Last week saw developments in an ongoing dispute over a carbon capture and storage bill in Germany, with power supplier Vattenfall suggesting it might cancel a €1.5 billion ($US2.1 billion) test plant in Brandenburg if the draft legislation is not changed “significantly”.
On Wednesday, Chancellor Angela Merkel’s Cabinet voted to send the bill to a parliamentary arbitration committee. The lower house passed the draft law in July this year after multiple delays but, two months later, the bill was rejected by 16 states in the upper house. The dispute revolves around an ‘opt-out’ clause which means that each state government can decide whether CCS can take place in their jurisdiction.
“We welcome that this [bill] will go into arbitration,” Katharina Bloemer, a spokeswoman for Vattenfall, told Bloomberg News on October 26. “There are still several issues with the bill that would make major investments in the technology unfeasible.” She added that in its current state, the bill would be up for revision in late 2016 or early 2017, leaving too little time and forcing the company to cancel the investment.
Just two weeks ago, Vattenfall’s CCS plans in Denmark suffered a setback after the government refused the Swedish utility’s application to store carbon dioxide in the Vedsted structure northwest of Aalborg. According to a statement from Denmark’s climate and energy minister Martin Lidegaard, the department will await the outcome of CCS projects in other countries before approving the process for use in Denmark.
The collapse of the Longannet project in Scotland two weeks ago has certainly not helped the case for CCS either. The UK Department of Energy and Climate Change had pledged £1 billion to the project through partners including Scottish Power, National Grid and Royal Dutch Shell.
UK energy secretary Chris Huhne blamed the abandonment of the project on a failure to reach a deal with power companies and technical difficulties, including the length of pipeline from the Fife coast to the North Sea oil fields where the carbon would be pumped.
Scottish Power told the BBC at the weekend that cost was the reason for Longannet’s cancellation: the trial was restricted to £1 billion from the government. However when Scottish Power estimated the final cost at around £1.5 billion, the government decided to pull the plug.
Earlier, before Huhne’s announcement that the project would be shelved, Tim Yeo, chairman of the UK’s energy and climate change committee predicted that Longannet “won’t go ahead and there will be a setback.” He added that there is a “serious question mark over the future funding of carbon capture, as the technological challenge is huge.”
At 2.5GW, Longannet is the third largest coal power plant in Europe. Today its CCS plan sits on the shelf among other deferred or cancelled CCS projects in Europe. Some of the cancelled projects in Europe are Nuon Magnum and RWE Eemshaven, both in the Netherlands, and Eon Kingsnorth in the UK.
The situation however looks more optimistic in North America, which currently leads the way in terms of active CCS projects. The region takes the top three places in CCS project size, by combining significant public funding with multiple revenue streams, including CO2 off-take.
Projects in North America are set to come online in 2014 while the EU lags behind – SaskPower’s Boundary Dam, the second-highest funded project in the world, receiving $US250 million from the Canadian federal government and a further $US770 million from SaskPower, a state-owned utility, has begun construction and is expected to come online in early 2014. Mississippi Power’s 582MW Ratcliffe project started construction in December and is expected to begin operations in 2014.
Several European Union projects, including Germany’s Jaenschwalde project and Italy’s Porto Tolle, have applied for New Entrants Reserve 300 (NER 300) funding, which is due to be awarded in late 2012. The later funding date means a delay for projects in the region. In addition, due to the European debt crisis, forecast emissions in the EU have been lowered, resulting in a lack of demand for European Union Allowances, or EUAs, and therefore lower carbon prices. As a result NER 300 sales – due to begin next month – will raise less money for grants, and support fewer CCS projects, than originally expected.
Projects in North America are undoubtedly ahead with the three projects under construction, said Kieron Stopforth, CCS analyst at Bloomberg New Energy Finance. “These projects have received enough public funding, they can sell CO2 and other byproducts and there is already an established industry for CO2 storage in enhanced oil recovery. The New Entrants Reserve 300 has stalled several projects in Europe, which will have to wait for the awards before they can continue development. Most storage in Europe is offshore – harder and more expensive."
Last week saw developments in an ongoing dispute over a carbon capture and storage bill in Germany, with power supplier Vattenfall suggesting it might cancel a €1.5 billion ($US2.1 billion) test plant in Brandenburg if the draft legislation is not changed “significantly”.
On Wednesday, Chancellor Angela Merkel’s Cabinet voted to send the bill to a parliamentary arbitration committee. The lower house passed the draft law in July this year after multiple delays but, two months later, the bill was rejected by 16 states in the upper house. The dispute revolves around an ‘opt-out’ clause which means that each state government can decide whether CCS can take place in their jurisdiction.
“We welcome that this [bill] will go into arbitration,” Katharina Bloemer, a spokeswoman for Vattenfall, told Bloomberg News on October 26. “There are still several issues with the bill that would make major investments in the technology unfeasible.” She added that in its current state, the bill would be up for revision in late 2016 or early 2017, leaving too little time and forcing the company to cancel the investment.
Just two weeks ago, Vattenfall’s CCS plans in Denmark suffered a setback after the government refused the Swedish utility’s application to store carbon dioxide in the Vedsted structure northwest of Aalborg. According to a statement from Denmark’s climate and energy minister Martin Lidegaard, the department will await the outcome of CCS projects in other countries before approving the process for use in Denmark.
The collapse of the Longannet project in Scotland two weeks ago has certainly not helped the case for CCS either. The UK Department of Energy and Climate Change had pledged £1 billion to the project through partners including Scottish Power, National Grid and Royal Dutch Shell.
UK energy secretary Chris Huhne blamed the abandonment of the project on a failure to reach a deal with power companies and technical difficulties, including the length of pipeline from the Fife coast to the North Sea oil fields where the carbon would be pumped.
Scottish Power told the BBC at the weekend that cost was the reason for Longannet’s cancellation: the trial was restricted to £1 billion from the government. However when Scottish Power estimated the final cost at around £1.5 billion, the government decided to pull the plug.
Earlier, before Huhne’s announcement that the project would be shelved, Tim Yeo, chairman of the UK’s energy and climate change committee predicted that Longannet “won’t go ahead and there will be a setback.” He added that there is a “serious question mark over the future funding of carbon capture, as the technological challenge is huge.”
At 2.5GW, Longannet is the third largest coal power plant in Europe. Today its CCS plan sits on the shelf among other deferred or cancelled CCS projects in Europe. Some of the cancelled projects in Europe are Nuon Magnum and RWE Eemshaven, both in the Netherlands, and Eon Kingsnorth in the UK.
The situation however looks more optimistic in North America, which currently leads the way in terms of active CCS projects. The region takes the top three places in CCS project size, by combining significant public funding with multiple revenue streams, including CO2 off-take.
Projects in North America are set to come online in 2014 while the EU lags behind – SaskPower’s Boundary Dam, the second-highest funded project in the world, receiving $US250 million from the Canadian federal government and a further $US770 million from SaskPower, a state-owned utility, has begun construction and is expected to come online in early 2014. Mississippi Power’s 582MW Ratcliffe project started construction in December and is expected to begin operations in 2014.
Several European Union projects, including Germany’s Jaenschwalde project and Italy’s Porto Tolle, have applied for New Entrants Reserve 300 (NER 300) funding, which is due to be awarded in late 2012. The later funding date means a delay for projects in the region. In addition, due to the European debt crisis, forecast emissions in the EU have been lowered, resulting in a lack of demand for European Union Allowances, or EUAs, and therefore lower carbon prices. As a result NER 300 sales – due to begin next month – will raise less money for grants, and support fewer CCS projects, than originally expected.
Projects in North America are undoubtedly ahead with the three projects under construction, said Kieron Stopforth, CCS analyst at Bloomberg New Energy Finance. “These projects have received enough public funding, they can sell CO2 and other byproducts and there is already an established industry for CO2 storage in enhanced oil recovery. The New Entrants Reserve 300 has stalled several projects in Europe, which will have to wait for the awards before they can continue development. Most storage in Europe is offshore – harder and more expensive."