Author: Natalie Antonowicz

CCS Plant in Germany (Image by: Vattenfall)

Saudi Arabia, and other oil exporters such as Norway have been negotiating for the inclusion of carbon capture and storage (CCS) as a means by which developed countries can offset their emissions through the Clean Development Mechanism.

Carbon capture and storage refers to the method by which carbon emissions are collected at the point of emission - or ‘at the pipe’ - and sequestered underground or in the seabed. CCS may be used for industrial processes such as power generation and the extraction and refinement of fossil fuels. This is not a means of reducing the total amount of emissions generated, but a means of preventing emissions from entering the atmosphere.

Norway’s Deputy Oil Minister Liv Monica Stubholt has been urging states to support her country, Saudi Arabia, and OPEC in pressing for CCS to be included in the CDM. The International Emissions Trading Association supports the states, and feels that CCS’ exclusion from the CDM is the result of “seemingly subjective and politicised reasons, rather than those drawn from any objective analysis”.

Despite the efforts of Norway and Saudi Arabia, it is almost impossible that the Copenhagen Conference will result in an amendment to the CDM which would allow CCS projects to qualify for emissions reduction under the mechanism.

During the Copenhagen Conference, the Subsidiary Body for Scientific and Technological Advances (SBSTA), which is one of two permanent bodies to the Conference of Parties (COP) formally pushed its decision regarding whether CCS will be incorporated into the CDM until either the 2010 conference in Mexico, or the 2011 conference in South Africa.

The Subsidiary Body for Scientific and Technological Advances is not seriously considering Saudi Arabia and Norway’s proposals due to concern registered by other states and stakeholders. The body’s  recent report cites concerns about “the long-term liability for the storage site, including liability for any seepage”.

Although incorporating CCS into the CDM was among the major negotiating goals of Middle Eastern and North Sea states, the SBSTA’s deferral of the issue suggests that it is not under serious consideration by the major organs of the COP. Additionally, the issue has been proposed at previous Conferences, such as COP14 in Poznan, Poland, where it was not considered by the Body.

Debate among environmentalists about CCS also hinders the chances of success for Saudi Arabia and Norway’s proposal. Many stakeholders argue that it is less expensive to develop renewable energy technologies than it is to develop CCS technologies. Additionally, CCS has not yet been deployed on a commercial scale, and remains a largely experimental technology.

Opposition to the inclusion of CCS into the CDM by states such as Brazil, and consultancies such as Point Carbon has not wavered during last week’s negotiations. Brazil has argued that delegating funding to CCS projects may reduce available monies for that state’s efforts at renewable energy deployment and forest protection. Brazil’s rainforests serve as a major carbon sink for the world’s emissions.

Ultimately, despite its rejection as an instrument of the Clean Development Mechanism, carbon capture and storage is gaining global popularity. The European Union plans to invest EUR 1 billion into six demonstration projects, and the United States Department of Energy has pledged almost USD 1 billion for three demonstration projects. Private firms have also been investing in CCS. This indicates that as more stakeholders become involved in the issue, the incorporation of CCS into the CDM may indeed be strongly considered at future COPs, however, it is virtually impossible that Saudi Arabia and Norway’s efforts will lead to any serious consideration of the issue at COP15, due to opposition by states and civil society, and a lack of consideration by international bodies. According to Mari Luomi of the Finish Institute of International Affairs, the proposal “is not likely to move anywhere” at COP15.

This month, the European Commission published development roadmaps for seven key low carbon technologies. Thy relate to wind, solar, bioenergy, CCS, nuclear technologies, as well as smart grids and energy efficiency, for the period 2010 and 2020. 

There is a long-standing policy debate over how best to spur innovation in low-carbon technologies. One option is to let markets ‘pull’ technology development along. According to this reasoning, if governments ensure there is a credible price for CO₂ and other greenhouse gases, then companies will start to develop new technologies with lower emissions in response to this market signal. The other possibility is for governments to use a policy ‘push’ and pay directly for early-stage R&D into new and promising technologies.

The roadmaps follow the publication of a EU Strategic Energy Technology Plan in 2007. It outlined a vision where the EU enjoyed global leadership in a range of low-carbon technologies. Each roadmap has been developed by the Commission in consultation with the relevant industries, and attempts to describe, step by step, how each technology should develop over the next decade in order to fulfil the vision of the SET Plan. Development in each of the technology areas is backed by an European Industrial Initiative, which is a public-private partnership working in each of the low-carbon technology areas.

In practice, governments usually opt for a combination of the two. The SET Plan was the EU’s policy push for low technologies, accompanying the market pull of the carbon and renewable energy targets included in the Climate and Energy Package it unveiled in the same year.

While the Climate and Energy Package and its 20/20/20 targets have successfully made it into EU law, the SET Plan has arguably been somewhat neglected by comparison. The Commission’s new communication implicitly acknowledges this by speaking of the need for the SET Plan now to be ‘taken forward to implementation’.

But implementation costs money and, critically, the Commission’s new roadmaps don’t come with any new funding plans attached. The Commission calls on Member States to dig deeper into their own pockets to fund energy R&D – a recommendation that is unlikely to receive a warm welcome from treasuries across Europe as they seek to recover their battered public finances – and proposes to use the European Investment Bank’s lending power to fund research in promising areas.

The communication also refers to the role of other countries in developing low-carbon technologies. As with other areas of international climate negotiations, there are large inequalities in the distribution of low-carbon innovation. While the EU can justifiably point to its global climate leadership committing early to substantial emission reductions (at least, compared to other developed countries), the US is leading the pack in terms of its expenditure on developing low-carbon technologies, from biofuels to smart grids. A number of international negotiations are in progress to improve coordination between developed countries and sure that they all pull their weight when it comes to energy R&D; another set of negotiations again are discussing how developing countries can access these new technologies.

As reported by EurActiv, it is not only global cooperation that lies behind the SET Plan: there is something of a technology race occurring between different developed countries, with potentially large future gains available to countries who lead the development of new low-carbon technologies. The IEA this week released its technology road map for CCS that envisages an investment of US$6 trillion by 2050. Companies who are successful in developing CCS technologies now will be able to profit from this economic activity in future. Similar arguments apply to other low-carbon technologies like renewable generation and low-emissions vehicles.

There is no question that low-carbon technologies will be vital during the twnty-first century: without them mitigating climate change will be intolerably expensive. How many of those technologies will be European in origin depends in no small part on whether the Commission succeeds in finding R&D funding at a scale that matches its R&D vision.

The Committee on Climate Change released its latest report today highlighting the devastating impact the economic recession has had on carbon trading schemes and investment for low carbon technologies. The report emphasises the vast investment needed in efficiency through green housing, power and transport in Britain, to service the goal of meeting the commitments in the Climate Change Act.

The Committee has called for ‘dramatic improvements’ in efficiencies across the economy, suggesting that more ‘forceful’ policies may be required to increase annual cuts in emissions by four-fold.

The Committee also recommends

- The introduction of 1.7m electric cars, with 3.9m drivers trained in fuel-efficient techniques, by 2020

- Building 8,000 new wind turbines, alongside four new coal power stations fitted with carbon capture technology and three new nuclear power plants, to slash emissions from the power sector by 50% by 2020.

The Government’s largest proposed clean coal plant to be fitted with CCS was shelved by E.ON last week, also reportedly as a result of the recession. However, the announced delay in the Kingsnorth project, which had become the focus of protests against climate change, heavily targeted by climate camp activists and the media; leaves politicians wondering how they might fill the expected energy supply gap in 2016.

The recession has also had a significant impact on the world’s emissions trading schemes - expected to be pivotal in driving market signals for low carbon investment. The drop in energy consumption, which led to the shelving of the Kingsnorth project in the UK, has also led to a drop in emissions in Europe, resulting in a surplus of carbon credits in the EU ETS. It is feared that this might result in a carbon price of just €20 a tonne in 2020, rather than the €50 a tonne used for its previous analysis.

The Committee has suggested that options to strengthen the carbon price, including the government underwriting a minimum price or intervening in the electricity market, should be “seriously considered”. On Friday, a report from Ofgem suggesting domestic energy bills could rise 14-60% by 2020 was seen by energy industry experts as an acceptance that the market-driven system has failed and the government needs to be more interventionist.

So the recession has played its role in dampening the prospects of the low carbon investment opportunities, and strong leadership will be essential to deliver the ‘radical’ and ‘dramatic’ improvements that the Committee has demanded. With Ed Milliband’s small budget, and uncertainties over changes in government next year, the UK needs to dig deep to create green opportunities that rescue the nation from the dire straits, courtesy of the economic recession.

A Calm North Sea

According to UK’s  Department of Energy and Climate Change (DECC) the North Sea has potential to store over 100 years worth of UK power station CO2 emissions.

In the build up to the Carbon Sequestration Leadership Forum (CSLF) in London on 13^th October, DECC has launched a UK wide consultation to explore the idea to develop and manage the potential carbon storage sites under the North Sea, to harness the huge potential for storing CO2.

According to the Energy and Climate Change Secretary, Ed Milliband says:-

“There’s enough potential under the North Sea to store more than 100 years worth of CO2 emissions from the UK’s power fleet.  We are also working closely with Norway and other North Sea Basin countries to ensure the North Sea fulfils its potential in the deployment of CCS in Europe. We want to get the UK regulatory framework in place so we can harness that potential and make the North Sea part of the CCS revolution.”  (Source: DECC)

The future talks of The Carbon Sequestration Leadership Forum (CSLF), which is made up from a private and public member (including Ministers from 23 countries) will build on the foundations of the G8’s ambition to launch twenty CCS demonstration projects globally by 2010; and prospects of a global agreement on CCS prior to the UN Climate Change conference in Copenhagen this December. (Source: DECC)

 “Without CCS there is no solution to climate change.   As well as getting things in place in the UK and Europe we need that consensus at the global talks in Copenhagen.   The meeting in London will be a pivotal part of moving the discussion on CCS forwards.”  (Quote: Ed Milliband).

Subject to the outcome of this consultation, DECC aim to make and lay regulations in the first quarter of 2010 in order to bring the regime into force in April 2010. (Source: DECC)

This CCS target will form part of the UK’s Low Carbon Transition Plan which was first introduced in 2008, it sets out how the UK will meet the 34 percent cut in emissions on 1990 levels by 2020.  The plans set out to reach the following target by 2020:

• More than 1.2 million people will be in green jobs
• 7 million homes will have benefited from whole house makeovers, and more than 1.5 million households will be supported to produce their own clean energy.
• Around 40 percent of electricity will be from low-carbon sources, from renewables, nuclear and clean coal.
• UK will be importing half the amount of gas that we otherwise would.
• The average new car will emit 40 percent less carbon than now. 

In times of financial and economic instability, the government has committed a very large sum of £405 million towards developing low carbon technologies to meet the Transition Plan targets. This commitment to CCS is prevalent in the recent announcement to support a multimillion-pound research facility in Yorkshire, The Centre for Low Carbon Futures.  This is an innovative £50m research centre that combines the expertise and research power of the Yorkshire universities, with funding from Yorkshire Forward.  The centre aims to build a competitive, sustainable and carbon-efficient regional economy, while providing climate change solutions of national and international significance in collaboration with local business.

So far, the Centre has already identified its first four pilot research projects, which include:

• The regional economics of climate change
• Low carbon supply chains
• Biorenewables
• Carbon Capture Technology

In September 2009, the UK government has also injected £20m into early stage works for developing advances in wave, tidal, fuel cells, solar and energy efficiency technologies.   Announced in September, the ‘clean energy technologies fund’ will be like the ‘Dragons Den’ Venture Capitalists TV series, aiming to attract private sector finance in coming forward to fund new innovative clean technology projects.

 Simon Walker, Chief Executive of the British Venture Capital Association, said:

“Low carbon energy technologies backed by venture capitalists will play an important role in creating a sustainable energy future for the UK. In 2009 we have seen a dramatic fall in the amount invested into clean energy companies in the UK. We welcome any initiative which boosts the supply of capital into this crucial sector.”

Penny Shepherd MBE, Chief Executive of UK Sustainable Investment and Finance said:

“Government support now is vital to develop the UK low carbon technology businesses that we need for lasting prosperity. This commitment shows that the Government is serious about promoting a low carbon economy and sustainable investment in the UK.”

With the financial commitment from government and the new opportunities exposed by the CCS storage capacity in the North Sea emerging, the academic support is absolutely paramount into driving UK’s commitment to achieving further gains in meeting not only the UKs carbon reduction targets, but also to share these technologies with the rest of the world at the UN Summit in Copenhagen to contribute to the global efforts needed.

European Parliament building in Strasbourg, France (Image: Andreas Tille - http://commons.wikimedia.org/wiki/User:Tillea)

Today sees the start of voting in the election of the European Parliament for the next five years. The Parliament is sometimes described as institutionally weak – a passive, reactive body unable to form legislative proposals of its own. But this is to understate the significant role that it can play in forming European legislation, including climate legislation.

The Parliament is the only European institution to be elected directly by EU citizens. This year the voting is taking place over four days, beginning with the UK and Netherlands, but the results will be made public only after all polling booths have closed on Sunday evening.

The other main European institutions are the Commission and the Council. The Commission is appointed by Member State governments, and the Council is made up of the heads of Member State governments. These institutions can interact in several different ways in order to create legislation, and the amount of influence the Parliament has varies depending on the policy area under consideration. Broadly speaking, though, the Commission is the body that determines the policy agenda by proposing new legislation, and the Council has the final say on whether the proposals become law. The Parliament can influence legislation after it is proposed by the Commission and before its final approval by the Council – hence the suggestion that it is the weakest of the three institutions.

But this doesn’t mean that its role is insignificant.

Consider the new EU Emissions Trading Directive, for example, which was proposed as part of the Climate and Energy Package, was amended and discussed extensively by the Parliament before the Council met in December 2008 to hammer out the final details. This meant that Irish MEP Avril Doyle had a crucial role in shaping the debate over contentious issues such as leakage and allocation or allowances, because she had the task of steering the draft legislation through Parliament.

Another important figure is Chris Davies, MEP, who played a pivotal role in ensuring that a multi-billion Euro package of funding was dedicated to the development of Carbon Capture and Storage plants. This will allow testing of CCS on a scale that should indicate whether these technologies can make a significant contribution to emissions mitigation in decades to come. Though it was a proposal made by the Commission at the beginning of 2007, it failed to attract support from Member States during that year. As a result, the idea barely featured in the Commission’s proposals at the beginning of 2008. It was at this stage that a campaign to secure the funding began in the European Parliament, and without this it’s almost completely certain that the billions that will now be available for CCS would not be there at all.

It is difficult to predict what effect these elections will have on the EU’s climate policy in future. Political allegiances and voting patterns in the European Parliament consist of a complex mixture of political groupings, national solidarity and individual Members’ interests and priorities.

Some experts do not predict a significant change in the party-political make up of the Parliament, But the influential role of a individual MEPs in shaping the Directives in the Climate and Energy Package suggest those who will be voted in to the Parliament over the coming days could have a profound impact – for better or worse – on EU climate policy in the decade to come.

Proponents of Carbon-Capture-and-Storage (CCS) have long hailed the technology as the silver bullet that will enable the world to both fight climate change and keep using coal reserves. In Germany, the debate about the merits and pitfalls of this approach has once again surfaced. It highlights three key problems with using CCS to solve the climate crisis. Ordered from least to most damaging to the proponents of CCS, they can be summarised as: 1) The technological challenges in bringing the technology to large-scale applicability and the amount of money needed to reach this point. 2) The economic uncertainties over the competitiveness of CCS-generated energy vis-a-vis other forms of energy. 3) The opportunity costs of investing in CCS given the proven potential and fast growth rates of other renewable energy sources.

1) The technological challenges in bringing the technology to large-scale applicability and the amount of money needed to reach this point.

To deploy CCS technologies to a degree necessary to substantially reduce CO² emissions from coal-based energy generation will require not the creation of an infrastructure similar in scale and technological complexity to that of the oil- and gas-supply. Furthermore, it will require sustained investments by governments and energy producers in fitting and possibly retro-fitting existing plants. This combination of the costliness of the infrastructure necessary and the technological challenges involved means that the technology will be deployed too late, when the peak of coal-based energy production has already been reached, argues Richard Heinberg, from the Post Carbon Institute.

2) The economic uncertainties over the competitiveness of CCS-generated energy vis-a-vis other forms of energy

Caused in part by uncertainties about the costs and feasibility of CCS, in part by uncertainties about future supplies and cost changes of other renewables, there is considerable uncertainty about the economic prospects of CCS-generated energy. Richard Heinberg argues that deploying CCS will lead to strong increases in electricity prices, because a) CCS will be deployed after coal production has peaked, and b) because the technology lowers the efficiency of energy production.

Long-term considerations aside, in Germany doubts about the economics of CCS have appeared from unusual quarters. Johannes Lambertz, head of RWE Power, stated that with increasing construction costs and the potential costs for CCS the economic case for constructing coal-fired power stations was hard if to make.

3) The opportunity costs of investing in CCS given the proven potential and fast growth rates of other renewable energy sources.

While the points made above merely express scepticism about the chances of successfully fighting climate change using CCS technology, they don’t seem to justify to not at least try (we should try everything, after all, if we take climate change seriously). But this misses the crucial point of the case against CCS - opportunity costs: The cost of an alternative that must be forgone in order to pursue a certain action. The question is, would investment in other forms of renewable energy or measures not make more out of public and private investment?

Axel Berg, deputy energy spokesman of the SPD-Fraktion, is one making this argument. He argues that while using CCS sustains an outdated mode of energy creation based on large utilities running large power plants, the technology cannot easily be exported, especially not to developing countries, and shift attention away from policies focusing on energy efficiency measures and new renewables technologies, the only sustainable solutions to climate change.

Overall, the debate around CCS will continue, and it is likely that it will play at least some part in policies addressing climate change. But there are serious problems linked with its use - it is not the silver bullet.

On December 22nd 2008 an earthen retaining wall not too far from Knoxville, Tennessee, gave way and more than one billion US gallons (about 5 million cubic yards) of potentially toxic wet coal ash flooded over 300 acres of the Tennessee Valley covering it in a deep layer of dark sludge.

A starker image of the dirtiness of coal really is hard to imagine.

While the recent PR battle raging between environmentalists and the coal industry focussed mainly the impact coal burning has on the climate, this spill is a timely reminder that “there is no such thing as clean coal” for other reasons as well.

The coal industry has been trying - with some success - to convince the American public that coal can be clean - both Barack Obama and John McCain proclaimed their support of clean coal during their presidential campaigns. By ‘clean’ they refer to the carbon emissions associated with burning it, claiming that with CCS (Carbon Capture and Storage) technology it is possible to burn coal while the resulting carbon dioxide is pumped back into the earth. It is an enticing idea - with so much coal still out there, and plenty of it on US soil, the pressure to continue burning it is strong. And if we can do it without adding green house gasses to the atmosphere, why not?

Well, for one thing, as Steven Chu, Obama’s choice for Energy Secretary has explained, CCS is still far from ready to be used on a large scale, and there are no guaranties it will ever be (in fact Dr. Chu has famously stated that “Coal is [his] worst nightmare”). This is a fact that the coal industry is ignoring, preferring to concentrate on PR stunts and empty claims that all is well and that America should continue burning its coal as it has always done.

But there are other reasons why coal is dirty. One of them is that burning coal releases many other toxins, most of which are regulated and are happily no longer polluting the atmosphere. Unfortunately they don’t just disappear, but rather are now collected in retention sites like the one that collapsed in Tennessee.

So this spill, while not pertaining directly to the climate change aspects of burning coal, might at least make it a little harder to use the term “clean coal” and still sound convincing.

Is this then the beginning of the end of the “clean coal” debate? Will the Tennessee Coal Spill be a watershed event encouraging the American public to change their views on coal? It is possible - “If the Exxon Valdez was a symbol of pollution 20 years ago, the Tennessee Coal Spill of 2008 is the symbol of it today,” said Kate Smolski, Senior Legislative Coordinator for Greenpeace.

The European Parliament has this week approved the EU ETS Directive, which means that only a rubber stamp from the Council is required for it to become law. By approving the Directive, the European Parliament has created a market that will probably be worth tens of billions of Euros annually from 2013 to 2020. So how will this big pot of money be distributed?

Distribution of EUAs under Phase III of the EU-ETS (Click on the image to view it - opens in new window)

As I discussed in my last posting, some of the carbon allowances (which are officially known as EU Allowances, or EUAs) will be allocated free of charge installations in sectors that are deemed to be at risk of ‘carbon leakage’ and to some power plants. This is represented by the grey area of the graphic accompanying this post. The rest will be auctioned by member states, and these are represented by the blue and green areas of the figure.

Most of the money raised in the EUA auctions will be retained by the governments of the EU member states as they auction them. This is represented by the blue area of the picture. The number of EUAs auctioned by each member state will mainly be proportionate to its CO₂ emissions in 2005, but with some variations. Partly as a result of the recent negotiations some countries will receive more because they are relatively poor, or because a relatively high percentage of their energy comes from renewable sources.

One of the points agreed by the European Council last week was that the revenue raised by auctioning 300 million of the EUAs would be used to fund for Carbon Capture and Storage (CCS) demonstration projects.*  This would represent €6 billion, assuming a price of €20/EUA was achieved at auction. This is shown by the green area of the picture. The intention is that the demonstration projects would allow the European power sector to bridge the gap between the situation today where CCS is just a promising idea and a situation where CCS could be deployed commercially on a wide scale from 2020 onwards.

It is hoped that this will make the EU ETS produce an environmental double dividend: not only reducing emissions from existing industries directly by capping the number of EUAs available each year; but also funding the development of new low-carbon technologies at the same time.

Although €6 billion is clearly a large amount of money, it’s actually a relatively small slice of the expected total value of the EUAs that will be issued during Phase III of the EU ETS. The total emissions allowed under Phase III correspond to at least 14 billion EUAs. So if the price obtained for the EUAs auctioned for CCS reflects the average value of the EUAs during Phase III, no more than 4% of the total value of the certificates will go to the CCS demonstrators. The consortium that proposed the CCS demonstrator programme believes that 10-12 projects are required to robustly test all the possible CCS technologies, and estimated that €7-€12billion of public money would be needed to achieve this. So the amount actually agreed by the Council will probably fall short of this range, but it should be enough to fund at least some of the demonstrator projects, according to British Liberal MEP Chris Davies.

As things currently stand, member states have complete discretion over how they spend the rest of the revenue they earn from auctioning EUAs. Some of it could go to further assist CCS projects: the Directive allows individual member states to choose to use some of their EUA auction revenues towards the cost of building new ‘highly-efficient’ power plant, including up to 15% of the costs of fossil-fuel plants that are CCS-ready.

But there are signs that at least some member states are ready to use EU ETS revenue as a bargaining chip in international climate negotiations during 2009. The European Council meeting last week noted that there was a willingness to use ‘at least half’ the amount raised for mitigation efforts including reducing deforestation, R&D for renewable technologies and energy efficiency; and to fund adaptation efforts in the least developed countries. This idea will be on the agenda at the Spring 2009 meeting of the European Council, which will happen in Brussels on 19-20 March.

* The wording of the Directive suggests that some of this could go towards renewable energy technologies as well as CCS, but unlike CCS I have not seen concrete proposals for this. If anyone knows why renewables are also in the agreement, please let me know!

Brazilian Minister for the Environment Carlos Minc launched the country’s national strategy to address climate change, signed by President Lola on 1st December 2008. Whilst the developing country previously held a defensive position, the launch of this strategy represents a shift to a more leadership position, with which they hope to influence the G77 and developed countries to also lead. Brazil echo the sentiments in Simon’s previous blog, that COP 14 has become a waiting game, as everyone waits for other’s to make the first move.

Key commitments from the National Climate Change Action Plan include:

•       Reduce deforestation in the Amazon by 70% by 2020 - saving 4.8bn tones of carbon over the 12 years. This is more than the target all countries agreed to reduce at Kyoto combined.
•       Increasing concentrations of ethanol in the fuel mix for cars by 11% each year, reducing a further 500m tones of carbon over 10 years. Additionally, this will be achieved without any impact on land used by indigenous people or for food production.
•       Increase in co-generation from 0.5% to 10% - improving efficiencies and representing a saving of around 100m tones of carbon
•       Increase in hydroelectric energy generation - to replace more of exiting energy supplies from fossil fuels
•       Plans to increase reforestation from 5 - 11 hectares, doubling the current rate of reforestation, including in indigenous areas
•       Planting more trees at a faster rate than those being chopped down - till at least 2015
•       Certification of wood and forest management to fight illegal sales of wood from the Amazon
•       Specific resources made available to fund adaptation and fight desertification - a key issues for north-eastern areas of Brazil, home to 50m people.
•       Amazon Fund created to fight deforestation in the Amazon- supported by 1bn Euros, from Norway, Germany and £100m from the UK

These commitments represent Brazil’s commendable decision to take a more leadership position, and the Minister for Environment called for collaborative action and further efforts from other developed and developing countries, to encourage the EU to adopt its higher target of 30% by 2020 - by meeting the condition of support from other nations.

Brazil has created National Climate Fund, which will be funded by 10% of the revenues from the petroleum industry. In addition, their ambitious programme is expected to be funded by their National Bank for Social and Economic Development, and the Minister of Environment felt this needed no further incentives at the moment.

Whilst Brazil’s leadership is in combating climate change is commendable, following the lead of Mexico’s ambitious intention for 50% reduction by 2050 earlier this week, it is interesting to note that the country has authorized the construction of their third nuclear power plant, using German technology. A further three are expected, but details are to be finalized. Brazil has strongly opposed CCS in CDM throughout the COP process, yet it is interesting to see their commitment and deployment of a similarly controversial technology.

Discussions that had been continuing on the incorporation of Carbon Capture and Storage (CCS) into the Clean Development Mechanism (CDM) have now halted.

In an open meeting of the negotiations–itself following several rounds of negotiations–no consensus between the negotiating parties could be found.  Three main camps emerged on potential use of CCS

• Full incorporation with CCS functioning like existing off-setting projects
• No CCS at all
• Use of some pilot projects, but only with assigned companies

The rationale is that CCS could be a major form of reducing emissions globally, but that the cost of doing so would be extremely high.  As an off-setting mechanism, though, CCS does not fit neatly in the CDM’s sustainable development goals; it is not clear, for example, exactly how CCS is development or what economic service it provides for developing countries.

Further, there is the complication of how the long-term aspects of CCS projects could be incorporated in to the CDM process.  At present, CDM projects are registered, implemented and completed: the technology or installed facility performs as installed, and that’s it.  For CCS, this could not be the case.  The capture technology is highly technical and would require ongoing operations from the operating company.  Further, CCS is not a permanent project; each project would have a finite life span, with different technical processes occurring at different stages.  Essentially, these issues ask the question: how can the long term nature of CCS fit into CDM?

Even if these issues could be overcome, there remains a raft of questions about actual operationalisation.  Not least: would CDM companies be prepared to take on such high investment and high risk projects?  The initial investment would be hundreds of millions of dollars.

When looked at through this lens–which is precisely the lens that the negotiating parties were discussing–CCS and CDM are not easily compatible projects.  Not for now at least.  The issue has been tabled until the SBSTA and SBI meetings in Bonn in June next year.