Evaluation of the EU's CCS Directive - First Stakeholder meeting 8th September, Brussels

Evaluation of the EU's CCS
        Directive

   First Stakeholder meeting

        8th September, Brussels

Evaluation of CCS Directive

The main objectives are to assess:

• The legal provisions, their:
  – Effectiveness
  – Relevance
  – Efficiency
  – Coherence
  – EU added-value

• How well the enabling policy of CCS at European level has worked, and

• Future path…

Evaluation of CCS Directive

We want an inclusive process with all relevant stakeholders.

Methodological pillars:

• Literature review
• Stakeholder consultations
• Case studies
Interested stakeholders can participate in the review through:
• Online questionnaire
• Interviews
• Stakeholder meeting
• Focus groups

Timeline

Gathering information
Online questionnaire:                 19 May – 29July
Interviews:                           June - August
1st Stakeholder meeting:              8 September

Formulating recommendations
Focus groups:                         Sept/Oct
2nd Stakeholder meeting:              November

Final report: December 2014

Aim of the day

1. Presenting findings
2. Verifying information
3. Complementing information

Agenda

10.00   – 10.30   Welcome with coffee
10.30   – 10.45   Short introduction to the project and day: Hans Bolscher (Chair)
10.45   – 11.00   EC’s role and goals:                Kerstin Lichtenvort
11.00   – 11.30   Presentation first findings:        Ton Wildenborg, Naser Odeh
11.30   – 12.30   Reactions and contributions from all participants

12.30 – 13.30      Lunch (sorry, at your own expense. There is a canteen-service
                  available in the building and many smaller restaurants near by)

13.30   – 14.30   Further reactions and contributions - all participants
14.30   – 14.40   First findings on ‘enabling policy for CCS’: Rob Williams
14.45   – 16.00   Reactions and contributions from all participants
16.00   – 16.30   Closing remarks (including clarification of the follow-up process)
                  Hans Bolscher and Kerstin Lichtenvort

EC's goals and role
    CCS Evaluation - Stakeholder Meeting

          Brussels, 8 September 2014

Kerstin LICHTENVORT
Unit C.1, Low Carbon Technologies
DG Climate Action
                          Climate
                           Action

Goals of the study

 The CCS Directive: in place since 2009 and had
  to be transposed into national law by June 2011
 Article 38: The European Commission is required
  to review the Directive and present a report to
  the European Parliament and Council by 31 March
  2015
 In order to support the review of the Directive,
  the Commission contracted an external
  evaluation study

                       Climate
                        Action

The aim of the study

 to collect and analyse data on the technical,
  environmental, economic, legal and social
  aspects of the implementation of the CCS
  Directive and the other linked legislative
  instruments
 to provide the Commission with the necessary
  background information and analysis so the
  Commission can carry out the review and prepare
  for the next phases of the process

                      Climate
                       Action

Role of the Commission

 The meeting aims at collecting your stakeholders
  views on the questions raised in Article 38
 The Commission is only an observer at this stage
  and can provide clarifications on the legislative
  framework, policy and process if necessary

                        Climate
                         Action

Thank you!

For further information:
http://ec.europa.eu/clima/policies/lowcarbon/ccs/directi
ve/index_en.htm
Functional mailbox: CLIMA-CCS-DIRECTIVE@ec.europa.eu

                          Climate
                           Action

First findings - Directive

Naser Odeh – Ricardo-AEA
Ton Wildenborg - TNO

Stakeholder consultation statistics

 We have received stakeholders input via:

  I. 105 completed questionnaires
  II. 16 written submissions
  III. 25 interviews

 We have analysed 8 case studies

Stakeholder consultation statistics

 Questionnaire responses per country

Stakeholder consultation statistics

 Questionnaire responses per stakeholder type

Need for revising the CCS Directive?

 Majority - not enough experience for changes
 Ideas for revision:
  i. ‘Capture readiness’ clause
  ii. Criteria for transfer of responsibility
  iii. Treatment of liabilities
  iv. Treatment of EHR under ETS

 Use existing legislation to address new CCS issues
 Revision - a signal of increased regulatory risk

Objective of CCS Directive

 CCS Directive objectives according to the Impact
  Assessment:
  i. To manage CCS environment, health and safety
       (EHS) risks
  ii. To internalise the positive externalities of CCS
       deployment
  iii. Addressing public acceptance concerns
  iv. Helping to create harmonised procedures to ensure
       a common approach
  v. Helping to increase the speed and scale of CCS
       uptake

Objective of CCS Directive

 Majority - objectives appropriate

 Directive provides enabling framework

 No (or negative) effect on progressing the speed of
  CCS deployment – lack of commercially-viable case for
  CCS

 Many respondents believe that Directive is indirectly
  hampering public acceptance.

Scope of the CCS Directive

 Overall:
  i. Adequate coverage of EHR

 i.   Does not (adequately) address: biomass-CCS,
      industrial CCS, ship transport, CO2 utilisation

 i.   Some risk of double regulation - can be better
      addressed by other existing EU legislation

 i.   More emphasis needed on EHR in the ETS
      regulation and public acceptance in the 2030
      climate and energy package

Scope of the CCS Directive

 Biomass CCS:
  i. Future issue – power plants co-firing biomass
  ii. Not relevant to the Directive – Most respondents
       believe that ETS regulation is more relevant route
 EHR:
  i. Not in focus of the Directive – different from storage
  ii. Majority: Inclusion into ETS regulation is more relevant
  iii. Use of gas for EHR purposes implicitly subsidised and so
       hampers the use of CO2 for EHR purposes
  iv. Some pointed the contradiction that EHR brings out
       more carbon but is still necessary in the short term

Scope of the CCS Directive

 Industrial CCS:
i. Important element of CCS – should be added
ii. Could ease public acceptance to CCS in general
iii. Kick-starter role vs. slow mover
iv. NGO support

Capture provisions

 Article 12 (CO2 acceptance criteria)
  i. Provides flexible wording (‘overwhelmingly’)
  ii. CO2 criteria could be clearer and more precise,
      not tighter

 Article 33 (capture readiness power plants)
  i. Does not support future CCS implementation
  ii. Industry contributors – formulation sufficient
  iii. Should cover industrial installations

Capture: EPS

 Mandatory Europe-wide EPS necessary (asap)
 Industry contributors not in favour
 Will not necessarily encourage CCS demonstration –
  couple with mechanism that incentivises CCS
 Undermines ETS
 Better addressed via the Large Combustion Plant
  Directive
 Difference in views on practicable level of EPS

Transport provisions

 Transport by ships – adequately regulated
  i. Ships as “installations” under ETS?
 Environmental risks – adequately addressed
 Integrated transport and storage infrastructure
  should be developed ahead of establishing capture
  projects. Options for support:
  i. Incentives?
  ii. Commercial fees?
  iii. Governments responsible – a ‘public good’?

Storage provisions: Definition of ‘permanent’

 Many stakeholders: not perfect but workable (also for EHR) as
  it enables flexible interpretation
 Most: not be replaced with a specific number of years.
 NGOs: term ‘permanent’ helps public confidence and credibility
 Majority: in favour of distinction between minor and major
  leakage, particularly in connection with transfer of
  responsibility (Article 18)

Storage provisions: Transfer of responsibility

 Most: criteria are workable
 Majority: default periods (post-closure pre-transfer phase and
  absence of significant irregularities) are not practicable and
  need to be reconsidered
   Case-by-case flexibility
 Prominent issue: unknown value of CO2 from future leakage;
  surrender of EUAs with unknown price represent a major
  barrier

Storage provisions: Financial security & mechanism

 Most: provisions are too rigid and need to be adjusted
 Guidance Document 4: over-demanding and prescriptive;
  additional liabilities that are not in the Directive
 Financial requirements seen as a barrier to entry for anyone but
  very large companies

Storage provisions: Monitoring plan

 Majority: criteria for monitoring plan in Article 13(2) and for
  post-closure monitoring plans are acceptable
 Guidance Document 4: too prescriptive

Storage provisions: Exploration permit

 Respondents with experience in exploration permitting (~25%):
  in many cases exploration permits were not required
 MSs need flexibility to account for the nature (the geology etc.)
  of the storage site.

Storage provisions: Storage permit

 Many: application process is a burden with many uncertainties
 Relationship between the MS competent authority, the EC
  reviewer and the applicant is immature and unclear.
 Industry stakeholders question the value and purpose of having
  the EC involved in permit approval.

Storage Guidance Documents

 Most: Guidance Documents 1 to 3 are helpful in the preparation
  and implementation of CCS projects in MSs.
 Majority: Guidance Document 4 is over-prescriptive and implies
  unreasonable, major financial liabilities.

Storage atlas

 Many: EU-wide atlas of CO2 storage capacity important to drive
  data collection
 Others:
   MSs are better placed to create their own national atlases
   Storage atlas not a priority and will not speed up CCS deployment

Public acceptance

 Most (from all sectors): Directive did not help improve public
  perception although it enhanced awareness.
 Many (mainly industry stakeholders): Directive even had a
  negative influence on public perception, due to the fact
  treating CCS as a hazardous activity.
 General public awareness is felt to be low with opposition to
  onshore storage having the highest profile public activity.
 EU pilot projects had to make extensive efforts to convince the
  local public, which was easier for projects in industrialised areas
  and with offshore storage.

Progress in CCS deployment: EU

 Consensus: Europe is well behind other countries in terms of
  progress on the uptake of CCS technology.
 Vast majority (all sectors) believed that there has been some
  but limited progress in knowledge and understanding of costs,
  performance and technical feasibility for the full CCS chain.
 Progress is largely of an academic / theoretical nature.
 European technology providers are involved in demonstration
  projects elsewhere in the world. However, European electric
  utilities are not gaining experience.

Progress in CCS deployment: Elsewhere

 Canada an example of greater flexibility in regulation, which
  enabled quicker project realisation.
 Progress in the US has been quicker due to the presence of CO2
  transport networks and an existing EOR industry.
 US acceptance of public liability for long term storage avoided
  the issues occurring in the EU.
 Specific CO2 taxes are proving to be a success elsewhere, e.g. in
  Norway.
 Australia having a more pro-active and positive attitude
  towards CCS.
 China is active - planning demonstration projects.

First findings – Enabling policy

Rob Williams – Triple E Consulting

General remarks on Directive

•   Most stakeholders believe that the key issues for
    discussions are related to the CCS policy framework
    (enabling policies) in Europe rather than the Directive
    itself.

•   Some policy contradictions, but the majority feel these
    are minor and should not be addressed now.

•   Some say the ‘tone’ of the Directive (and Guidance
    Documents) is too negative - too ‘risk focused’.

•   Some stakeholders do not support the concept of CCS.

Expectations towards the European Commission

Market wants a clearer message and commitment from the
EC
o Many stakeholders are less concerned with the type of
   policy to support CCS (EPS, ETS, CO2 tax, etc.) than with
   the need for the Commission to signal clearer
   commitment to CCS rather than (in their view) the
   current ‘half-hearted’ policy

Need for roadmap and long term planning on CCS
o In 2030 package EC should require carbon reduction
  roadmaps per MS up to 2050
o Broad support for a CCS target as part of the total CO2
  reduction target (and the EU and MS roadmaps)

ETS

• Correct instrument to support CCS in the longer
  term
• BUT Insufficient to support / incentivise CCS to
  2030
• No need to formally assign ETS benefits
  throughout the CCS chain – business case issue
• Needs some reform – regarding:
  •   Biomass plus CCS
  •   EHR
  •   Ship transport
  •   CDU

Financial support

CAPEX
•   Subsidies were initially seen as positive (NER300, EEPR),
    now the view is that they do not work well
•   Expand NER300, e.g. higher levels and include more OPEX
•   Regional Development and Cohesion funds are mentioned
    as a possibility

OPEX:
•   Need for additional support on the OPEX side. E.g. Feed-
    in tariffs / Contracts for Difference? Creating demand for
    CO2: EHR.
•   Calls for a level playing field with RES support – targets
    leading to financial support mechanisms
•   Mixed levels of support for CCS certificates

Closing remarks

Next steps
- Two weeks to submit additional comments (by
  22nd September)
  -   E-mail to ccsreview@tripleeconsulting.com
  -   Please be as concise and specific as possible

- Invitation focus groups
- 2nd stakeholder meeting (tentatively 7 November
  (subject to room availability))

www.ccs-directive-evaluation.eu