PGE Says Belchatow Carbon Capture Project Needs State Support

PGE SA (PGE) said it’s in “no position” to start a project that would trap and bury emissions from a power plant in Belchatow without incentives.

“The construction of such plants without support in the form of special certificates, similar to those used in renewable energy projects, would be unprofitable,” Wojciech Ostrowski, PGE’s chief financial officer, said today by e-mail.

Carbon-capture and storage projects in at least five countries including Canada, the U.S. and Germany have been delayed or canceled in the last year. Environmental concerns and questions about the technology’s economics have hampered developments, and low carbon prices make it cheaper to run a coal plant and buy emissions allowances than to build so-called CCS plants.

The Parkiet newspaper reported on May 25 that PGE, Poland’s biggest electricity producer, suspended its 600 million-euro ($747 million) investment in the carbon capture facility. PGE planned to install equipment at an 858 megawatt lignite-fired unit of the Belchatow power plant.

“As long as such support is not ensured, we are in no position to launch this project fully,” Ostrowski said.

Low CO2 Cost

“Power companies will be interested in the implementation of CCS technology when the cost of storing CO2 underground is lower than the cost of emission allowances,” Ostrowski said in today’s e-mail sent on behalf of Lukasz Witkowski, a spokesman at the company.

The cost of capturing and storing a ton of CO2 would be about 60 euros to 65 euros at the company’s pilot project to trial CCS at Belchatow, Ostrowski said. Permits on the EU emissions trading system were trading at 6.53 euros a ton, down 63 percent from a year ago, on the ICE Futures Europe exchange today.

The technology known as CCS generates “huge costs” in both the implementation and operation phases, Ostrowski said.

PGE’s CCS Project was selected to receive 180 million euros of European Union funding under the European Energy Program for Recovery. The company also sought funding from an EU contest to support renewable and CCS technologies called the New Entrants’ Reserve.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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