start to infrastructure for wide-scale deployment

.New infrastructure

» storage of CO2» transport of CO2» linking of emission and storage sites

• Study will be prepared in 2008/2009

.European dimension of networks

» revision of TEN-E guidelines to include CO2 infrastructure


King Coal

Fuel mix of power sector by (%)

0

10

20

30

40

50

60

70

80

90

100

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ia

Po

lan

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Gre

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Cze

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ark

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lan

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Sp

ain

Fin

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ly

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Sw

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Cy

pru

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La

tvia

Lit

hu

an

ia

Lu

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mb

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Ma

lta

Other fuels

Renewables

Nuclear

Natural Gas

Oil

Coal or Lignite

No other large country is so dependent on coal for its power generation.


New capacity needed vs. climate goals

Capacity deficit risk* (GW)

Capacity deficit

26,2

26,225,9 27,0

26,1

27,3

26,5

26,0

25,1

28,3

2008 2009 2010 2011 2012

* Comparison of peak electricity demand and net peak capacity of system power plants and CHP units

0%

10%

20%

30%

40%

50%

60%

70% Reserve margin in the national energy system

31.12.2007 1.1. 2008 2.1. 2008 3.1. 2008

Reserve below safe margin


Taking advantage of Polish coal resources constitutes a major energy security issue

Covering the missing part of electric output while staying in tune with EU zero-emission trend

Investing in sustainable coal technologies for power generation

CCS in Poland…… a must !

Energy security

The challenge

The solution

6,74,5

3,32,0

3,9

7,5

Poland Germany CzechRepublic

Greece Hungary Bulgaria

Proved recoverable coal reserves, bn t

Polish coal reserves are the largest in the EU


Object /Subsidy needed for:

Investment cost € Mio

Capacity On stream?

1.Polygeneration IGCC plant (ZAK+Blachownia)

825 180MW 2015

2. Supercritical unit with CCS applied (PGE)

350 858MW 2014

Main Polish CCS projects


Conclusions

.To prove CCS economically viable by 2020 we need demonstration asap

.Common efforts of the EU institutions, MS and industry essential (legislation and financing)

.Poland and Silesia in particular exceptionally placed to lead the next industrial revolution


Thank you for your attention !

10/06/2008 - Brussels CCS Communication « Supporting Early Demonstration of Sustainable Power Generation From Fossil Fuels » Krzysztof BOLESTA Policy Officer.

Documents

ccs communicationbackground

ccs communicationstory

ccs communicationcosts

ccs demonstration plants

ccs communicationccsdirective

ccs communicationccs

climate changedeploying

low carbon technologies