Insight-E

An Energy think tank informing the European Commission.

The outcomes of COP21

January 12, 2016

What are the main outcomes of COP21?

1. Temperature below 2°C and should be aiming for 1,5°C

2. Review and raise National Contributions every five years

3. Mitigation and adaption fund for fragile countries

This agreement marks a change in direction. It confirms the target of keeping the rise in temperature below 2°C. The agreement even establishes, for the first time, that we should be aiming for 1.5°C, to protect island states. By 12 December 2015, 186 countries had published their INDCs (Intended Nationally Determined Contributions), which represents 97,1% of global greenhouse gas emissions[1]. The Paris agreement asks all countries to review and raise these contributions every five years from 2020.

To mitigate and adapt to the impacts of climate change, the agreement acknowledges that $100 billion (loans and donations) will need to be raised each year from 2020 to finance projects of the most fragile countries (developing countries and island states).

But despite the unprecedented mobilization shown by States, at this rate global warming would still be between 2.7°C and 3°C if every State sticks to its national contribution.

Methods and drawbacks

The Paris Agreement has followed an international and open method of coordination (OMC), often used to reach an agreement among a huge number of parties. The negotiations resulted in an agreement made of a principal document and an annex. The OMC cannot lead to legally-binding national contributions but we have entered into a process in which the present document will play a central role. With this document, decision-makers managed to create an instrument which has a concrete goal (temperature), and establishes a framework for reviewing each other efforts every five years. The document still needs to be ratified by 55% of States representing at least 55% of global emissions. The method of coordination is based on voluntary cooperation, through benchmarking and share of best practices but also on peer pressure. The five years reviews should lead to emulation among the countries who agreed on the Paris document.

THE DUTCH PRESIDENCY OF THE COUNCIL OF THE EU AND ITS ENERGY PRIORITIES

December 7, 2015

On January, the 1st of 2016, the Netherlands will hold the Presidency of the European Council.

This Presidency will start just after the COP21 climate negotiations, therefore there might have lots of work to implement a potential global agreement.

At the same time, the Dutch Presidency will have to chair the negotiations on the Emission Trading System as the European Commission published its review in July 2015.

In addition, the Dutch Presidency will deal with the proposal on Energy Labelling, published in July 2015 as well and might chair the beginning of the negotiations on Security of Gas supply (to be published at the beginning of 2016).

In its agenda presentation, The Dutch Presidency underlined that the completion of the internal energy market will be one of the most important element of the Energy Union that the Dutch want to see on the 2016 agenda.

CONFERENCE OF THE PARTIES - COP21

November 18, 2015

From November 30th to December 11th 2015, France will host the COP 21 meeting, also known as the 2015 Paris Climate Conference. COP 21 means that this event is the 21th Conference Of the Parties to the UN Framework Convention on Climate Change (UNFCCC), adopted in 1992 (Rio Earth Summit) and ratified by 196 States. Although such meetings take place annually, this one is special because for the first time, parties have set the objective to achieve a post-2020 legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.

What outcome is expected?

The achievement of a “Paris agreement”, which will be a “protocol, legal instrument or agreed outcome with legal force” and must be agreed unanimously by the States Parties or by consensus. This agreement should cover equally climate change mitigation and adaptation and apply to all parties from 2020 onwards.

The participation to all countries through national contributions - INDCs (“Intended Nationally Determined Contributions”). INDCs are the instruments which help achieve the Paris agreement. They replace the former “commitments” of developed countries[1] (also called “Annex 1 parties”) and the NAMAs (“Nationally Appropriate Mitigation Actions”) of emerging and developing countries (Annex 2 parties). While this was intended to attenuate the differentiation between Annex 1 and Annex 2 parties, it is specified that contributions will be evaluated with regards to the specific national circumstances. For each country, INDCs must go beyond the current national commitments and NAMAs, and consist in mitigation (GHG emission reduction targets, on the basis of a provided methodology) and/or adaptation objectives (voluntary).

The mobilization of $100 billion per year by developed countries, from public and private sources, from 2020 (commitment from the 2009 COP in Copenhagen). Part of this will pass through the Green Climate Fund (GCF), which has received a $3 billion pledge from the United States, and an aggregate $4.6 billion pledge from EU Member States towards its initial 10.2 billion capitalization (European Commission, 2014). The GCF has thematic windows for adaptation and mitigation and a separate Private Sector Facility. It aims for a 50/50% balance between mitigation and adaptation, and a 50% floor of the adaptation allocation for particularly vulnerable countries, including Least Developed Countries (LDCs), Small Island Developing States (SIDS) and African States. This geographical focus has been reiterated and extended beyond adaptation activities at the COP 20 meeting. COP 20 also requested the Fund to ensure adequate resources for capacity-building and technology development and transfer. Besides, the Private Sector Facility is the signal that the GCF aims to maximize engagement with the private sector. This Facility will see its resources allocated based on the contribution of a proposed activity towards financing private sector mitigation and adaptation, and promoting the participation of local private sector actors (SMEs, local financial intermediaries) in developing countries (Green Climate Fund, 2014).

The mainstream of on-state initiatives developed by stakeholders such as cities, regions, businesses, or NGOs (known as “Agenda of Solutions” since the New York Climate Summit of September 2014).

What exactly is at stake?

There is now an international recognition that the global temperature should be kept below 2°C, which corresponds to a CO2 concentration in the atmosphere of around 450 ppm. This objective has been written in the 2010 Cancún Agreements.

In its 5th Assessment Report, the International Panel on Climate Change wrote that:

“Without additional efforts to reduce GHG emissions beyond those in place today, global emissions growth is expected to persist, driven by growth in global population and economic activities. Global mean surface temperature increases in 2100 in baseline scenarios—those without additional mitigation—range from 3.7°C to 4.8°C above the average for 1850–1900 for a median climate response. […]

Emissions scenarios leading to CO2-equivalent concentrations in 2100 of about 450 ppm or lower are likely to maintain warming below 2°C over the 21st century relative to pre-industrial levels. These scenarios are characterized by 40 to 70% global anthropogenic GHG emissions reductions by 2050 compared to 2010, and emissions levels near zero or below in 2100.” (IPCC, 2014, p. 20) 

THE KEYSTONES OF ENERGY MANAGEMENT POLICY

July 15, 2015

Source: IFRI

THE EU POLICY FRAMEWORK FOR CCS

March 24, 2015

In its Communication on the Energy Union Package from 25 February 2015, the European Commission mentions Carbon Capture and Storage (CCS) and Carbon Capture and Use (CCU) as “additional research priorities which merit a much greater level of collaboration between the Commission and those Member States who want to use these technologies” (page 16).

CCS consists in separating CO2 from large industrial and energy-related (power plants) point sources, compressing it, transporting it to a storage location and isolating from the atmosphere through storage (for more details on CCS technology, please refer to our technology note on CCS). As a matter of fact, CCS seems to attract increasing attention from EU policy makers and industry as a climate change mitigation measure likely to reduce GHG emissions from coal plants or energy intensive industry, therefore helping to achieve CO₂ targets. Besides, the technical challenges surrounding CCS and the volumes of investments required make a case for regulating this activity at EU level. What is the EU Policy framework around CCS?

The EU legal framework around CCS is provided by Directive 2009/31/EC of 23 April 2009 on the geological storage of carbon dioxide, which entered into force on 25 June 2009. It mainly focuses on the end-of-chain part of CCS - namely storage - rather than on the prior steps.

What is the case for EU regulation?

EU regulation of CCS activities can be justified in two ways:
1. Limiting health, safety and environmental risks by providing a regulatory regime (this is quite straightforward).
2.  Addressing commercial barriers and market failures.

What is at stake behind this directive?

- EU security of supply: enabling the use of European coal-fired generation is explicitly mentioned as a benefit – instead of importing gas.
- The future of a coal industry and coal-fired plants in the EU, which can only be acceptable from a climate point of view if they are made cleaner.

What does the 2009 directive include?

- A regulatory regime framing the selection of storage sites and exploration permits (chapter 2, articles 4-5) and storage permits (chapter 3, articles 6-11).

In short: Member States that allow storage in their territory have to undertake an assessment of the storage capacity available. A geological storage site should only be selected if no significant risk of leakage and no significant health and environmental risks exist. If a Member State decides to undertake exploration of a site before it is declared suitable for storage, it needs an exploration permit. After a site is found to be suitable for storage, it should not be operated without a storage permit.

- Operation, closure and post-closure obligations such as CO2 stream acceptance criteria, Measurement, Monitoring and verification (MMV), reporting obligations, inspections, risk assessment and measures in case of leakage, financial mechanisms (chapter 4, articles 12-22).
- Rules on third party access (chapter 5, articles 21-22).
- General provisions such as transboundary cooperation or information to the public (chapter 6, articles 23-32).
- ​Amendments to water and waste directives to make CCS compatible with the existing legislation (chapter 7, articles 33-37).

It is important to note that the directive focuses on regulating CCS and ensuring a common approach throughout the EU, rather than incentivizing it.

How is the directive assessed?

An independent study from Triple E, Ricardo-AEA and TNO requested by the European Commission in 2014 draws the conclusion that CCS remains a necessary option to address climate change and decarbonise the power supply. The weak progress of CCS uptake is rather due to the economic recession than to inadequacy of the Directive. The few concerns with specific aspects of the CCS Directive (namely: status of Enhanced Hydrocarbon Recovery and CO₂ storage, Biomass energy with CCS, ship transport, future leakage value and Carbon Dioxide Utilization) do not justify high level changes nor a revision of the text at this stage, which would jeopardize investors’ confidence. The Directive should only been revised in 2020 after more experience is gained with CCS in Europe.

However, the main points for improvement according to the study’s authors are:

- The conditions for “CCS readiness” outlined in article 33. The study recommends to set up a definition of “readiness for CO2 capture retrofit” applicable to both large carbon-intensive industrial installations as well as fossil fuel power plants ; to set more protective criteria regarding the availability of geological storage, space, feasibility of CO2 transport and the requirements for capture readiness. The Competent Authority is encouraged to decline applications if the plant is proven not to be ‘ready for CO2 retrofit’ and to inform the EC if it chooses to allow an installation despite unfulfilled criteria. If not through the revision of the directive, this can be outlined in a new guidance document.
- More policy effort to encourage industrial CCS.
- More study on the potential of Biomass CCS.
- Definition and implementation of Emission Performance standards that would be compatible with the Emission Trading System (ETS).
- Improvement of the liability related to linkage procedure, and coherence between the Directive and the Guidance Document 4.

How do Member States comply with the legislation?

Most of Member States have now completed transposition, which was requested by 25 June 2011. Infringement cases against Austria and Poland were ongoing as from December 2014.

How developed is CCS in Europe?

As of November 2014, there were 13 large-sale CCS projects operating worldwide, among which 2 in Europe (with storage offshore in Norway). Four other projects are in the planning stage in Europe, the most advanced is the ROAD project in the Netherlands and the three others are in the UK (Peterhead, White Rose and Don Valley). Members States that are the most active in research and implementation of CCS technology are Norway, UK, the Netherlands, Germany, France, Italy and Spain.

What are the other enabling policies for CCS outside the directive?

The vast majority of the enabling policy for CCS lies outside the direct scope of the Directive:

In the short term, there is a need for financial support to finance the capital costs of capture, transport, and storage infrastructures and some operation costs:
- Large-scale demonstration projects with NER300-type funding.
- Integration of CCS in Horizon 2020 funding.
- Support for CCS transport infrastructure, through Projects of Common Interest (PCIs) for instance.
- Use of regional funds.
- Funding through the European Investment Bank (EIB).

In the long term, the policy drivers for CCS will be:
- The ETS. Although the current low carbon prices do not make a strong commercial case for CCS, the ETS can be a real enabler for CCS. Integrating Bio CCS under ETS regulation could also be beneficial.
- General low-carbon programme documents. CCS shall be integrated in the general EU framing documents such as the 2030 targets or the SET Plan[1]

Sources:
“Support to the review of Directive 2009/31/EC on the geological storage of carbon dioxide (CCS Directive)”, report from Triple E, Ricardo-AEA and TNO to the European Commission, December 2014 http://www.ccs-directive-evaluation.eu/assets/CCS-Directive-evaluation-Final-Report.pdf