EU cooperation with developing countries on CCS Bonn
EU cooperation with developing countries on CCS Bonn, 3 June 2009 Lynn Sheppard European Commission DG ENV, Unit C 1: ‘Climate strategy, international negotiation and monitoring of EU action’
Outline • The context • EU cooperation with China • EU cooperation with other developing countries and emerging economies • Concluding remarks
The context l l l Action by developed countries is not enough Energy efficiency should deliver the greatest reductions, but coal will continue to be an important element of the energy mix We have made commitments in the EU; want to help coal -dependent emerging economies (climate and energy package) Cooperation on clean technologies will not only practically help developing countries tackle climate change, but could also help politically to get a deal on post-2012 – EUChina cooperation could serve as a model Publicly supported demonstration in the EU and in 3 rd countries can create important business opportunities while helping achieve climate change goals
The context: EU-China Cooperation on Near Zero Emissions Coal (NZEC) l EU-China Summit (Sept 2005) Declaration on Climate Change & Energy: m l l l “ We will aim to achieve the following co-operation goals by 2020: To develop and demonstrate in China and the EU advanced, near-zero emissions coal technology through carbon capture and storage ” Phase I: R&D – 3 projects funded by EC and UK – complete October 2009 Phase II (eg. 2010 -2012) – feasibility and design – EC support agreed, May 2009 Phase III (2012 -? ) – construction and operation – forthcoming Commission Communication proposes how to proceed European Commission Environment Directorate General: Unit C. 1 - Climate Strategy, International Negotiation and Monitoring of EU Action
Proposed EC Communication Ø Ø l Because of existing political commitment, advanced cooperation, emissions trajectories and lock-in potential (and eventual deployment potential), China chosen as first EU-3 rd country demo project EC Communication is the start of a process of discussion and negotiation with China, EU Member States and other interested public and private stakeholders Aims: To facilitate early demonstration of CCS technology in emerging and developing countries in order to maximise the public benefits of these technologies (GHG emissions reductions, improved air quality) as they move from demonstration to deployment, increase experience and economies of scale and drive down costs, initially using China as a case study. For that purpose, provide financing through a viable financing model – public private partnership
An option worth further exploration: Special Purpose Vehicle m highly flexible investment vehicle - can be tailored to suit one-off project m relatively light legal and managerial structure m rules governing the SPV are set down in advance and carefully circumscribe their activities. m suited for the transfer of assets to finance a large project achieving a narrow set of goals while limiting the risk to the investing entity. m public donors can ensure full coherence with public policy objectives. m combine public and private funding m Need to inform and garner support from China, EU and EEA MS, IFIs and private companies m Private investment in CCS is only attractive if there are prospects for a revenue stream, eg from the carbon market and/or enhanced oil recovery.
Funding clean coal and CCS cooperation with emerging and developing countries
l l Communication: Demonstrating CCS in emerging and developing countries: the EUChina Near Zero Emissions Coal (NZEC) Plant project to work up and establish an appropriate financial structure, eg an SPV, working with EIB and other IFIs to support Phase III of the NZEC project in close cooperation with interested EU and EEA Member States & Chinese partners; to invite MS to pledge financial support. to further secure political support from China and ensure maximum value for European public money in the negotiation of the cost-sharing arrangements; to engage in the international negotiations on a post-2012 global climate change agreement in support of carbon financing for CCS technologies both in the first commitment period of the Kyoto Protocol (up to 2012) and in the new regime thereafter. NB: subject to agreement by the European Commission, June 2009
The broader context: what else are we doing? l l € 60 m earmarked from Environment and Natural Resources Thematic Programme (ENRTP) in Annual Policy Strategy 2009 ENRTP Annual Action Plan 2009 agreed spending of first € 10 m (May 2009) - Two planned activities: m capacity building, studies and demonstration activities on clean coal technologies and CCS in developing and emerging economies through calls for proposals later in 2009 m support to the site-specific feasibility and design phase of the NZEC project in China, and the transition to Phases II and III of NZEC, consisting of i) feasibility study ii) dissemination actions – tender later in 2009 Plan for remaining € 50 m to go to NZEC Phase III Currently tasking consultants to advise us on how to shape NZEC Phase II and other capacity building activities
ENRTP project: capacity building activities (excluding China) l Capacity building, studies and demonstration activities on clean coal technologies and CCS in developing and emerging economies through calls for proposals on activities such as the following: l Support for national CCT and CCS capacity building and technology development centres; Capacity building in the form of internships on CCT and CCS for engineers and power sector managers from a limited number of emerging economies and developing countries to European companies; Cooperation activities between interested groups in emerging economies and developing countries and those working on CCS demonstration plants in Europe, and Potential demonstration activities for clean coal and CCS technologies. l l l Call for proposals 2 nd half 2009: interested governments/organisations/entities will have to bid in
Concluding remarks • • EU has taken important steps, but developed countries cannot tackle climate change alone Need to provide incentives to demonstrate CCS to assess true mitigation potential, create better understanding and awareness & drive down costs – in developed and developing countries Because of barriers (especially financial gap) CCS may initially require special treatment, but the sustainable solution is a price for carbon Cooperation with China has a wider significance in context of Copenhagen lynn. sheppard@ec. europa. eu
More information on EU climate policy: http: //europa. eu. int/comm/environment/climat/home_en. htm
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