CCS deployment in Italy at cross roads of stop-and-go and full-steam ahead in climate change battle

"Italy’s composition of energy production from fossil fuels shows a preponderance of gas at the moment, which comprised 50 percent of total production, with coal at only 14 percent. But the country’s main electrical utility, the privately-owned ENEL, is aiming to modify this portfolio by eliminating oil, and increasing the use of coal to 50 percent of total energy production. Gas and oil consumption would, as a consequence, fall.

This private sector interest in CCS could be an environmental boon for the nation, but questions remain about whether the government will help pave the way for the innovative climate strategy.

A new policy for energy: Room for a CCS strategy?
Under the government of Prime Minister Silvio Berlusconi, energy priorities have shifted from renewables to nuclear. Nevertheless, it seems that the government is considering the range of different options to reduce emissions, particularly in light of the European Union’s climate change targets.

A supportive policy for CCS emerged only a few months ago. The National Action Plan for greenhouse gas emisssion reduction (download PDF to right)  is expiring in 2010, and for 2020 there is only the 2007 Position Paper of the Italian Governmebt (download PDF to right) setting out a number of targets for 2020, such as doubling renewable energy use and decreasing thermal power plants to 22 percent of total energy production. But the position paper fails to spell out any concrete measures to attain these goals.

The Group of Eight (G8) meeting on energy in Rome in May and, particularly, the G8 summit in L’Aquila, sparked official Italian commitment to combating climate change. As a result, Italy has signed a framework agreement with the US Energy Department (download PDF to right) on exchanging research and know-how on CO2 capture technology between universities and laboratories, and on coordinating and monitoring joint projects, studies and developments of new technology, as well as on developing models to identify new sites to store CO2. The joint project is also aimed at raising public awareness on the advantages of CCS.

Italian Law n.99, published in the Official Gazette no. 176 (download PDF to right)  on July 31st 2009,  lists several measures for economic recovery and energy sector development. The Italian Government included CCS among the four energy technologies into which stimulus funding should be invested. The other three are fourth generation nuclear power, renewable energy, and other low carbon technologies. As there is no budget yet fixed for the implementation of Law n. 99, however, there is a risk that nuclear power will garner the lion’s share of funding.

The Law supports the realization of CCS demonstration projects of around 300 megawatt (MW) each, and the next step should logically be a call for project proposals.

However, the question of when this call for project proposals would be launched remains unanswered – something that is likely due to the ongoing high-stakes political struggle between Italy’s Ministry of Economic Development and Ministry of Environment for the coordination of the adoption process of the EU “Climate Package.” Whichever ministry leads the process will have more clout in all related policies and actions – and will also control the respective purse strings.

Furthermore, the Law envisions Italian participation in low-carbon technology research and development (R&D) projects within the scope of several existing agreements on climate change with the United States. It remains unclear at the moment which body will be in change of implementing it and who will select or propose the R&D projects.

Lastly, the law addressed the use of Sardinia’s coalmines for electricity with CCS. Using Italy’s only significant coalmines for this purpose is a proposal that has long been on the table. However, the European Commission did not accept, in the past, its technological proposals on mitigating the project’s environmental impact, and asked for a number of corrections that ultimately made the proposal unfeasible.

Problems with private initiatives
On July 15th 2009, ENEL submitted a request for €100 million to the EC’s  European Energy Recovery Plan (EERP) for the construction of a CCS demonstration  unity in Italy’s Veneto Region. The project would be integrated into an enormous coal-fired plant planned to produce more than 2,500 megawatts of power in Porto Tolle within the Po River Delta.

ENEL proposes to build a CCS post-combustion unit to abate CO2 emissions from a 300 megawatt power production line within the Porto Tolle plant. ENEL currently has three other smaller CCS projects slated to go online – one near Venice and two in Brindisi. None are operative yet, but when they are will cover the full range of CO2 capture technologies from pre- and post- combustion to oxy fuel.

Porto Tolle’s CCS unit is expected to cost some €800 million, while ENEL will receive less than €400 million from the EU toward the project. The question, therefore, is who will fund the remainder. The Italian state is vague on the issue of support, and relies on the conditions spelled out in Law n. 99. Yet it is fairly certain that the cash-strapped state will not be able to fill the financial gap.

The main hurdles for these projects are financial as well as the need to secure the necessary authorization, as well as build up the needed public support.

There is in fact local opposition in Porto Tolle against deploying a large coal fired plant. The Porto Tolle coal fired plant will be built by converting an existing oil-fired electrical plant that is located in a regional park. The plant was therefore expected to be decommissioned. Local residents thus question the construction of a coal fired plant where an oil powered plant they expected to get rid of still stands, as the new coal plant will raise the risk of negative environmental impacts locally. The project begs the question as to whether ENEL is actually engaged in reducing environmental dangers or is just attempting a “greenwash.”  

Now is the time to set strategy
There is no apparent or specific strategy surrounding full-scale CCS deployment in Italy, and only ENEL has taken concrete, albeit incipient, steps. ENEL’s interest in CCS is economic, as the utility wishes to switch from gas to coal. For ENI, the Italian multinational oil and gas giant, and other industry players, however, CSS is expensive and superfluous at this point as it is not mandatory.

The recent adoption of Law n.99 is a spark to start discussions on long-term strategy to phase out unabated fossil fuel power production in Italy. Partnering with other countries – like Italy and the United States have done – is also a good way for the country to compare goals and policies, as some EU Member States are proposing interesting steps in ending fossil fuel dependence.

The recently begun national adoption process spurred by the EU Climate Package should also force Italy to decide how and by when to deploy CCS technology as an important option to match other EU national emissions reduction targets – and the public would doubtless like to have advance notice to weigh in with its own opinions.