Long-term Viability of Carbon Capture and Storage in a European Context

There is much discussion concerning the question whether Carbon Capture and Storage (CCS) is a sustainable climate change mitigation option. An even more debated topic is currently whether it is affordable and economically viable on the long term. Different legal frameworks at different levels around the globe seek to provide incentives for CCS technology. This article focuses on two core aspects of economic viability, more specifically financial incentives and transparent handling of liability, and how they are dealt with at the European Union level in the CCS proposal. This approach is compared with the approaches chosen in Australia and the USA. It seems that, at all levels, more efforts are needed to make CCS viable on the long-term. Core elements to succeed are transparency and pragmatism.

By way of conclusion, it has been ascertained that the financial incentives regime of the European proposal for a CCS directive is too soft and vague to be effective. More funding and transparency will be needed to ensure that CCS indeed becomes economically viable in the long term. First, several demonstration projects have been scheduled, but there is as yet no clarity about their funding. Second, inclusion in the EU ETS has been deferred until 2013, with the exception of current opt-in possibilities for Member States. Details of accounting and whether all CCS projects or only harmonised categories will be included are issues that will only be addressed definitively prior to the third phase, starting in 2013. Third, the State Aid Guidelines for Environmental Protection are very vague, and it is unclear how the generally positive attitude of the Commission towards state aid for CCS will bear out in practice. As regards liability, a more positive assessment of the proposal is justified. Liability rules are very clear: operational liability lies with the operator, who has to provide a financial guarantee. Under normal circumstances, following closure, responsibility can be transferred to the state, which needs to reserve allowances in the event of long-term climate liability. Also, the will apply the environmental liability directive to local environmental damage. The only weaknesses can be identified in the calculation of the security, and the exact conditions for transfer.

Copyright: © Lexxion Verlagsgesellschaft mbH
Quelle: Issue 4/2008 (Januar 2009)
Seiten: 11
Preis inkl. MwSt.: € 41,65
Autor: Kristof Hectors

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