In an annex to the response, Bellona submitted its recent report on market incentives for CCS – ‘Driving CO2 Capture and Storage in the EU: New Policies, New Perspectives’. This and the submitted communication response may be downloaded from link below.
Bellona applauds the Commission’s proposal to move beyond ETS and introduce new mechanisms to drive the deployment of CCS. The EU’s ability to decarbonize over the coming decades depends on clear and predictable incentives for the European energy and industrial sectors, but the carbon market in its current form will not bring about the timely innovation we need to cost-effectively achieve all the necessary emission reductions.
The current suite of EU-level policies provides effective, targeted support to wind, solar, biomass, cogeneration and energy efficiency abatement opportunities – but not CCS. This makes CCS especially dependent on the EU Emissions Trading System (ETS) and the related NER300 scheme to drive its deployment.
Because the CO2 price in the EU has been much lower than anticipated, the current EU policy framework is not simply trying to pick winners but effectively picking CCS as a loser. Until an effective structural reform of the ETS can be realized, targeted support for CCS will therefore be necessary.
In order to prevent further costly delay, Member States must step forward with CCS market incentive schemes at the national level to plug funding gaps created by the current lack of an effective EU policy framework for CCS until 2020.
From 2020 onwards Bellona recommends a core EU CCS policy framework comprised of:
- An overarching EU-wide CCS target;
- A complementary EU CCS certificate scheme to help Member States achieve this target efficiently; and
- A connected CCS fund to provide extra support to first movers and drive the development of shared projects and infrastructure of EU relevance.
It is essential that this policy framework be fully integrated into the EU’s 2030 Climate and Energy Package, creating a level playing field for CCS so that it is able to compete with other technologies in the decarbonisation of the EU energy system.
Around this core policy framework, there are several other stand-alone actions that would greatly facilitate the deployment of CCS in the EU.
First, EU legislation should be put in place to ensure privileged grid access for CCS electricity generation in the same way that priority grid access for renewable energy and cogeneration facilities is mandated by EU law. Such access is necessary to ensure CCS investors that their plants will actually be run once they are built.
Second, the EU should strongly consider how limited border carbon adjustment measures could help specific industrial sectors address the dangers of carbon leakage should they deploy CCS. Whilst significant practical questions remain about such schemes, competitiveness is a key barrier to CCS deployment in industry and the EU has an exclusive competence in the field of international trade.
The Commission’s call for far greater commitment from both national governments and industry actors is therefore timely and justified. Many have failed to accept the necessity of CCS. But it is clear that stakeholders are now looking to the Commission itself for the leadership on CCS that is needed. The Commission should be bold and propose an ambitious new policy framework for CCS that is fully integrated within the 2030 Climate and Energy Package.