Transcript Speech Title

The European Perspective on Power
Generation and Carbon Capture and
Storage
Derek M. Taylor, Energy Adviser, European Commission1
1. The views expressed here are those of the author and may not necessarily reflect those of the European Commission
OCTOBER 07
Outline
 The three challenges for an energy policy

Security of supply

Competitiveness

Sustainability
 The role of coal and other fossil fuels

Shares in energy consumption

Prices of fossil fuels

Environmental impacts of fuels
 Key issues that must be urgently addressed

Reduction of carbon emissions

Demonstration of Carbon capture and storage (CCS)

Deployment of CCS technologies in EU and globally
 International Research Co-operation
OCTOBER 07
 The three challenges

Security of Supply

Competitiveness

Sustainability
OCTOBER 07
Security of Supply – Import dependence
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
total
2000
oil
2010
natural gas
2020
solids
2030
OCTOBER 07
Security of Supply - Sources of imports of fossil fuels
Main suppliers of gas
Main suppliers of oil
 Russia
(31%)
 Russia
(33%)
 Norway
(20%)
 Norway
(29%)
 Saudi Arabia*
(13%)
 Algeria
(21%)
 Libya
(10%)
 Mainly LNG
(12%)
 Iran*
( 7%)
 (* Total Middle East ~22%)
Main suppliers of coal
 South Africa
(26%)
 Russia
(16%)
 Australia
(15%)
 Colombia
(12%)
OCTOBER 07
Competitiveness - Border prices for oil and gas
X (today!)
OCTOBER 07
Sustainability – carbon dioxide emissions
CO2 from energy production and use makes up
80% of EU Greenhouse gas emissions
OCTOBER 07
Sustainability – quantities of carbon dioxide from energy
1600
1400
1200
1000
800
600
400
200
0
Power and Heat
Industry
Transport
Households
Services and other
Million tonnes of CO2
OCTOBER 07
 The role of coal and other fossil fuels

Shares in energy consumption

Prices of fossil fuels

Environmental impacts of fuels
OCTOBER 07
Gross inland consumption – 2004 (Mtoe)
700
600
500
400
300
200
Oil
Gas
Solids
Nuclear
Renewables
100
0
OCTOBER 07
Role of different fuels in electricity production (BAU)
4500
solid fuels
4000
3500
oil
TWh
3000
2500
gas
2000
1500
renewables
1000
500
0
1995
nuclear
2000
2005
2010
2015
2020
2025
2030
OCTOBER 07
Reserves of coal - global


Coal is an abundant energy resource:
 Global reserves:
900 billion tonnes
 Annual production:
4.5 billion tonnes
 Lifeline:
200 years
Coal is a reliable energy source:
 Fairly even reserve distribution, on almost all continents
- Accessible at reasonable costs
- Low risks in transport, handling & storage
OCTOBER 07
Indigenous resources of solid fuels in the EU
 The total solid fuel resources in the EU amount to around
438 billion tonnes
 Of which 309 Bt are hard coal
 The total solid fuel reserves in the EU amount to close to 88
billion tonnes
 Of which 36 Bt are hard coal
 Production in 2004 was 187 Mt of hard coal and 392 Mt of
lignite (total 579 Mt)
Source: Euracoal
OCTOBER 07
Solid fuel – benefits for security of supply for EU
 So indigenous reserves of hard coal are
equivalent to close to 200 years of production
at its present level.
 Reserves of lignite are equivalent to around 130
years of production at its present level.
 Resources of both are significantly greater –
especially those for hard coal
OCTOBER 07
Oil price - $/bbl Spot Brent Crude – Source BP
90
80
70
60
50
40
30
20
10
0
8
8
19
0
9
19
2
9
19
4
9
19
6
9
19
8
9
19
0
0
20
2
0
20
4
0
20
6
0
20
OCTOBER 07
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
Gas price - $/billion BTU – cif Europe – Source: BP
10
9
8
7
6
5
4
3
2
1
0
OCTOBER 07
Coal price – $/t - coal marker price (NW Europe) – Source: BP
90
80
70
60
50
40
30
20
10
0
8
8
19
0
9
19
2
9
19
4
9
19
6
9
19
8
9
19
0
0
20
2
0
20
4
0
20
6
0
20
OCTOBER 07
Fossil fuel price evolution – 1988 – present - Summary
 Oil and gas prices have quadrupled in the last 20
years
 Coal prices have (only) doubled
OCTOBER 07
 Key issues that must be urgently addressed

Reduction of carbon emissions

Demonstration of Carbon capture and
storage (CCS)

Deployment of CCS technologies in EU
and globally
OCTOBER 07
An Energy Policy for Europe
 Adopted by the European Commission in January 2007
 Endorsed by the European Council in March 2007
 One strategic objective:
 Reduction in CO2 emissions by 20 or even 30%
- by 2020
OCTOBER 07
CO2 emissions from energy in EU-25 – million tonnes
3900
3850
3800
3750
3700
3650
3600
3550
3500
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
3450
OCTOBER 07
Sustainability – future emission trend ….. (BAU)
600
500
400
300
200
100
0
-100
-200
2000/1990
transport
2010/1990
industry
2020/1990
electricity/steam
2030/1990
other
total CO2
OCTOBER 07
Carbon dioxide emissions during electricity generation
OCTOBER 07
The key issue for coal – view of the European Commission
 Coal is a key contributor to the EU's security of
energy supply and will remain so.
 However, coal can continue to make its valuable
contribution to the security of energy supply and the
economy of both the EU and the world as a whole
only with technologies allowing for drastic
reduction of the carbon footprint of its
combustion.
OCTOBER 07
The need for carbon capture and storage (CCS)
 Future coal (fossil fuel) generation to be low carbon
 The Commission would like to see all new fossil fuel generating plant built
after 2020 to include CCS
 The need for commercial scale demonstration of CCS
 In order to demonstrate the variety of different option for CCS up to 12 largescale demonstration plant need to be constructed - by 2015
 If demonstration is delayed then deployment will be delayed
 The need for public funds to support such demonstrations
 There will need to be very significant industry and public funding if the
necessary demonstration plants are to be built
 ……..and very strong political support over a period of time
 The European Commission is expected to adopt a Communication on
support for CCS tomorrow………
OCTOBER 07
The cost of CCS – a critical issue

Mobilizing decisive industry commitment will be crucial
 Without such funding complementary public funding may not be triggered
 The dedication of substantial resources by companies is a precondition for the
stimulation of the technologies

Paving the way for strong Member States’ involvement
 Some MS have identified possible approaches
 Feed-in tariffs, up front investment grants, guaranteed CO2 prices
 Use of revenues from ETS auctions might be appropriate
 Structural funds in new MS (EU-12)
 Revision of State Aid guidelines for environmental protection

Identifying sources of financing at EU level
 Financing low-carbon technologies to be addressed
 European financial institutions could be instrumental
 Continuing support under the EU’s Research Programme
OCTOBER 07
Creating the right conditions for CCS
 The need for clear regulation for CCS – both in EU and globally
 The European Commission is expected to propose framework
legislation for CCS tomorrow (23 January)
 Recognition of CCS in the EU Emission Trading Schemes
 The issue of CCS will be addressed in the new Directive on the
ETS expected to be adopted by the European Commission
tomorrow……
 Greater international co-operation on CCS
 The European Commission is developing bilateral activities with
India, China and South Africa
 The EU and many of its Member States are active in the CSLF
OCTOBER 07
International Research
Co-operation
FP7 Energy Theme
Concrete opportunities in New Calls
OCTOBER 07
Specific International
Cooperation Actions (SICA)
o Topics for Collaborative Projects especially designed and
devoted to the international cooperation with targeted
ICPC – including India
o Address problems, on the basis of mutual benefit, of
shared interest and importance e.g. the environment
consequences of energy policies, energy supply interdependency, technology transfer and capacity building
OCTOBER 07
SICA Topic 5.2.1: CCS capacity building with the large
emerging economies (EE)
• Content and scope: research aimed at first global estimate of the
CO2 storage capacity in large EE, matching sources and sinks and
identification of a few potential storage sites for large emission
point sources. Capacity building in CCS inc. development of
transport infrastructure
• Funding scheme: Collaborative Project (2 X MS + 2 X ICPC*)
• Expected impact: allow deployment of zero emission fossil fuel
based power plants in large EE with sufficient pre-requisite
knowledge (CO2 storage potential) and technical know-how
• Other information: SICA; balanced partnership between EU and
Large EE members of the CSLF; institutions from developed
countries also members of CSLF welcomed)
*
International Co-operation Partnership Country
OCTOBER 07
Two stage Evaluation Procedure
OUTLINE PROPOSAL
• Submission deadline: 26 February 2008, 17:00:00
• Evaluation: March-April 2008
FULL PROPOSAL
Submission deadline will be specified in invitation
letter (indicative: 29 May 2008)
Evaluation: June 2008
Full proposal should be complete and precise, but
as concise as possible
OCTOBER 07
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 Some basic conclusion
OCTOBER 07
Coal – secure and competitive, but ……
 The European Union is increasingly dependent on imports to
meet its energy needs
 Coal is a more secure source than other fossil fuels – because
of world and European reserves/resources
 Coal has economic benefits over other fossil fuels – including
the price is generally less volatile and is increasing at a
slower rate
 However coal is a major source of carbon dioxide emissions
It is the main source of carbon emission in power
production
OCTOBER 07
What we MUST do ….
 The world needs to reduce its carbon dioxide emissions to
slow down climate change
 Removal of carbon dioxide from the waste stream from coalpowered electricity production is a vital part of this reduction
 Commercial scale carbon capture and storage needs to be
demonstrated urgently
 Demonstration of CCS will require changes to legislation and
strong public and political support
 Full deployment of CCS will require very significant funding
by industry and also significant public funding and other
forms of support
OCTOBER 07