Commissioner Stavros Dimas: General Assembly of the Technology Platform on Zero Emission Fossil Fuel Power Plants

September 13, 2006

Brussels, 12 September 2006

General Assembly of the Technology Platform on Zero Emission Fossil Fuel Power Plants
Brussels, 12 September 2006

Ministers, Ladies and Gentlemen,

It is an honour for me to address this first General Assembly of the Technology Platform for Zero-Emission Fossil-Fuel Power Plants. When Janez Potocnik launched the Platform in December of last year, he said how much he looked forward to the first results of the Technology Platform.

Today, we have two papers, the Strategic Research Agenda and the Strategic Deployment Document, that are the fruit of the excellent work of all involved: oil and gas, utilities, equipment suppliers, NGOs, government and not least the research community– and they are all to be commended..

The Climate Change Challenge

Climate change concerns us all. The climate is noticeably shifting. The 10 warmest years on record have all occurred since 1990. At global level, 2005 was the hottest year of them all, while in the US, the first six months of this year were the warmest ever.

The physical impacts of these changes are becoming increasingly evident. One of the most dramatic is the alarming speed at which the Artic ice is melting, both at sea and on the Greenland ice shelf. At the current rate, there may be no ice at all during the summer of 2060.

The economic impacts are potentially vast. Climate change is already having serious consequences for such essential sectors as agriculture and energy production. China is suffering its worst drought in 50 years. Parts of Spain face the same scourge. And during this July’s heat wave across much of Europe, many power plants were forced to reduce electricity generation or even shut down because the rivers they use for cooling or for discharging into became too warm.

None of us can ignore the need to rein in the emissions of greenhouse gases. There is now an overwhelming consensus among governments, climate experts and scientists, business and civil society on the need to take urgent action against global warming. We must build on this.

The challenge is considerable. Our projections warn us that, with current trends, global greenhouse gas emissions will double by the year 2050 in the absence of resolute action. Yet, if we are to meet our objective of limiting global warming to 2°C, we will probably have to half greenhouse gas emissions compared to 1990 levels by 2050. As a first step, the European Council has set down a pathway of 15-30% reductions for industrialised countries by 2020.

Energy – a key to Climate Change

The energy debate is central to climate policy. The world's energy system of 2050 must be fundamentally different from that of today. The International Energy Agency has pointed to the fact that, over the coming 25 years, investments into the energy sector alone will require at least US$ 17 trillion. These investments must allow the transition towards clean and sustainable energy. We will have to rely on the rapid deployment of already existing technologies and the development of new efficient technologies.. There are no silver bullets - a mix of energy sources is necessary - but I have no doubt that the zero-emission power-plants that we are discussing today will be an important part of this mix.

Economic benefits - Security of Supply

Clean energy technologies are not only driven by the vision of a low-carbon future, they also bring us important economic benefits. They allow us to use our own domestic energy sources to a higher extent, thereby improving Europe's energy security. Ever-increasing energy prices remind us all how vulnerable our economies are to energy supply risks -and the costs we have to pay for our reliance on energy imports. Addressing this issue is key to Europe's competitiveness.

This is money well spent. Clean technologies not only decrease our future energy bill, each of them also represents a huge business opportunity. In some of these technologies, like wind farms and photovoltaics, Europe is already a world leader. In others, like hybrid cars, we are not yet. By launching a deployment strategy early on, the technology platform contributes to European innovation and gives European companies a first mover advantage as large-scale users of clean technologies. Carbon capture and storage is one of these technologies of the future but we still need to assess all its industrial, environmental and commercial aspects.

EU support for Carbon Capture and Storage

The Technology Platform is proposing ten to twelve industrial-scale CO2 capture demonstrations, using various technologies, which would provide a significant spur towards commercialisation. Together, we should find ways to make this happen within ten years.

No doubt, the funding involved to implement such an agenda is significant, and public and private co-operation will be essential. One of the priorities of the Seventh Framework Programme for Research are the "Zero-emission power-plants" and the research, development and demonstration activities connected to these plants. More generally, a new “Risk-Sharing Finance Facility” is being proposed by the Commission. This facility will be managed by the European Investment Bank to step up the availability of loans for risky research and provide more favourable conditions for development projects. The Commission expects that in the next seven years, this new financial instrument will leverage billions of Euros through venture capital and guaranteed bank loans for major research and development projects.

A Commission proposal for draft legislation on carbon capture and storage

To assure rapid commercial deployment, I agree with stakeholders that the Commission must provide clarity on the future regulatory framework for carbon capture and storage. The working group set up under the second European Climate Change Programme that looked into Carbon Capture and Storage pointed to a number of outstanding issues. The Commission will, in the course of next year, put forward draft legislation in this area.

This will be accompanied by a full impact assessment. It will address a number of key legal, economic and environmental issues concerning carbon capture and storage for which we still need clear answers. Let me comment on some of these.

1. The first is the need to manage the environmental risks associated with carbon capture and storage, both in the short and the long term. The potential for carbon capture depends on public acceptance, and that in turn requires environmental safety.

The main risks relate to the release of CO2 from the pipeline or storage site, but there are others too, such as the potential change in emissions of traditional air pollutants resulting from the opposing impacts of the fuel penalty, on the one hand, and the capture process on the other. We must show the public that all potential problems have been identified and will be properly controlled.

2. The second issue is the existence of unwarranted legal barriers to the deployment of this technology. These are cases where carbon capture and storage would have no adverse impact on the objectives of a policy, but is nonetheless prohibited by the current wording.

The potential issues relate mainly to water and waste and have now largely been identified. We are working towards resolving them.

3. A third issue is the need for appropriate incentives to get carbon capture and storage deployed on the ground. By 'appropriate,' I mean that any incentives must be in proportion to the greenhouse gas reduction benefits, and should not unduly disadvantage other reduction options such as renewables and energy efficiency.

4. Fourthly, we need to clarify liability issues, in particular responsibility for remediating any leakage from storage sites in the short and long term.

On all these issues, the Commission's regulatory framework for carbon capture and storage should provide clarity, coherence and stability. This will enable market operators to invest cross the EU under harmonised and predictable regulatory conditions.

Emission trading

At the same time we will need to look at how we will integrate carbon capture and storage into the EU emissions trading scheme. This will be part of the review of the scheme which should be finalised next year.

At present, the Commission is in the process of assessing the notified national allocation plans for the 2nd commitment period. I will ensure a stringent and fair assessment of these allocation plans that is consistent with the Kyoto reduction commitments and the verified emissions data for 2005. Especially for those Member States not on track with their Kyoto targets, the plans should be used to help them meet their reduction goals.

Climate Change – international context

Ladies and Gentlemen,

I believe there is a new momentum in the international debate on climate change. The international community must provide a stable and long-term international system to win the battle against climate change. This was the clear message from the Montreal Climate Summit of December 2005 and the EU is committed to show leadership in this process.

Last December in Montreal we launched a dialogue on global action to tackle climate change after 2012, when the Kyoto targets expire. The dialogue got off to an encouraging start in May and will continue in November at the UN climate change conference in Nairobi.

Strong action to curb emissions will be needed from all developed countries. That includes the US.

But we also need to find a fair way to bring major developing countries with fast-growing emissions into a future international regime. A positive trend is that developing countries are increasingly pursuing more sustainable energy policies which also benefit climate change.

Fast growing energy markets, like China and India, will continue to make use of coal as a strategic energy resource. To have a hope of cutting global emissions, we need to ensure that carbon capture and storage is also deployed in these countries together with other reduction options. We are already working closely with Chinese leaders, through the EU-China Climate partnership, who say they want to develop a zero emission coal power plant in partnership with the EU. The Commission will support China in view of having a large-scale plant operational in 2014. And we will explore doing the same with India and other countries.

Ladies and gentlemen,

Your presence here shows that the times of theoretical debates about climate change are over. The focus now is on concrete action to reduce emissions. Carbon capture and storage has a vital role to play. The Commission will continue working with you to ensure this technology delivers on its promise.

Thank you.

Item source: SPEECH/06/492 Date: 12/09/2006

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