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FREEZING CLIMATE CHANGE
WWF POSITION STATEMENT – EU CLIMATE & ENERGY PACKAGE
WWF briefing on the EU’s
Carbon Capture and Storage legislative proposal
November 2008
This briefing summarises WWF’s
response to the 2008 Commission’s
legislative proposal, the debate of
the EU parliament with the Council
on Carbon Capture and Storage
(CCS)
and
related
questions.
background facts on
the threats to the
climate of emissions
from unabated coal
burn
“If we burn most of the available coal
without CO2 capture, even with the lowest
estimates of available coal reserves, it
will be impractical if not impossible to
avoid passing climate tipping points
with
disastrous
consequences.”1
“The European Union relies heavily on
coal. Solid fossil fuels, i.e predominantly
coal, presently account for approximately
18% of all energy consumption and
around 30% of electricity consumption”2.
In
addition
coal
is
responsible
for about 60% of all conventional
fossil fuel power generation in EU3.
Almost half of all coal (about 120 million
tons of oil equivalent) burned in the EU
is imported from countries outside of
Europe. In addition, the importation of
coal is growing as is the global price of
coal. For example today with the price
around $US 60/ton the EU is paying
about twice as much for imported
coal than it was a few years ago4.
“In the EU27, around 950 million
tons of CO2 were emitted from
coal-fired power stations in 2005.
This represents […..] 24% of EU
CO2 emissions across all sectors”5.
Because of the comparably low
generation costs and in the absence of
strong coal-containment policies, the IEA
‘reference scenario’ estimates overall
new-build power capacity additions
in the EU to be around 870 GigaWatt
(GW) between today and 2030. Much of
this would replace existing and ageing
power capacity and under this scenario
much of it would be coal. This compares
to about 730 GW electric capacity in
the EU 27 today. In other words, in
about 25 years the EU27 could turn
over almost its entire power capacity.
This new capacity would require almost
€1.5 trillion of investment, equivalent
to 13% of the annual GDP of the EU6.
If only one quarter of those projected
new power stations were to be coalbased without CCS and considering
the life-time of new plants of at least
40 years Europe will have find it very
difficult to achieve its long-term climate
goals of cutting emissions by more than
50% below 1990 levels by mid century.
There is almost 200GW of coal fired
capacity in the EU27 today. According
to Prognos, about three quarters of this
capacity is over 25 years old and one
third will be replaced (likely with unabated
coal) between now and 2015, with
another 50 GW being replaced by 20257
WWF European Policy Office
168 avenue de Tervurenlaan Box 20
B-1150 Brussels
Hansen, J. (2007). Letter to Gordon Brown from Jim Hansen, NASA Goddard Institute for Space Studies
EU Commission I (2007): Commission Staff Working Document – Impact Assessment for the Commission Communication on “Sustainable
Power Generation from fossil fuels: Aiming for near Zero emissions from coal after 2020”
3
DG TREN (2007): EU Energy and Transport in Figures
4
EU Commission II (2007): Commission Staff Working Document – EU Energy Policy Data
5
see: EU Commission I (2007)
6
IEA (2006): World Energy Outlook 2006
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Prognos AG (2006): The future of coal, Part 1
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2
Tel: +32 2 743 88 00
Fax: +32 2 743 88 19
E-mail: [email protected]
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1
Average CO2 emissions from existing unabated
coal fired power stations in EU (>1000g CO2/
kWh)8 and of new coal-fired power stations (680
– 900gCO2/kWh) could be reduced to 90 – 150
gCO2/kWh with effective CCS9. Indeed retrofitting
all existing coal-fired power stations in the EU with
CCS based on unabated emission levels could
reduce European CO2 emissions by about 20%.
In addition carbon capture technologies are likely
to substantially reduce conventional air pollution
(e.g. sulphur dioxide) by 80 – 90% and subsequent
health impacts compared to a normal coal fired
power station that is already subject to mandatory
flue gas desulfurization requirements in EU10.
In other words, given that developed nations need
to reduce their emissions by up to 95% by 205011 in
order to play their fair role in keeping global average
temperature rise well below 2 degree global warming
- the EU cannot allow a single new coal-fired power
station to be built that is not fitted with functioning
carbon capture and storage from the outset. However,
provided current gas price hikes and debates on
import dependency for gas remain, and as natural
gas exploration (similar to oil) is likely to peak in a
few years, the default choice of conventional fuel
will unfortunately be coal. Indeed this has been
signaled by Denmark who recently withdraw its
moratorium on building new coal power stations.
This intention to return to coal burn is particularly
alarming from a climate change perspective. Much
of this resurgence of unabated coal in particular is
being justified on the grounds that new stations will
by “carbon capture ready” at some point in the future.
However, in practice this claim is rarely backed up
by any substantive technical, financial or regulatory
commitments, with no guarantees over when, if at all,
CCS would be fitted. Any decision or lack of intervention
that allows the build of new unabated coal-fired plants in
the EU, with only vague promises of “CCS readiness”,
would in fact lock the EU into yet more carbon-intensive
energy infrastructure. Moreover, it would send a
worrying signal to the rest of the world that the use of
unabated coal is acceptable in a carbon-constrained
world and in a post-2012 global deal attempting
to avert dangerous man-made climate change.
WWF urges all policy makers to
effectively legislate a moratorium
on new unabated coal fired power
stations in order to prevent high
carbon emitting business-as-usual coal.
•
Coal and the urgency of addressing climate change
To prevent catastrophic climate change we must
keep the global average temperature rise compared
to pre-industrial temperatures as far below 2 degrees
centigrade as possible. To have a high chance of doing
so the latest Intergovernmental Panel on Climate Change
(IPCC) Assessment report suggests that industrialized
countries should take on domestic greenhouse gas
reduction targets of between 25% and 40% below 1990
levels by 2020. The purchase of carbon offset credits
from developing countries such as those generated
via the CDM should be in addition to and not instead
of domestic GHG emissions reductions in line with the
range given above. Indeed, this 25-40% range was
endorsed by all EU Member States at the international
climate conference in Bali at the end of 2007.
In line with staying below 2 degrees the IPCC also showed
that global emissions need to be reduced to around zero
well before to the end of the century. This means that
industrialized countries including the EU need to achieve
this objective of zero-emissions by around 2050 or earlier.
At present the power sector is responsible for an
estimated 37% of global energy-related CO2 emissions
and for a similar share in the EU, with most of this
from burning coal. WWF is working to ensure the EU
power sector becomes largely decarbonised well
before 2050 and to ensure a downward trajectory in
CO2 emissions such that there is a significant cut
in emissions by 2020. We consider that this must be
done without resorting to nuclear power, which we
regard as a fundamentally unsustainable technology.
As studies have shown, prioritising decarbonisation of
the power sector is the most effective way of reducing
carbon emissions from any given industrialised nation.
Like any infrastructure change and development,
cleaning up the EU power sector and energy system is
see: EU Commission (2007); if including heat production from coal, overall average is 0.8 kgCO2/kWh (IEA, 2007: CO2 Emissions From Fossil Fuels)
IPCC (2006): Technical Summary, IPCC Special Report on Carbon Capture and Storage
Rubin, Rao & Chen (2005): quoted by Commission (2007), as above.
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Declaration on Climate Change (2008): 1st SA-EU Summit 25 July 2008, Bordeaux, France
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FREEZING CLIMATE CHANGE
going to cost money, be it new investments required
for research and development, capital and operational
costs. However, the more money governments,
industry and citizens invest today, the cheaper it will
be to tackle climate change than if we delay action and
put off the investments required into the alternative
technologies, such as renewables, energy demand
reduction, combined heat and power and CCS. The
costs of inaction far outweigh the costs of action.
THE CCS DIRECTIVE AND LOW-CARBON
DEVELOPMENT
•
Carbon Capture Storage (CCS) - legislative proposal
WWF is strongly supportive of the EU Commission’s
proposals for additional support mechanisms for
CCS, Renewable Energy and Energy Efficiency which
sit alongside the EU Emissions Trading Scheme
(EU ETS). There is no tension between the different
regulatory approaches. These proposals recognize
that the carbon price won’t be high enough to deliver
investment in the low carbon choices in the power
sector in time to avoid dangerous climate change (this
requires that emissions peak and start to decline in
the next 10 years). However, although we welcome
the proposals on CCS announced by the Commission
earlier this year WWF believe they don’t go far enough
and need strengthening. In addition, although WWF
believes that it will be necessary to retrofit all existing
conventional coal and probably gas-fired stations with
CCS in the next decade, CCS for new-built coal is only
one option out of many others when planning new
capacity. Priority should be given to highly-efficient gas
fuelled combined heat and power plants, renewable
energy and demand side energy saving options.
In light of this WWF’s priority recommendations to strengthen the CCS legislative proposals
are as follows:
•
Immediately set a general emission performance standard (EPS) for all new electricity
and heat producing plants, and by no later than 2020 for all existing generation units at
350g CO2/kWh12. This legally binding limit would provide a level-playing field for all actors.
Those who could not comply with the proposed EPS would need to either invest in other
generation technologies or foster demand-side options. Old installations would have to
be closed unless by 2020, at the latest, they were fitted with CCS. Other CO2 emission
limits for the EPS such as those proposed by the European Parliament of 400g or 500 g
CO2/kWh are too high as they would allow some oil and inefficient natural gas powered
stations.
•
The proposed EPS should be reviewed regularly in light of the best available science and
over time strengthened towards <150 g CO2/kWh13.
•
The EPS must be introduced as a non-tradable CO2 emission standard for each power
station individually independent of size and age. Co-firing of biomass in coal-fired power
stations can account for meeting the objectives under the EU renewable energy obligations
but its gross emissions to the atmosphere must still be accounted for.
•
The proposed EPS alongside a regular review should also be introduced for other nonenergy producing large point polluters such as steel smelters, cement and clinker production
and also other energy-intensive installations which are covered under the EU ETS.
350 g CO2/kWh as a limit will not allow any coal power electricity (and heat) production unless CCS is applied but will allow for highly efficient natural gas and combined heat and power
(IPCC, WG III, ‘Energy’; 2007://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-chapter13.pdf). Current utilities’ coal-based electricity and heat production in EU 27 is about 808 g
CO2/ kWh (IEA, 2007).
13
Carbon capture technologies may allow for residual emissions of between 40 – 150 g CO2/kWh for both modern natural gas and modern coal-fired power stations (IPCC, 2006; Special
Report on CCS).
12
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In light of this WWF’s priority recommendations to strengthen the CCS legislative proposals
are as follows:
•
‘Early auctioning’ by Member States of an earmarked part of the pollution permits under
the EU ETS the revenues from which should feed into a fund for the financing of welldefined pilot and research and development CCS technologies both inside and outside
EU14. In this respect WWF rejects allocating free emissions credits worth about €10 billion
for CCS activities from the EU ETS new entrants reserves as proposed by the European
Parliament.
•
Analysis and identification by independent scientific institutions of: a) those CCS
technologies that need the financial support for pilots in the EU from revenues from the
‘Early auctioning’ process and b) CCS support needed for developing coal-rich nations
from the revenues from the general auctioning of EU ETS allowances.
•
Public financing only for the adequate selection, monitoring and scientific oversight of the
carbon storage sites.
•
Public co-financing together with private industrial capital for the publicly controlled and
infrastructure needed to transport CO215.
•
No public financing for fossil-fuel-based carbon capture as this is an industrial activity
and should be mandatory for all power stations that cannot meet the proposed EPS. An
exception should be made with emissions captured from burning biomass. Here, public
support may be necessary as this contributes not to low-carbon but negative carbon
emissions.
•
Mandatory permanent (‘in time’) monitoring for all storage sites to ensure the geological
storage of CO2 is safe and permanent, plus binding remediation plans in case of leakage
and possible closure in case of non-compliance.
•
Public consultation at EU and Member State levels on the role of coal for electricity generation (if any) given the near and long-term future of the EU will be carbon-constrained and
also the delivery of the new EU 2020 20% Renewable Energy target.
•
Mandatory assessment, before building any new fossil fuel power plant, of the potential for
other ways to meet energy needs - via demand side measures, supply efficiency (such as
combined heat and power) and renewable energy.
Standards?
close down as they would become uneconomic.
WWF strongly supports the principal of a ‘technologyneutral’ cap and trade regime as embedded in the
EU ETS. In principal a strong cap on large point
polluters such as coal fired power stations should
deliver the right incentives to make them cleaner,
for investment that replaces carbon-intensive power
generation and industrial production or for them to
However, the current Commission proposal on how the
EU ETS will be revised post 2012 is extremely unlikely
to deliver the right incentives to stop the move to new
unabated coal power. This is because the level of the
cap proposed combined with the level of ‘flexibility’
companies will have to purchase CDM credits in
conjunction with the perceived CO2 price of €39/t CO2
Why
Emissions
Performance
Such a “CCS development fund” from earmarked auctioning revenues which was administered by the Commission or another neutral body is a much better instrument to support CCS
development and preparation for the market than the proposed free allowances for the various CCS-promoting industrial actors from the EU ETS new entrant reserve. The former option
allows for clear and transparent definition as to which technologies are funded where and who is the beneficiary whereas the latter option blows an unnecessary hole into the architecture of
the EU ETS and paves the way for all kind of other low-carbon technologies to also benefit from this kind of preferential treatment. Also, the fund-option contains the ‘polluter-pays’ principal
– important for the political hygiene of the EU ETS and overall societal CCS acceptance.
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This is to avoid that a new potential “CO2 grid” is monopolized by a few early incumbents of the CO2 transport infrastructure and keep out industrial CCS newcomers.
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FREEZING CLIMATE CHANGE
by Commission will likely not trigger investments into
CCS. Various estimates of different CCS technology
component costs at the point of commercialisation
vary from well below €50/t CO2 to over €100/t CO2.
One may question the motivation for some of these
likely inflated price estimates by industrial ETS actors
but the fact remains that the current proposal of the
EU ETS will not challenge unabated coal in a robust
way that will allow the EU to take the lead globally
in helping to decarbonise the power sector as rapidly
as possible. In this respect the proposed EPS is a
necessary band aid for the EU ETS as long as emission
caps are not set sufficiently to stop unabated coal.
WWF’s assessment of the CCS proposal from the EU Commission is as follows:
Good:
Bad:
√ Relatively solid legal framework for dealing with
the technicalities of CCS storage and liability.
√ Plan for 12 demonstration projects.
√ EU ETS allowances must be surrendered if any
leakage of CO2 from CCS occurs.
√ Financial provisions for liability.
X: No mandatory cap on emissions from new
fossil fuel power plants.
X: No retrofitting of CCS to highly polluting old
power stations.
X: No mandatory, independent verification of
storage safety.
X: No independent public funding for selection,
oversight and monitoring of carbon storage.
X: No mention of strong legal provisions in the
EU’s current definition of ‘CCS ready’ (only land
and engineering issues are included).
X: No support for individual components or full
chain of CCS technologies in coal-rich developing
countries.
X: No prioritization/differentiation of the 12
demonstration projects regarding technology
needs.
There are several different ways in which
governments and industry can deal with coal burn
and the CO2 pollution it is responsible for. To date
few countries and states have already adopted
practical policies to tackle coal in this critical
period before CCS is demonstrated. For example:
•
•
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Norway does not allow any new conventional
fossil fuel (including gas) power stations onto
the grid without CCS, and New Zealand has
a moratorium on new fossil fuel plants. The
current UK Labour Government also has
experience of introducing moratoria in the power
sector. When they were elected in 2007 they
introduced a moratorium on new gas-fired power
stations in order to protect UK coal interests.
The State of California has adopted a minimum
CO2 emission performance standard for
every significant new power plant investment
of 500gCO2/kWh16. Although the limit on
emissions is too high in WWF’s view, the socalled ‘California Standard’ works with market
dynamics as it allows the market to choose which
technology to deploy, it encourages investment
in CCS, renewables and CHP and discourages
unabated coal. It also works alongside cap and
trade, energy efficiency and renewables targets.
Overall it sets a clear framework that makes a
carbon choice, but avoids specific technology
choices. A similar proposal has been made by
the opposition Conservative Party in the UK.
•
A strong minority of >130 parliamentarians
supported an EPS of 350gCO2/kWh for all new
build power stations in the EU in the context of
http://docs.cpuc.ca.gov/published/FINAL_DECISION/64074.htm
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the debate on the Liberalisation of the
Electricity and Gas Markets in the European
parliament in spring 2008. Amendments to
the proposed new CCS Directive to include
an EPS were also tabled by the parliament’s
Environment Committee. Indeed in the vote
by Committee on this Directive in October
2008 MEPs voted to support an EPS of
500gCO2/kWh which would apply to all
new plant from 2015. Support for an EPS
of 450gCO2/kWh was narrowly missed with
29 MEPs voting for this and 31 against. The
rapporteur of the CCS Directive is a strong
supporter of an EPS and it is hoped that the
urgency of the climate problem will lead the
EU Parliament and eventually the Council to
endorse a pollution limit of 350gCO2/kWh.
•
In a similar vein the EU Large
Combustion Plant Directive (LCPD)
was introduced to deal with air pollution
from sulphur dioxide and nitrous
oxide emissions from power stations
but excluded carbon dioxide. It set a
standard for power stations to meet and
a timetable for closure if they chose not
to meet the standard (opting in or opting
out). The legislation principle could be
extended to CO2 emissions. However,
important lessons need to be learnt
by the EU if it were to agree on such
a CO2 pollution limit under the CCS
Directive (or any other legislative piece
in the EU) so that power companies and
Governments are not again able to delay
decisions and allow weak enforcement.
WWF believes the introduction
of an EPS is an urgent priority
for the EU and all its Member
States. It would work with the
energy and carbon markets, and
act as a backstop to make sure
the EU does not forget the real
world science and imperatives
of climate change mitigation
in the effort to have a more
elegant policy mechanism.
•
Additional requirements for the power
sector in the context of CCS installment
1. Strategic Environmental and Economic
Assessments
There needs to be a mandatory assessment,
before building any new fossil fuel power
plant, of the potential for other ways to
meet energy needs – e.g. via demand side
measures, supply efficiency (such as CHP)
and renewable energy. WWF believes
the Strategic Environmental Assessment
(SEA) Directive and SEA’s themselves
are a very useful tool. We consider a new
fleet of unabated coal-fired power stations
in EU Member States would warrant
application of a full-scale SEA. WWF
believes such a mandatory assessment
must be carried out before building any
new fossil-fueled power plant in the EU.
2. Selection of CCS pilot financing
A source of some public funding certainly
should come from the revenues that will
accrue to governments from the auctioning
of pollution allowances in the EU ETS.
In the context of the 12 (or more) CCS
demonstration plants, the EU needs to
prioritize and select key CCS technologies
for financial research and development
support from the revenues of the auctioning
of the pollution permits from the EU
ETS including innovative post- and precombustion technologies, biomass CCS,
transport and regional storage options.
Moreover, WWF strongly urges the EU to
embrace financial support for all industrial
CCS components in carbon-rich developing
countries including through technical
support for geological carbon storage
surveys in regions including the OPEC
Middle East, China, India and South Africa.
FOR FURTHER INFORMATION:
Delia Villagrasa
EU Climate Project Coordinator
WWF European Policy Office
Tel: +32 2 740 09 35
E-mail: [email protected]
www.panda.org/eu