Everyone knows that CCS is not economic yet. So, what’s the matter with the requirement contained in the Directive that the new combustion plants assessed economic feasibility to retrofit for CO2 capture?
The legal ground for the legislative concept of the CCR (Carbon Capture Readiness) is Article 9a of the LCP (Large Combustion Plants) Directive. It was added by the Article 33 of the CCS Directive (the Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (OJ L 140, 5.6.2009, p. 114)) and is repeated by the Article 36 of the newly passed Directive of the European Parliament and of the Council on industrial emissions (the IED Directive, see: European Parliament legislative resolution of 7 July 2010).
The said Article 9a of the LCP Directive (which corresponds to the art. 33 of the CCS Directive) reads:
1. Member States shall ensure that operators of all combustion plants with a rated electrical output of 300 megawatts or more for which the original construction licence or, in the absence of such a procedure, the original operating licence is granted after the entry into force of Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide, have assessed whether the following conditions are met:
- suitable storage sites are available,
- transport facilities are technically and economically feasible,
- it is technically and economically feasible to retrofit for CO2 capture.
2. If the conditions in paragraph 1 are met, the competent authority shall ensure that suitable space on the installation site for the equipment necessary to capture and compress CO2 is set aside. The competent authority shall determine whether the conditions are met on the basis of the assessment referred to in paragraph 1 and other available information, particularly concerning the protection of the environment and human health.
Article 33 of the CCS Directive addresses CCR and requires applicants for new combustion power stations to carry out an assessment of whether suitable storage is available as well as technical and economical assessments of transport and retrofitting CCS technology.
Reading the said provision literally, Member States are only required by the Directive that they ensured that operators ‘have assessed whether the conditions are met’. So, logically, if the assessment proves that ‘the conditions are not met’ it shouldn’t, at least theoretically and taking into account only the exact wording of the Directive, automatically effect in the refusal to grant the construction or operating licence.
It seems to be quite fundamental question – the normative sense of the Art. 9a of the CCS Directive. But it isn’t formulated in such a way as if it intended to ban permitting new power stations in every case, where ‘the conditions are not met’.
In addition, the provision requires only appropriate space to be set aside to accommodate carbon capture technology if assessments show that CCS is feasible. When CCS appears to be not feasible, setting aside the necessary space for capture equipment on the installation site is not required.
These conclusions are unchanged by the recital 47 of the Directive.
Every directive is, however, subject to implementation into national legal orders of Member States. And here we can find sometimes quite a surprise. In the “Carbon Capture Readiness (CCR) A guidance note for Section 36 Electricity Act 1989 consent applications” issued by the Department of Energy and Climate Change in November 2009 (http://decc.gov.uk/en/content/cms/what_we_do/uk_supply
/consents_planning/guidance/guidance.aspx) UK government envisioned its intention to implement both Article 33 of the Directive and the Government’s further requirement that if a proposed power station is subject to the Directive requirements, it will only be granted development consent if it is assessed positively against the Article 33 criteria” (p. 7).
UK Government made clear that it intended to interpret the EU requirements on CCR in a way that supported its commitment to new power stations at or over 300 MWe (and of a type covered by the LCP Directive) being built CCR.
According to this conception applicants’ CCR assessments should be with a “no barriers” approach. Applicants are asked to demonstrate that there are no known technical or economic barriers which would prevent the installation and operation of their chosen CCS technologies.
Applicants for a consent are expected to follow best practice as far as this knowledge is available and provide a reasoned justification of their choices.
UK Government made some interesting assumptions as regards the assessment process. In this place – according to the title of this publication - we concentrate on economic feasibility.
According to the said guidance British developers of new power plants face quite a challenge – they will be generally required envisage reasonable scenarios under which CCS is economically feasible.
Important parts of these scenarios will be some assumptions:
1) the technology option chosen as most suitable in the technical part of the assessment should be also applied as the basis for the economical part (but this determination is not binding on the applicant, which can change his mind as regards this issue in the future), also other assumptions adopted in technical part should consequently be applied in the economical one;
2) time – span that should be taken into account for assessments is the entire power station’s lifetime;
3) the vital determinant of the projections will obviously be the anticipated cost of avoided CO2 allowances (see recital 47 of the CCS Directive);
4) British guidance requires to identify transport routes within specified corridors – which costs should (in addition to the costs for carbon capture retrofitting and cost for carbon storage) be accounted for (market in shared transport facilities – if they will develop in time – may be a scenario for comparison);
All assessments should be interpreted in the view of underlying aim of the UK Government’s CCR policy, which is identifying, and not granting development consent to, those plants where it is “unlikely that there will ever be a reasonable business case for CCS”.
What seems to be most important, power plants developers will be required to determine the range of carbon prices, for which CCS is economically feasible and to justify the view that such a carbon price would occur within the lifetime of the proposed power station.
This is probably the most challenging part of the job. It is obvious that such a predictions are burdened today with an immense degree of uncertainty. And even if in an individual country, like UK, forecasts in this field are maybe easier (thanks to the efforts and guidance of the UK Government) than in others, it doesn’t end the issue. Wholesale electricity market is, and will be in the coming years, increasingly pan-European – taking into account at least the latest initiatives of infrastructure corridors “of European interest” (see: MEMO/10/582 and IP/10/1512 of 17 November 2010). It follows, that if in a given territory the electricity will be more expensive, than in others, cross-border transfers should be much easier, than currently. Such corridors could in the coming years significantly change the European wholesale electricity market, the prices, and – consequently – all previous predictions, estimates and assessments.