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Carbon clean-up in Stinky Town logo

A new German coal-fired power station buries its own CO2. Now Europe must decide whether to spend €12bn subsidising more. Nick Mathiason reports

  • The Observer, 
  • Sunday September 28 2008

It used to be called Stinky Town – a smoke-belching, coal-burning industrial powerhouse in what was once the heart of East Germany. But the old folk of Spremberg no longer have to check which way the wind is blowing before venturing outside.

Earlier this month, Spremberg, or ‘Stink-Stadt’, made history. It is now host to the world’s first power plant that collects emissions from coal burning and pipes them deep underground. Built by Swedish power firm Vattenfall, it emits up to 90 per cent less carbon dioxide than a conventional facility. The process it employs, known as carbon capture and storage (CCS), is seen by a growing coalition of power companies, financiers, academics – and even campaign groups including Greenpeace and WWF – as the silver bullet in the fight against climate change.

Regarded as the best the way to secure affordable electricity without polluting the atmosphere, CCS could also facilitate the return in the UK of a new era for coal, a ‘dirty’ fossil fuel whose fate had seemed sealed.

The next 10 days will determine if CCS, which is expensive and still unproven, has a future. A vote in the European parliament will decide whether the first 12 demonstration projects receive a €12bn (£9.5bn) subsidy. Failure to reach agreement – and Europe is split over the proposal – will mean a delay of at least two years while the search goes on for alternative funding mechanisms.

On Tuesday of next week, members of the European environment committee will consider an amendment by Liberal Democrat MEP Chris Davies, who is seen as the champion of the CCS movement in Europe. Davies’s powerful lobbying has successfully short-circuited the legislative process. If his amendment is passed, he has been given permission to take it directly to EU president José Manuel Barroso and the Council of Ministers – the environment ministers of the 27 European member states – for rubber-stamping early next year.

The Davies amendment is part of legislation aiming to reconfigure Europe’s emissions trading scheme. Davies has inserted a clause that would allow firms building CCS power plants to sell carbon allowances via the scheme, on condition that the new plants actually work and succeed in burying CO2

Power firms would be paid the €12bn subsidy retrospectively. The first wave of CCS plants will cost about €1bn more than equivalent conventional power stations. Davies argues, however, that CCS will ultimately be cost-effective, although only once the knowledge gleaned from the demonstration projects is shared and refined to allow economies of scale to kick in. Supporters are encouraged by a report published last week by management consultants McKinsey that backed his case.

More than 60 coal-fired power stations could be built across Europe if CCS takes off, and a number are planned for the UK. John Hutton, Labour’s Business Secretary, told the party conference in Manchester last Monday that he would take on critics of new coal and nuclear power stations, arguing that their construction was vital to securing Britain’s long-term energy needs.

But last week the influential UK Environment Agency warned that on no account should coal-fired stations get the go-ahead until CCS is a proven technology, because otherwise the increased CO2 they produce would be devastating. It is understood that the cabinet is split on allowing Eon to build a coal-fired station at Kingsnorth in Kent that will be ‘CCS-ready’, but which is not conceived from the start as a CCS facility.

Davies acknowledges this concern and has inserted another amendment in the legislation that will mean the closure of ‘dirty’ power stations across Europe, with only those emitting less than 500g of CO2 every kilowatt hour being allowed. Really dirty stations emit almost three times that figure.

Until recently, Davies’s plan appeared to have little chance of passing through the European parliament: opposition from accession countries led by Poland looked to have defeated the measures. But in recent weeks the tide has turned. There is now a chance the 60 members of the committee will approve the package, seeing it as a way of meeting medium-term emissions targets. Europe has set itself a CO2 reduction target of 20 per cent by 2020 and 60 to 80 per cent by 2050. Successful CCS could slash European CO2 emission by 20 per cent.

There are global implications for the MEPs’ decision. If Europe cannot reach agreement, it will enter international climate change talks in Copenhagen designed to replace the Kyoto Protocol with no sign that it is taking a lead on the issue. Without a European CCS funding commitment, it has been suggested that it will prove difficult to persuade China to act on climate change and other countries to act on deforestation.

In addition, European parliamentary elections next year will slow down any EU agreements on new CCS projects.

Ian Temperton of investment firm Climate Change Capital, says: ‘Money is absolutely needed. These programmes won’t happen without support. We are effectively already in the middle of the next decade in terms of the lead time for getting these plants up and running. If we don’t modify existing legislation we will miss the opportunity. If we want to demonstrate that Europe is able to show the world leadership in the most difficult energy area, this is something we have to do.’

Developing CCS has created a Europe-wide alliance of power firms. A new body in Brussels known as the Zero Emissions Platform is attempting to secure next week’s vote. Members of the ZEP include BP, Shell, WWF and a range of European firms. Leading the organisation is Dr Graeme Sweeney, who heads Shell’s future fuels division.

BP and Shell have invested heavily in the controversial Canadian oil sands, which require a more energy-intensive process than conventional oil extraction because hot air and steam are needed to make ‘heavy’ oil flow into reservoirs. Some suggest that oil sands require double the energy usually needed for production. Shell disputes that, putting the figure at just 15 per cent more. Whatever the truth, the oil giants need to capture their emissions via CCS to offset the higher energy use required for oil-sands exploitation. The same argument applies to many of their natural gas finds.

Keith Allott, WWF’s climate change adviser, says: ‘Potentially, CCS can play a significant role in moving away from a disastrous high-carbon future. We’re seeing new proposals for new coal-fired power stations in the UK and Europe. Europe needs to show leadership and this is why we need to fund well-focused demonstration projects.’

Next week, we will know whether his wish has been granted.

Fossils still alive

The International Energy Agency says that global electricity production will nearly double by 2030. Even with increased reliance on renewables and investment in energy efficiency, fossil fuels are likely to remain at around 65 per cent of the total energy mix for decades.

The world is returning to coal as demand for electricity increases. In China, a new coal-fired power station opens every other week. Today, 40 per cent of the world’s electricity comes from coal, with a fair chance of that share increasing. Unless CCS can be successfully deployed, many experts regard this as a nightmare scenario.

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