The Evolution of European CCS Policy

Abstract

The European Carbon Capture and Storage (CCS) industry is still grasping for an effective policy structure which will support deployment of commercial CCS projects. This paper will consider the current context of CCS policy given three significant developments: (a) the agreement in 2014 for a technology neutral 2030 EU emissions reduction target; (b) a binding commitment at COP21 in Paris, Dec 2015, for a global emissions reduction target; (c) the collapse of the UK's CCS Commercialisation Programme in Nov 2015.The period 2010-2015 saw continued stagnation in the European CCS industry, with a series of projects proposed but then subsequently cancelled. This hints as three problems (1) an industry which is weak in communicating why CCS is important, and failed to engage a wider stakeholder base; (2) incumbent governments which are not willing to fund the initially high costs of the first CCS projects; (3) weak market based structures which force industrial consortia to rely on government subsidy, thus leaving projects vulnerable to political forces.The tension within the UK's Commercialisation Programme could still offer lessons for other potential CCS projects in Europe; and inform policy developments at the UK and European level. Namely (i) payment flows between the emitter / capture plant to the transport & storage provider, and the risk apportionment between those partners; (ii) the cost-benefit of oversized infrastructure and the challenges of a first project to finance the bulk of these costs.A recent report to the UK government on CCS recommended state-owned companies delivering all aspects of CCS, but such a recommendation makes it all too easy for a centre-right party focussed on smaller government and tight expenditure to dismiss CCS as “too difficult”. An alternative would be normal commercial and market arrangements for the power & capture section; and a regulated monopoly for the transport & storage infrastructure, backed by the state for risk and liabilities.