CCS regulatory developments in the EU

Transcription

1 CCS regulatory developments in the EU Heleen de Coninck IETA event SBSTA May 10th

2 Presentation outline Local risks & global risks Present thinking on EU legislation Present thinking on EU incentivation Conclusions

3 EU safety legislative context has two faces 1. Control of local risks (safety-related) 2. Control of global risks (climate-related)

4 and may links LFC Water Waste EIA Seveso II 1. Control of local risks (safety-related) Mining laws ETS ELD IPPC 2. Control of global risks (climate-related) Climate UNFCCC IPCC

5 EU ETS what it could achieve Regulatory need Risk assessment Risk management Liability Achieved under EU ETS? Baseline survey and leakage risk assessment [partial coverage]: Monitoring scheme design must be site specific and risk-based Monitoring & reporting (M&R): under Art 4-6 (GHG Permit) subject to regulatory approval Impurities: must be monitored [for accounting purposes] Post closure M&R: enforceable so long as GHG permit valid Global risk: Any emissions offset via EU ETS (so long as zero allocation to installation(s)) Liability transfer [partial]: on withdrawal of GHG permit, perhaps not? (Paul Zakkour, 2007)

6 What EIA, IPPC, Seveso, ELD might add Regulatory need Risk assessment & management Enforced closure Verification & assurance Liability Other EU laws EIA: Site selection & characterisation, site-level risk assessment, risk management system, monitoring receptors, pipeline routing IPPC: Technical design standards, monitoring plan, site closure conditions. Trigger enforced closure Seveso II: More detailed risk assessment, emergency planning Three-tier approvals structure in place. EIA: open to consenting at CA discretion may be a need to harmonise with de minimis consenting conditions IPPC: will require a BREF. Seveso II: inclusions is a policy decision IPPC: qualification would trigger ELD. Liability for damage post-closure No financial securities. (Paul Zakkour, 2007)

7 ETS and other EU Directives ETS: Baseline survey and leakage risk assessment, monitoring and reporting guidelines, including impurity and post-closure as long as GHG permit is valid; offsetting of leakage emissions; partial liability transfer EIA: Site selection and characterisation, pipeline routing, risk management IPPC: technical design standards, monitoring, enforced closure, requires BREF document ELD: (triggered by IPPC qualification) Liability for post-closure damage (Paul Zakkour, ERM, 2007)

8 In addition Probably not much added value of waste legislation Waste notification provisions: create a duty of care for producer. But chain of custody already created under EU ETS. Landfill Directive provisions: ambiguity and unsuitable technical standards. Does create requirement for financial securities (Paul Zakkour, 2007)

9 Conclusion ETS, IPPC, EIA and ELD cover a large part of the legislative uncertainties Create stand-alone CCS directive covering the remaining issues But how will CCS be incentivised? (Paul Zakkour, 2007)

10 Market share Appropriate policy for innovation phase? CO 2 transport, EOR Pre/post combustion, gas/oil fields, aquifer storage Commercialisation Oxyfuel, ECBM? Upscaling R&D Demonstration Time

11 EU Emissions Trading Scheme Cost-effective instrument, if strong incentive given However, if EUA prices remain low: - Preference for low-cost abatement options - Innovation market failure - ETS unlikely to lead to CCS deployment Need for complementary policies

12 Complementary policies Public financial support (most likely MS level) - Investment support - Feed-in subsidies - CO 2 price guarantee Low-carbon portfolio standard with tradable certificates (most likely EU level) CCS obligation (EU level) (Public-private partnerships)

13 Member state policies? Investment support Feed-in subsidies CO 2 guarantee Characteristics: - Demonstration/upscaling phase - Environmentally effective - Reduction of financial uncertainty for operator - Possibly high costs - Poor incentive for further innovation or cost reduction

14 EU-level policies? Low-carbon standard: Source minimum % of power from specified sources, tradable certificates Obligation CCS for new fossil-fuel based power plants from 2020 onwards Characteristics: - Environmentally effective - Risk for operator (technological, financial, and availability of storage) - Incentive for further innovation and cost reduction - Standard: complex and administratively challenging

15 Interaction additional incentives ETS Any additional instrument will reduce demand for EUAs and lower CO 2 market price unless cap is lowered accordingly

16 Other interactions Renewable energy: Diversion of resources + attention % renewables contingent on CCS implemented? Innovation: Cost reduction discouraged Portfolio standard, obligation Electricity market: Technical reasons for placing CCS as baseload option, however O&M cost lead to higher electricity price Security of energy supply: CCS only contributes if gas prices spur a shift to coal, and CO 2 prices are high enough for CCS

17 Market share Timing of policies Commercialisation Upscaling R&D Demonstration Time

18 Conclusions EU regulatory framework for CCS seems conceivable by combining existing legislation with stand-alone CCS legislation ETS cost-effective incentive for CO 2 reduction, however market failures and low prices may hinder CCS deployment Additional incentives needed to advance large-scale CCS deployment EU-wide structural policies preferable, possibly complemented by MS policies in demonstration phase Interaction with ETS requires cap adjustment

19 Thank you Heleen de Coninck: