APPENDIX 35
Supplementary evidence from E.ON UK, submitted
by Mr Colin Scoins, Director of New Business
E.ON UK SPENDING
ON CCS R&D
The R&D effort within EON UK focused specifically
on CCS power plant, is £1 .2 million in 2005, rising to £1.3
million next year. This does not include any of our project development
activities, which are also gathering pace.
In general, utilities such as EON do not spend
a large proportion of their revenue on technology R&D because
we are not technology developers / providers. Most of the commercial
benefit from development of new technology is gained by the developers
and providers of that equipment. Our R&D effort on CCS is
therefore unusual, although other low carbon power generation
options—including renewables—are also receiving similar
attention. This reflects the importance E.ON UK attaches to this
field, and our willingness to implement CCS as soon as the technology
development and market conditions allow.
"Does the UK need a Carbon Capture and Storage
Authority?"
The Need for a Carbon Capture and Storage Authority.
In order to assess the value of creating a new
Authority, we need to consider the role of Government in encouraging
and implementing carbon capture and storage. We can then consider
what structures would be most effective in delivering this.
The Role for Government
We have identified a number of tasks we suggest
should be undertaken by the UK Government to encourage and implement
CCS within the UK.Establishing the Rules:
1. Establish a clear legal framework for
CO2 storage both on-shore and off-shore. This includes
working with other countries to amend marine treaties (London
Convention and OSPAR) to remove the legal barriers they represent.
The UK Government has a clear role in leading international opinion
on this matter, and driving the necessary amendments. Other legislation
(for example, the EC Groundwater Directive (1980) and UK Groundwater
Regulations (1998)) should also be reviewed and may need amendment
in order to give legal clarity.
2. Establish the planning and regulatory
framework to allow granting of consents for both carbon capture,
and for CO2 storage (both offshore and on-shore) in
a transparent and timely manner. This includes ensuring appropriate
Governmental policy direction to existing Government Agencies
and planning authorities. This could involve carrying out an appropriate
Strategic Environmental Impact Analysis.
3. Establish clear requirements for monitoring
and inspection of CO2 installations, including storage
sites, to ensure that industry can have confidence in the long
term monitoring costs, and that the wider society can have confidence
in the safety and integrity of the installations.
4. Establish the conditions under which CO2
storage sites can be capped off and decommissioned, with the transfer
of long termliability for future CO2 emissions to the
Government.
5. Promote the explicit inclusion of CCS
as a carbon abatement mechanism within the EU Emissions Trading
Scheme, working with the EU to ensure consistency between the
EU regulatory requirements and UK regulatory requirements (including
monitoring).
6. Establish suitable incentives to allow
the first demonstration CCS projects to be financially viable.
This is a complex subject, expected to involve Ofgem, DTI, DEFRA
and HM Treasury.
Implementation:
1. The planning and consents process for
CCS will need to be led and co-ordinated by Central Government
(as now for large power stations and off-shore developments).
This includes maintaining appropriate Governmental policy direction
to existing Government Agencies and planning authorities to ensure
an expeditious planning system. Currently for large power projects,
the DTI handles planning consents.
2. Ongoing regulation and monitoring of CO2
storage sites will be required, and it is assumed the Government
will need an agency to ensure this is being done.
3. The remaining CO2 emission
from the capture sites and any fugitive leakage in transport (expected
to be small) need to be verified for the purposes of the EU ETS.
CO2 emission verification for the EU ETS is currently
being undertaken by the Environment Agency on behalf of DEFRA.
4. Implementation of the financial incentives
scheme, once established. The suitability and scale of incentives
will need ongoing review as costs change, as the global consensus
of climate change emerges, and as the EU ETS evolves.
5. Support for further research and development
will be required to further reduce the costs of CCS. This is currently
being provided through the DTI.
The Value of a Carbon Capture and Storage Authority
We do not have strong views on how the Government
should best organise itself to deliver the tasks listed above.
We can see clear value in a dedicated authority to drive through
the implementation of CCS. However, we do have a concern with
the proposal to create a new Authority, that it may simply add
a further stakeholder, complicating consents and adding bureaucracy.
The existing implementation of the EU ETS already involves the
EA, DEFRA and the DTI and this leads to some apparent duplication
and delays.
Therefore, if a new Authority is to be recommended:
— Its roles and responsibilities should
be very clearly defined, with theminimum overlap with other departments
and agencies.
— Where responsibilities are given
to the new Authority, it should be clear that other interested
government bodies (DTI, DEFRA, EA, Ofgem etc) cease to be responsible
for those issues.
In our view, it is equally reasonable to place
the responsibility for CCS within an existing Government Department.
However, in this case also, the responsibilities must be clearly
defined with the minimum of overlap, and we suggest one individual
should be responsible for ensuring collaboration and progress.
December 2005
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