Memorandum submitted by the Institution
of Mechanical Engineers
A. GENERAL COMMENTS
The Committee wants to find out about the
implications of emissions performance standards on energy markets
and future investments, and whether they could encourage the deployment
of CCS technologies. The Committee is also interested in the role
to be played by UK emissions performance standards in international
negotiations on climate change.
As a general principle, an emissions performance
standard (EPS) should be feasible to meet; it should involve performance
improvement not encourage avoidance of meeting the regulation.
The overall effect should be the phased introduction of new technology
with more desirable performance characteristics over a reasonable
period of time, whilst maintaining continuity of energy supply.
As the answers to the following questions set
out, this inquiry raises the question of the electricity and energy
markets in which the EPS is applied. This is critically important
since an EPS will be effective only as long as it is economically
viable for project developers to meet it by using CCS. An EPS
cannot therefore properly be considered in isolation and the Institution
strongly endorses the Government's decision to consider an EPS
in the context of wider energy market reforms.[15]
Such a comprehensive and holistic treatment
of an EPS is beyond the scope of the present inquiry, but it would
be extremely valuable if in advance of this more complex policy
debate a discussion of the principles and practical implementation
of an EPS were to take place.
If a well-designed EPS that drives CCS technology
development and deployment is ultimately introduced as part of
a broader set of market reform measures then this may contribute
significantly towards the direction taken by international negotiations
on climate change. This is because, in the more general sense,
it is likely that major countries participating in global climate
change negotiations will be much more significantly influenced
by actual operating UK CCS plants rather than by UK regulations
(that may or may not lead to a negative result (ie nothing being
done to meet them; the need to do so is just avoided).
B. RESPONSES
TO SPECIFIC
QUESTIONS RAISED
1. What are the factors that ought to be
considered in setting the level for an Emissions Performance Standard
(EPS) and what would be an appropriate level for the UK? Should
the level be changed over time?
The question of "level" cannot be
considered in isolation from the basis for the EPS; what are the
emissions based on? Possible bases and units include:
| Basis | Example units
|
| i) Per unit of primary energy supplied/used at a particular site
| kgCO2/MWh thermal (HHV or LHV basis)
|
| ii) Per unit of electricity produced | kgCO2/MWh electricity
|
| iii) Per unit of CO2 produced |
fraction of CO2 captured and stored |
| iv) Per unit of electricity generating capacity
| tCO2/MW/year |
Other factors that need to be considered in connection with
the level are:
(a) Can compliance with an EPS be transferred and/or traded
and what are the details of how this can be done?
(b) What is the time period over which compliance is measured;
at least a year is strongly suggested.
(c) What is the size of the entity to which the EPS applies,
eg a generating unit, a plant, a company, an industry sector?
Once these questions have been answered it becomes at least
technically feasible to define a level that is intended to meet
a desired outcome or outcomes. But the nature of the market in
which the plant operates is also extremely important. In the UK
context a particular area of uncertainty, for which open and generally
accepted peer-reviewed data is surprisingly lacking, is the operating
patterns which will be forced on fossil fuel plants by different
levels of wind and other uncontrollable (or limited control) renewable
generation. Part load operation and starting and stopping all
affect achievable emission levels, particularly from unabated
(ie without CCS) fossil generation (as well as resulting in additional
costs due to the displacement of one low-emissions generation
source by another if CCS operation has to be stopped during periods
of higher wind generation output).
The "level", together with the other factors required
to define an EPS, such as changes to the "level" over
time, need to be examined as to their suitability for achieving
the required objectives in terms of driving technology and infrastructure
changes.
2. What benefit would an EPS bring beyond the emissions
reductions already set to take place under the EU ETS?
If an overall emissions cap and trade scheme (EU ETS) is
in place, the primary objective for an EPS should not be to reduce
emissions directly. This is because the presence of the EU ETS
is likely to nullify any tendency of the EPS to reduce emissions
within the bounds of the cap. This happens due to a strong tendency
for the total amount of allowable emissions under a cap to be
used, thus emissions cuts in one part of the EU ETS can be offset
by emission increases in another part, as "freed up"
allowances are traded.
An EPS should only be used to do something that an ETS cannot
do. It should drive technical change ahead of it being unavoidably
required to meet an ETS, with the objective of making it cheaper
to meet a given cap in the future or making a tighter cap feasible
for the same cost. The cap in question could be national or be
interpreted more generally as global emissions.
An EPS does not meet the above criteria if the effect is
to preclude totally certain types of power generation plant. A
simple ban would be more appropriate in this case. It is also
disingenuous to impose an EPS which could theoretically be met
but which never will be for commercial reasons; again a ban would
be more appropriate and likely to lead more rapidly to the development
of the appropriate overall energy policy.
3. How effective is an EPS likely to be in driving forward
the development of CCS technology? Should the UK's CCS demonstration
programme cover gas-fired as well as coal-fired power stations?
For clarity, an EPS should drive CCS deployment as well as
development. It will be effective only as long as it is economically
viable for project developers to meet an EPS by using CCS. This
question cannot be separated from wider market reforms.
The first stage in implementing a successful EPS is to decide—and
agree—what it is intended to achieve, in the context in
which it will actually be applied. For the UK it is suggested
that this should be the rapid development of CCS as a proven option
for deployment in the UK (and elsewhere, except that some local
factors will always differ); an objective which will require two
generations of technology to establish proven reference projects.
Subsequently, progressively more individual power plant sites
should be converted to full CCS implementation or all new power
plants should be built with full CCS. It is also critical that
the appropriate strategic CO2 transport and storage
infrastructure to support CO2 capture projects (including
both demonstration and deployment phases) should be put in place
in a timely manner.
The Institution has already suggested strongly that the current
market conditions in the UK indicate that CCS development and
deployment on natural gas plants should proceed as quickly as
possible,[16] with the
objective of having 2nd generation reference plants in operation
before 2020. This is a prerequisite for routine deployment of
CCS on gas power plants, either as new build or retrofit, in the
2020s.
It should be noted that, if the UK were to develop and deploy
CCS on gas, then technically it could be relatively easy to "plug
in" coal based CCS technology provided that suitable versions
of this were developed abroad. However, availability of suitable
coal CCS technology is not a foregone conclusion as no large-scale
coal power plant full scale CCS projects are currently committed
anywhere in the world[17]
and relatively few are even near to making an investment decision.
With this proviso, an existing UK CCS infrastructure for gas should
make subsequent introduction of CCS for coal possible, provided
that suitable sites for new build and retrofit coal plants with
CCS had been retained.
4. Could the introduction of an EPS pose any risks to
the UK's long-term agendas on energy security and climate change?
An EPS which encouraged deployment of unabated natural gas
generation, in preference to CCS development and deployment would
delay the introduction of CCS in the UK. Even if suitable CCS
technology was developed elsewhere it would still take significant
learning time to apply routinely from scratch in the UK due to
local factors such as UK-specific regulations, power plant mix
and other market conditions. (It is doubtful, however, that significant
work on CCS from gas will take place elsewhere in the world; Norwegian
plans for its Mongstad plant have recently been postponed.[18])
Although less critical for energy security, such a scenario would
create risk of failure of meeting long-term agenda objectives
for climate change.
5. What is the likely impact of an EPS on domestic energy
prices?
Any well-crafted EPS should ultimately result in lower domestic
energy prices, relative to where prices would be without the EPS.
It appears likely that CCS projects on gas or coal (under current
market conditions) could produce low-carbon electricity more cheaply
than the higher-cost offshore wind sites that will have to be
considered to meet national emissions targets.[19]
Therefore an EPS that drives CCS development has the scope to
reduce domestic electricity costs relatively.
6. Are any other European countries considering an EPS?
If so, should the standards be harmonized?
The EU parliament voted for the introduction of a general
EPS, but this was rejected by the Council of Ministers.[20]
This would have applied a harmonised standard to all EU countries.
It is, however, apparent that unless the technology development
requirements of the different EU members are in harmony—which
they certainly are not—an EPS ought to be left as an optional
tool for national governments to use to meet their individual
energy supply infrastructure requirements. It is logical to apply
a comprehensive EU ETS, but this does then leave available relatively
few further regulatory tools for electricity supply developments
at the national level, especially when the restrictive effects
of the EU Renewables Target also have to be taken into account.
7. Could unilateral action by the UK to introduce an EPS
contribute towards global climate negotiations in Cancun in November
2010?
It appears likely that legislation for an EPS will now not
be considered as part of UK legislation before negotiations in
Cancun in November 2010. The approach taken by the UK to carefully
consider EPS design and implementation could be noted by negotiators
at Cancun (and in the preparations leading to it), but it is difficult
to assess what type of impact this may have on global negotiations.
If a well-designed EPS that drives CCS technology development
and deployment is ultimately introduced as part of a broader set
of market reform measures then this may contribute significantly
towards the directions taken by international negotiations after
Cancun in the area of mitigation technology development.
This is because, in the more general sense, it is likely
that major countries participating in global climate change negotiations
will be much more significantly influenced by actual operating
UK CCS plants rather than by regulations.
The influence of UK CCS plants would arise in two main ways.
The obvious one is to show working CCS power plant and full chain
technology. But this is probably less important than the irrefutable
evidence that the UK is prepared to pay significant amounts of
money simply to make a major reduction in CO2 emissions
from fossil fuel utilisation.
A motivation to access additional sources of energy from
renewable generation is well understood and universally shared
across the globe. A demonstrable motivation to spend money (even
if less than on the equivalent renewable generation) solely to
cut emissions to atmosphere would be a tangible confirmation of
how serious the UK is about tackling the major cause of anthropogenic
climate change.
8. Can greater use of Emissions Performances Standards
internationally help promote agreement on global efforts to address
climate change?
Greater use of an EPS is of itself unlikely to promote such
agreement. However, work by professional engineers and scientists
to design and build two successive generations of CCS technology,
to the point where reference CCS power plant projects exist as
the basis for subsequent routine deployment, is likely to help.
Indeed, it is hard to see how the largest national emitters of
fossil CO2, China and the USA, as well as the EU, will
be able to agree to the necessary cuts in emissions unless they
can rely on CCS being available as an option.
If greater use of an appropriate local EPS leads to CCS becoming
a real option in a timely fashion then it will give politicians
a key tool to negotiate deliverable agreements to tackle fossil
fuel emissions and reduce the consequent risks of dangerous climate
change.
August 2010
15
"We consider planning applications thoroughly and will not
allow any new coal power station to be built unless equipped with
carbon capture and storage. While we will consult on the final
details of an emissions performance standard, I am clear that
without CCS it would be impossible to meet such a standard. However,
an EPS on its own is not a magic bullet to decarbonise our economy.
We have inherited an energy system that has suffered from a lack
of clear direction and was not fit for purpose. That is why we
will be implementing comprehensive electricity market reform to
ensure that we can have a secure, low-carbon, affordable electricity
mix for decades to come."
Chris Huhne MP, Secretary
of state for energy and climate change
Letter to the Guardian,
17 August 2010, http://www.guardian.co.uk/environment/2010/aug/17/policy-on-clean-energy-clear Back
16
Institution of Mechanical Engineers policy statement, Carbon Capture
& Storage: natural gas power plants, May 2010 http://www.imeche.org/media/PPA/Energy/Policy/Carbon+Capture+and+Storage+Gas+Power+Plants.htm Back
17
http://www.globalccsinstitute.com/downloads/general/2010/The-Status-of-CCS-Projects-Interim-Report-2010.pdf Back
18
http://www.reuters.com/article/idUSTRE6410YM20100502 "Norway
delays Mongstad Carbon Capture and Storage project", Sun,
May 2 2010, "Norway said it would delay the decision to finance
a top carbon capture project to 2014, after the life of the present
parliament, in a major setback for a technology seen as key to
mitigate climate change". Back
19
http://www.decc.gov.uk/en/content/cms/statistics/projections/projections.aspx
, UK Electricity Generation Costs Update, Mott MacDonald, June
2010. Back
20
http://www.platts.com/IM.Platts.Content/ProductsServices/Products/powerineurope.pdf
Platts, "Power in Europe", Issue 546/March 9, 2009 Back
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