-EU Climate and Energy Package-

Mihai Tomescu

Policy Officer, Unit ‘Energy and Environment’

Directorate-General Environment

European Commission

Enabling legal framework for

carbon dioxide capture and geological storage

Risk management framework

Capture:• Regulated and permitted under IPPC Directive

Transport:• Regulated at MS level and through environment impact assessment

(EIA)

Geological storage• Main focus on geological storage• Scope:

– Territory of MS, their exclusive economic zones and continental shelves

– Storage in water column prohibited

– Doesn’t apply to research projects (<100 ktCO2)

– Covers EHR combines with CO2 storage

Main elements of Commission proposals

• Enabling approach– Draft directive on geological storage sets environmental

rules and liability requirements– Member States determine whether and where CCS will

happen on their territory– Emissions captured and stored are recognised as not

emitted under the Emissions Trading Scheme– Companies decide whether to use CCS on the basis of

conditions in the carbon market

• Clear and comprehensive provisions (1/2)– Site selection– Operation of storage sites– Monitoring and reporting requirements

Main elements of Commission proposals

• Clear and comprehensive requirements (2/2)– Liability measures in case sites do leak– Closure and post-closure obligations, and transfer of

responsibilities– Access to transport networks and storage sites

• Capture-ready assessment required to avoid lock-in of high-emissions technology

• No mandatory CCS at this stage:– Let the market work: The revised ETS will ensure a robust

carbon price and action on demonstration will bring CCS costs down

Key issues in negotiation1: Financing CCS

demonstration

• European Council June 2008 requested a mechanism to incentivise MS and industry investment

• ETS/CCS rapporteurs in European Parliament proposal:– to reserve 500M allowances for CCS demonstration (c €15bn

equivalent, covering full incremental costs of CCS)

• COM conditions:– No increase of cap, no award of allowances directly to investors,

limited to demonstration, limited in time, efficiently targeted, minimal distortion of ETS, and only leverage financing (as requested by European Council), and technology neutral.

Key issues in negotiation2: mandatory CCS?

• EP proposing 500 g CO2/kWh performance standards for plants > 300 MW operational from 2015– Implications for whether new coal can be built without CCS

• COM position in Impact Assessment:– Would make meeting 20% GHG reduction target more expensive– Cost burden falls disproportionately on small number of Member

States (DE, PL, UK, BE)– In tension with market-driven deployment under ETS– CCS technology still not demonstrated at commercial scale.

• Council: reservations from most Member States.

Key issues in negotiation3: Liability and transfer to

the state

• Enabling legal framework sets out liabilities covered– Corrective measures for any leakage (geological storage directive)– Surrender of allowances under the ETS to cover any leaked

emissions– Liabilities under the Environmental Liability Directive (2004/35/EC)

• Site transfers to the state when injection has ceased and site has progressed towards safe condition:– Criterion: all available evidence indicates that stored CO2 will be

completely and permanently contained

• Council and EP issues:– Minimum period before transfer?– Fee to cover any costs incurred after transfer?

Other outstanding issues

• Composition of CO2 stream:– Commission formulation based on London Convention and

OSPAR– Criterion: CO2 stream shall consist overwhelmingly of carbon

dioxide; no wastes or other matter added for the purpose of disposal, but incidental associated substances permitted if their concentration does not adversely affect the integrity of the storage site and transport infrastructure, pose a significant risk to the environment or is in breach of existing EC legislation

– EP: 95% purity and no corrosive substances

• Commission review of draft storage permits– Commission: issuing of non-binding opinion on draft permits

within 6 months; Competent Authority (CA) to justify deviation– Council: notification in parallel with CA, opinion after 4 months

with justification– EP: notification in parallel with CA, consultative opinion after 3

months with justification

Summary

• Main elements of CCS enabling framework seem to have gained broad acceptance in institutions

• Enabling under ETS is chosen approach: revised Emissions Trading Directive will enhance regulatory stability and predictability.

• Key issues to be solved in trialogue: financing demonstration, mandatory CCS/performance standards, transfer of responsibility to the state, CO2 purity requirements, Commission review of draft permits

• Substantial progress towards agreement by end of the year