U.K. Says CO2-Capture Cash May Spur October Climate Deal

Photographer: Hannelore Foerster/Bloomberg

The carbon dioxide capture and storage unit at the E.On AG Staudinger coal-powered plant in Grosskrotzenburg, Germany. Close

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Photographer: Hannelore Foerster/Bloomberg

The carbon dioxide capture and storage unit at the E.On AG Staudinger coal-powered plant in Grosskrotzenburg, Germany.

Europe-backed finance for carbon capture and storage may help seal a European Union climate-protection deal by October, according to Ed Davey, the U.K. energy and climate secretary of state.

“There would have to be an EU-wide solution to supporting new CCS in Poland or anywhere else as part of a package to tackle coal,” Davey said today in a phone interview. “So if a country was to go down this route, they would need financial support from the EU, but that would make sense because we are trying to promote new technologies.”

Russia’s annexation of Crimea has pushed energy security near the top of the EU’s political agenda as the 28-nation bloc devises plans to cut reliance on natural gas from Moscow-based OAO Gazprom. The bloc plans to decide in October on an energy and climate-change package laying out targets including reducing emissions by 40 percent by 2030 from 1990 levels.

Davey didn’t say how the EU would pay for CCS, which involves trapping carbon-dioxide emissions from factories and power plants and pumping them underground for permanent storage. Poland, which relies on coal for more than 80 percent of its power, has suggested the bloc proceed at a slower pace on climate-protection measures.

$790 Billion

Annual spending on low-carbon technology and energy efficiency needs to double to about $790 billion by 2020 from 2013 levels to help the world keep temperatures from rising more than 2 degrees Celsius (3.6 Fahrenheit) from pre-industrial levels, the International Energy Agency said in a June 3 report.

Spending $1.4 trillion through 2035 on carbon capture will cut emissions and help provide power for electric vehicles, according to the IEA, which advises 29 nations on energy policy.

In June last year, the IEA said delayed CCS deployment would increase the cost of power sector decarbonization globally by $1 trillion through 2035 and result in lost sales for fossil-fuel producers.

“As the International Energy Agency has shown, a low-carbon world by 2050 would be a cheaper world to achieve if we can get CCS to work in a commercially viable way, and to do that, you’ve got to deploy,” Davey said. “You can’t just do it in the laboratory. You have to deploy to understand how you can get cost reductions.”

Gas-Fired Plant

Royal Dutch Shell Plc, Europe’s biggest oil company, said in February it would proceed with a project to capture carbon dioxide from a U.K. gas-fired power plant after signing an agreement with the government.

The Peterhead project, led by Shell and supported by SSE Plc (SSE), the second-largest U.K. energy supplier, was one of two selected 11 months ago to win funding of 1 billion pounds ($1.7 billion) from the government.

The venture and Drax Group Plc’s White Rose site in northern England will initially get about 100 million pounds of funding between them. Shell said its project, which may begin by the end of the decade, could be the first commercial-sized CCS facility at a gas-fired power plant.

“At the moment, it’s expensive,” Davey said today. “No one is denying that. We are showing that it’s possible, and if you look at one or two projects in the USA and in Canada, they are showing that you can have CCS with coal.”

Policies that are “deliberately adverse” to coal may stop people around the world getting power at a low cost, the IEA said this month.

Under the agency’s climate-saving scenario, spending on coal-fired power reaches $1.9 trillion through 2035, of which $800 billion is for plants with CCS. The total is 25 percent more than under the IEA’s “new policies” scenario, which does not keep temperatures from rising 2 degrees Celsius, it said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Dan Weeks, Sharon Lindores

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