Beginning in 2007 the European Union has tried to make CCS an integral part of EU energy policy. The European Commission's energy strategy published in 2007 recommended developing low-CO2 power generation from fossil fuels by 2020. In 2008 the European Commission adopted this proposal. Since then the ETS 2009 Directive amends the original Trading Scheme to include additional allowances to finance renewable technologies and CCS installations. The CCS Directive 2009 defines a carbon capture readiness policy requiring that new combustion power plants generating over 300 MW need to be built to be CCS-ready. By the end of 2009, six CCS demonstration projects were selected to receive European Energy Recovery Program funds. These include Jaenschwalde, Germany; Porto-Tolle, Italy; Matsvlake,Netherlands; Belchatow, Poland; Compostilla, Spain; and Hatfield, UK.
New focus on CCS
Since then Germany with a high proportion of its electric power generation derived from coal (in 2010 coal accounted for 42 % of Germany’s generation, nuclear energy 23 %, gas 13 % and renewables 17 %) has decided to shut down all of its nuclear power plants by 2022, which suggests a heightened German interest in CCS or at least in new coal plants.
A recent Draft European Commission Communication deals specifically with state aid (subsidies) to CCS-ready power plants. The communication says that state aid to support the construction of highly efficient power plants is acceptable within the EU's competitive market guidelines if that investment aid is granted to projects satisfying several criteria
- the new highly efficient power plant exceeds the current efficiency reference value published by the EC
- the final investment decision to construct the plant is taken 2013 to 2016.
- the aid targets a market failure by having a substantial impact on the environmental protection and that there is reasonable evidence that without the aid the beneficiary would not have undertaken the investment.
- For new highly efficient power plants that are CCS-ready, the aid must not exceed 15 % of the eligible costs.
According to one commentator, the Draft Communication significantly modifies the definition of ‘CCS-ready’. The result is the relaxing of the regulatory requirements because of the slow deployment of CCS technology.
The modification of the definition of the ‘CCS-ready’ means that ‘an installation has demonstrated that suitable storage sites are available, that transport facilities are technically and economically feasible and that it is technically and economically feasible to retrofit for CO2 capture, as soon as sufficient market incentives in the form of a CO2 price threshold are reached.’ It is suggested that the EC believes that the current price for CO2 allowances does not provide sufficient incentives to motivate the deployment of CCS technology.
Germany's response
The German Federal Minister of Economics and Technology has said that the EC has created the necessary conditions for granting up to 15 percent funding for highly efficient power plants as an important political compromise between all stakeholders, but that the commitment "must not now be undermined by making excessive demands on power plants' CCS-capability and their actual use of CCS." He goes on to say in a message that seems to be intended for the governments of the German Länder that it is critical that the implementing CCS Act is passed by the German Bundesrat, because if it isn't "it would be impossible to support and provide appropriate rates of financial assistance to new power plants in Germany. We are reliant upon new power plant capacities due to the accelerated phase-out of nuclear energy and the expanded use of renewable energy."
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