Carbon capture and storage - input to EUETS Directive review

Penny Tomlinson

Proposed Terms of Reference for ETG CCS Group

• To co-ordinate the ETG views on how to treat potential carbon capture and storage (CCS) projects within the EUETS.

• Initially to consider options for treatment of CCS projects in phase III of the EUETS to provide views to Government (through WG 8) as input to the EUETS review. In particular to consider definition of installations, responsibilities for emissions and any wider links with regulatory framework for CCS projects.

• Phase II projects are likely to be addressed on a project by project basis and whilst ETG would like to be kept aware of proposals it is unlikely to need to provide significant input to the discussion.

• Monitoring, reporting and verification will be dependent on the proposed method of treatment of CCS installations and is therefore an issue to be considered at a later date through WG 3/7.

Key issues

• Requirements of directive

• Definition of installation

• Responsibilities for emissions

• Links with monitoring and reporting

• Any other issues?

Current options for CCS in EUETS

• Article 24 - From 2008, Member States may apply emission allowance trading in accordance with this Directive to activities, installations and greenhouse gases which are not listed in Annex I, provided that inclusion of such activities, installations and greenhouse gases is approved by the Commission in accordance with the procedure referred to in Article 23(2), taking into account all relevant criteria, in particular effects on the internal market, potential distortions of competition, the environmental integrity of the scheme and reliability of the planned monitoring and reporting system.

• MR and V guidelines do not allow for recognition of storage of CO2 to be counted as zero emissions

– For directive review do we need an alternative to Article 24 as a way of recognising CCS projects?

– MR&V guidelines will also need updating – consistency with IPCC 2006 guidelines

Definition of Installations

• A stationary technical unit where one or more activities listed in Annex I are carried out and any other directly associated activities which have a technical connection with the activities carried out at that site and which could have an effect on emissions and pollution

– Is this sufficient to cover CCS chain from capture to storage?

– Are all parts of chain covered by ‘technical connection’?

IPPC 2006 guidelines

The capture/storage chain

CO2 capture

plant

Combustion installation

transportCO2

capture plant

storage

Injection (including

EOR)

Hydrogen to non EUETS sector?

Fugitive CO2 emissions

Long term storage

Outside remit of EUETS

Transport from other EU member state?

Options for consideration

• Treatment of plant with CCS as a single installation including all stages from capture to storage

• Define separate installations along chain eg– Combustion plant (including capture?)– Transport– Injection– Storage

• Issue credit for CO2 storage

Single Installation

• Key issues– Different operators along chain - who has overall

responsibility for monitoring and reporting

– Multiple users of pipeline /storage installations including from different Member States

– Responsibility for emissions if CO2 is used for EOR?

– Accounting for emissions from storage in different EUETS years

Separate Installations• Key issues

– Combustion already included as activity, should CO2 capture be included as a separate annex 1 activity (potentially separate ownership/operator of plant)?

– Can you define transport (particularly by ship) as an installation? Or could include transport emissions as responsibility of combustion plant operator?

– Would allow storage site to account for any fugitive emissions that occur in different years

Credit for CO2 storage

• Key issues– Would require post-hoc adjustments – Need to account for installations from different member

states using single storage site– Accounting for CO2 storage from non-EUETS

installations resulting from hydrogen separation from fuels

– Still requires monitoring along all parts of chain– Benefit of CO2 reduction would need to be accounted

for contractually

Summary

• Is there a preferred approach for treatment of CCS installations?

• If so what are the implications for EUETS review?