New Report Sets Out What European Union Must Do To Encourage Take Up of Carbon Capture and Sequestration

The European Union, which has enacted legislation mandating a reduction (across the whole of the EU) of greenhouse gas emissions by 20 percent by 2020 based on 1990 levels, must invest more public money for developing carbon capture and sequestration (CCS) projects as well as implement "strong market signals" to "ensure mass deployment of the technology," according to a new study by a leading EU think-tank.

In "Carbon Capture and Storage: What the EU Needs to Do," the Centre for European Reform in London sets out several key activities that the EU must undertake if it is to have 12 large CCS demonstration projects operating by 2015.

In a broader context, the EU finds itself in an increasingly difficult position. It has adopted strong legislation aimed at achieving its GHG reduction targets. But thus far, despite the leadership it has tried to provide at an international level it is moving along mostly in the absence of any large partners (for example, China, India, the U.S.).

Have the Europeans made a huge strategic mistake that will hinder economic development? Or will their first mover approach pay dividends in a world that will adopt EU-based solutions? Difficult questions to be sure. Only time will tell.

Carbon Capture and Sequestration: Do the Benefits Outweigh the Risks?

Carbon capture and sequestration (CCS) is in some respects the "holy grail" for countries that largely depend on coal-fired power for electricity generation but want to reduce carbon emissions. Under this approach, carbon is captured during the incineration process and then transported typically to an underground location where it can be stored.

Energy experts in the European Union have very high -- perhaps way too high -- hopes for CCS. There is also considerable interest in China and the U.S. since a successful CCS process would allow both countries to continue to burn vast amounts of coal without emitting more carbon into the atmosphere.

But what about the risks associated with CCS? Will they outweigh the benefits? A recently published paper in Issues in Legal Scholarship, "Carbon Capture and Sequestration: Identifying and Managing Risks," provides an interesting and thought-provoking consideration of the subject.

The article, written by Profs. Alexandra B. Klass and Elizabeth J. Wilson of the University of Minnesota, is organized in two parts. The first part assesses risks associated with CCS. These include capturing the carbon dioxide emissions, using pipelines to transport the gas, and then storing it permanently underground. The second part of the article considers how the risks associated with these steps could be managed and analyzes whether "CCS should be deployed or whether its use should be limited or rejected in favor of other solutions."

CCS is going to be one of many ideas evaluated in the context of a carbon constrained economy. This article helps put the overall subject in more context.

(Thanks to Diane Burkhardt, Faculty Services Librarian at the DU law library, for calling this to my attention.)

ScottishPower, Shell U.K., and National Grid Establish Consortium to Develop U.K.'s First Commercial Size Carbon Capture and Sequestration Project

Shell U.K. and Britain's National Grid company have joined ScottishPower's efforts to develop the U.K.'s first commercial-sized carbon capture and sequestration (CCS) project.

Led by ScottishPower, the three firms will submit a bid for the U.K.'s carbon capture and sequestration competition. The British government is aiming to develop four "clean" coal-fired power stations that will use the technology. CCS, which has not been proven on a commercially viable basis thus far, involves capturing carbon dioxide, compressing it, and transporting it to reservoirs underground.

The European Union, which has committed to major reductions in carbon dioxide emissions, is especially interested in the technology.

Nick Horler, ScottishPower chief executive, said, "I am delighted to welcome Shell and National Grid to the team. Both of these companies will bring specialist knowledge, expertise, and opportunities for growth in the development of this cutting edge technology...[T]he new companies represent a 'perfect fit' as we strive to reduce carbon dioxide emissions by 90 percent from the [coal-fired] power plant at Longannet in Scotland."

Coal State Senators Casey and Enzi Introduce Legislation to Promote Carbon Capture and Sequestration

U.S. Senators Robert Casey, Pennsylvania Democrat, and Mike Enzi, Wyoming Republican, have introduced legislation, the Carbon Storage Stewardship Trust Fund Act of 2009, to "remove a major barrier to private investment in carbon capture and storage."

The major barrier? The long-term liability of carbon storage. Pennsylvania and Wyoming are big coal producing states, and the two senators are keen to protect the interests of their constituents. If a carbon capture and sequestration (CCS) approach can be put into place so that electric utilities can continue to burn coal without emitting carbon dioxide, so much the better for the coal states. At least that is what Senators Casy and Enzi seem to think.

According to the senators:

"A liability framework is needed that will encourage firms to invest in CCS but that will not relieve the private sector of the responsibility for ensuring that best practices are followed. The purposes of this act are to promote the commercial deployment of CCS through the creation of a carbon storage liability trust fund and the sharing of liability between the private sector and the federal government."

Hum...The words "sharing liability" have a funny ring to them.

Sounds as if the senators are asking "big government" to bail out the CCS developers if things go wrong. Would this logic not also apply to a small business person who was taking a chance on a concept that might go bad? Is the federal government going to "share the liability" with these small folks?

No one will ever accuse me of being an economics major, but I thought that private business liked to keep the government at arm's length and that part of the free market system was the freedom to succeed as well as fail. Of course, I'm not being serious but the next time Senators Casey or Enzi rail against "big government," will someone remind them that they are being rather selective when they complain about government programs?

Alstom CEO Speaks About Carbon Capture and Sequestration

If the world is going to limit greenhouse gas emissions, it is likely that carbon capture and sequestration (CCS) may play a role.

Pierre Gauthier, Alstom's American CEO, spoke recently to E&ETV's OnPoint program ("Carbon Capture: Alstom's Gauthier Discusses Successful Wisconsin Project," July 21, 2009) about the challenge of CCS.

Among other things, Mr. Gauthier explains three different technologies being used by Alstom.

MIT Conference Concludes "No Credible Pathway" Towards Reducing Carbon Emissions Without Retooling Coal-Fired Power Plants

Authors of an MIT Energy Initiative report based on a major symposium have concluded that, "There is today no credible pathway towards stringent greenhouse gas stabilization targets without carbon dioxide emissions reduction from existing coal power plants."

The "Retrofitting of Coal-Fired Power Plants for CO2 Emissions Reductions" symposium included stakeholder representatives from academia, government, industry, public interest groups, and utilities.

The report's summary for federal policy makers says:

"The United States and China account for about 40 percent of global anthropogenic carbon dioxide emissions and for over half of global coal use. Both countries have immense reserves of relatively low cost coal. In the United States, almost half of all electricity is supplied by coal power plants that average 35 years of age and produce about a third of U.S. carbon dioxide emissions. China has brought on line in the last five years a coal electricity production capacity equal to the total U.S. installed capacity."

Among the observations of symposium participants related to reducing carbon dioxide emissions included:

• For existing coal plants, post-combustion capture followed by long-term, large-scale, sequestration is the most direct pathway to avoiding nearly all carbon dioxide emissions.
  
  
• Efficiency retrofits of existing coal plants can result in modest reductions of emissions per unit of electricity produced.
  
  
• Major rebuilds of existing coal plants should be considered.
  

"Time is of the essence," the report said, adding:

"The retrofit, rebuild, or re-powering of the existing coal fleet, in the U.S. and in China, to reduce carbon dioxide emissions dramatically is a necessary step towards achieving GHG stabilization targets. Practical options that will justify the vast investments needed over the next decades require validation from demonstration, development and research. Failure to do so will both drive up carbon dioxide prices (and the cost of electricity) and leave us with a continuing dearth of appropriate technology options."

Higher and More Stable U.S. Energy Prices Will Result in Long-Term Benefits, According to New Harvard Study

A price on U.S. greenhouse gas emissions must be established – either through a cap-and-trade system or a carbon tax – as part of the country’s overall energy policy, according to the Belfer Center for Science and International Affairs at Harvard University.

This recommendation is part of a policy brief, “Acting in Time on Energy Policy,” just published by the John F. Kennedy School of Government at Harvard. The report “outlines priorities for U.S. energy policy at the dawn of the Obama administration, and recommends specific steps that the U.S. government should take to address the numerous energy-related challenges facing the United States.”

According to the report, "Higher and stable energy prices would help achieve all the policy objectives in the longer term – improved oil security, lower greenhouse gas emissions, more efficient operation of the electricity system, more incentives for private sector innovation in energy technologies, and more incentives for consumers to purchase cleaner and more energy efficient products.”

As part of addressing the greenhouse gas emissions issue, there must be a long-term goal for global emissions reductions, the report said.

Other key findings and recommendations:

The U.S. should subsidize the building of 10 to 20 commercial-scale projects involving carbon capture and storage. Longer term, carbon capture and storage should be adopted at all large fossil fuel-based stationary power plants.

Legislation should be enacted to set a “variable tax” when oil reaches a certain price. For example, a tax could be established that sets an oil “floor price” of $90 per barrel. When oil has a market price of $80 per barrel, a $10 tax would increase the cost to $90 per barrel. Once the price hit $90 a barrel, the tax would be suspended. In effect, the tax would eliminate the possibility of huge downward trending oil prices.

Additional investment is required for energy infrastructure projects.