If approved, the paper would require the Commission to prepare an impact assessment and legislative proposals “before the end of the current mandate,” in 2014, so that CCS can be deployed after 2020.

The communication, which is intended to launch a public consultation, says that performance standards of the type being considered for Britain’s electricity market reform, could give “certainty” to investors dismayed by wild plunges in the carbon market in the last year.

These would set mandatory and perhaps tradable limits to emissions from energy firms, which could also cover energy-intensive industries. 

“One of the best things about regulation is that it is not susceptible to volatile price fluctuations so it gives a much better price signal to investors, and that’s a good way forward,” said Sanjeev Kumar, a senior associate at the E3G environmental consultancy.

In Norway, which is outside the EU, no new gas power plant can be built without CCS. The country currently hosts two of the world’s 20 demonstration CCS projects.

Currently, the EU draft is being debated within the European Commission, where it faces resistance from officials in the climate directorate, who contend that the Emissions Trading System (ETS) should be the primary driver of CCS investment.

But with EU carbon allowances currently trading at around €6.4 per tonne, this seems an unlikely proposition to many. Even the Dutch energy giant, Shell, which has pioneered the case for market intervention to support CCS, now favours a more flexible approach.

Source: EurActiv - Special Report, Published 15 January 2013, updated 16 January 2013

>>more