Insights and Commentaries

Insights and Commentaries

Where does CCS feature in the European Green Deal?

12th June 2020

This blog serves as an update to the Perspective “The European Green Deal: New opportunities to scale up carbon capture and storage” from February 2020.

The European Commission has come out with several major initiatives under the European Green Deal during the last months, including the proposal for the first European Climate Law, the new Circular Economy Action Plan and a new Industrial Strategy for Europe.

To take stock of the latest developments, the Institute held a “CCS Talks” online event on the role of CCS in the European Green Deal on 19 May. During the fireside chat, Artur Runge-Metzger, a Director in DG Climate Action, shared Commission’s views and latest news on this front, followed by the Q&A with the audience. The recording of the webinar is available in the Institute’s audio and visual library.

Three key takeaways from this conversation:

1. The revision of EU’s 2030 climate target means that CCS technologies will need to be deployed sooner

According to DG CLIMA’s estimations, raising the 2030 climate target to 50-55% in the upcoming Climate Target Plan will mean that the new 2030 target will be a point in the net zero trajectory that would under the current -40% target only be reached around 2035-2037. This means that the emission reduction activities previously foreseen for the second half of 2030s would need to happen in early 2030s.

Mature technologies like CCS where the process has moved on from demonstration to rolling out commercial deployment in several of its applications, are well positioned to be scaled up earlier. The first call of the EU ETS Innovation Fund, scheduled for July, will help get the next wave of CCS projects off the ground in Europe.

Clean hydrogen is another enabler of decarbonisation and DG CLIMA sees both green and blue hydrogen as part of the solution – it’s useful to keep as many technologies as possible in play. The scale-up of different technologies will depend on the cost of technology and the price of hydrogen. The increasing demand for clean hydrogen should deliver the gradual build-up of the hydrogen infrastructure, and major investments will be needed across the value chain in the coming decade.

2. The EU will need a significant amount of CO2 removal. The upcoming work on the regulatory framework for certification of carbon removals is the next big undertaking on this front

The climate policy in the EU has been built up through sectoral policies – the EU ETS, the Effort Sharing Regulation (ESR) for non-ETS sectors, and the LULUCF Regulation covering land use, land use change and forestry. Both the EU ETS and the ESR are designed to deliver emission reductions, they don’t incentivise carbon removals. Policymakers and stakeholders are beginning to notice that there is no existing framework that looks at all aspects of carbon removals and informs the policy making process to incentivise carbon removals. However, significant amount of carbon removals will be needed to achieve climate neutrality by 2050 and negative emissions thereafter.

In order to address this missing element, the Commission will propose a regulatory framework for the certification of carbon removals by 2023. This is listed as one of the key actions under the new Circular Economy Action Plan and aims to deliver robust and transparent carbon accounting to monitor and verify the authenticity of carbon removals. As highlighted by DG CLIMA, this exercise will revisit experience already gained in the past, for example under Clean Development Mechanism.

This could also be one of the success stories going forward – by getting the framework for the certification of carbon removals right, the EU could lead the way and set an example for other countries to follow. The questions around the potential and permanence of different carbon removal options are also widely discussed internationally in the context of achieving the Paris Agreement goals.

Meanwhile, researchers are already looking at policy design and putting forward solutions for regulating carbon removal under the European Green Deal. Once the framework with accounting rules is established, the policy design questions will indeed emerge. As the proposed climate neutrality target by 2050 is domestic and EU-wide, some countries will likely deliver more negative emissions than others. CCS will be one of the technological solutions to deliver negative emissions with bioenergy with CCS (BECCS) and direct air capture with CCS (DACCS).

3. The solution to include non-pipeline CO2 transportation under the EU ETS is underway

One of the barriers in the current legislation is the fact that only those projects where the CO2 is transported by pipelines can benefit from the EU ETS carbon price. Facilities that plan to transport CO2 for storage by other means than pipelines, for example by ship or truck, would still need to pay for captured CO2 emissions. A good example here is the Norwegian full-scale project which will transport CO2 by ship.

Mr Runge-Metzger confirmed last month that the Commission has been requested to provide legal clarity on possibilities to include CO2 transport by ship and is looking at possibilities for it in the legislative framework. It was encouraging to hear that the ongoing discussions should lead to a response to this request very soon.

Financing recovery that delivers climate neutrality by 2050

 IEA estimates that the global CO2 emissions will decline by 8%, to levels of 10 years ago, due to impacts of the Covid-19 crisis. This major behavioural change over a few months with reduced flying and commuting is expected to deliver an annual drop in emissions is comparable to what is needed to achieve the goal of the Paris Agreement. According to UNEP’s Emissions Gap Report 2019, emissions must drop 7.6 per cent every year from 2020 to 2030 for the 1.5°C goal (and 2.7 per cent per year for the 2°C goal). These numbers make it clear that we will need to have another serious look at all available solutions and technologies to deliver sustained emission reductions and negative emissions and align the recovery programs accordingly.

In the last week of May the European Commission came out with its proposal for a major recovery plan, "Next Generation EU". Among other instruments supporting the plan, the InvestEU investment program is to be upgraded, and a new Strategic Investment Facility built into it. The proposal includes clean hydrogen and carbon capture and storage under green technologies that are of strategic importance in view of green transition.

An amended proposal for the Just Transition Fund increases its size from 7.5 billion to 40 billion EUR.  Facilities covered by the ETS (for example steel, cement producers) to be able to receive support for substantial emission reduction, for example through CCS. All this provided that the facilities are in the most affected regions covered by the just transition plan prepared by the Member State.

Next steps

In early June, stakeholders have an opportunity to provide feedback on several initiatives and consultations by the European Commission, including 2030 Climate Target Plan, revision of the guidelines for trans-European energy infrastructure (the TEN-E Regulation), roadmap for the EU Hydrogen Strategy, roadmap for the EU Smart Sector Integration Strategy and consultation on the renewed sustainable finance strategy.

The Institute will continue providing updates on the European policy processes that are relevant for the role of CCS in achieving the climate neutrality goal by 2050.

This piece was written by Eve Tamme, our Brussels-based Senior Advisor for Climate Change Policy.

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