Stars and Dragons: The EU and China - European Union Committee Contents


Letter from Sub-Committee C to Lord Hunt of Kings Heath, Minister of State, Department for Energy and Climate Change dated 19 October 2009

EM 11448/09 Communication from the Commission to the European Parliament and the Council—Demonstrating Carbon Capture and Geological Storage (CCS) in emerging developing countries: financing the EU-China Near Zero Emissions Coal Plant Project.

Sub-Committee C considered this document at its meeting on 15 October 2009 and cleared it from scrutiny.

The Committee has taken a great deal of interest in China recently, including on climate change and energy issues. In relation to the Commission communication, we were very concerned to learn of the slow progress of this project, given its importance in the global fight against carbon emissions and the pace of growth of high emission coal-fired energy generation in China.

After all this time and publicity we are still in the initial phase of this project, with no certainty of any funding for phase three. We are very keen to understand, therefore, what the realistic timescales are now likely to be for all three phases to be completed. When will sufficiently reliable results of the project be available so that Carbon Capture and Storage can actually be rolled out in China?

We would also welcome your views on the initial management of the project within the EU, and the degree of enthusiasm of the Chinese government for this project.

Given the importance of this project, we are issuing a press release tomorrow dated 20 October 2009.

Letter to Sub-Committee C from Lord Hunt of Kings Heath, Minister of State, Department for Energy and Climate Change to the Chairman dated 2 December 2009

Thank you for your letter of 19 October concerning the EU-China NZEC Agreement. As you know, it was developed and agreed under the UK's Presidency of the EU in 2005, and international collaboration on CCS continues to be a high priority for the UK Government in our efforts to avoid dangerous climate change.

Your letter expresses concern that we are still in the initial stages of the project with no certainty of funding for Phase III, the construction of the plant. In response, I would like to highlight that a significant amount has already been achieved, and emphasise my belief that we are well placed to deliver a demonstration plant in China in parallel to those in the UK and elsewhere in the EU.

Under Phase I, the China-UK NZEC[124] Initiative, the China-European Commission COACH[125] project, and the STRACO2[126] project launched their results in Beijing on 28-29 October. Key findings from the China-UK NZEC Initiative included that: there is potential for CCS in China on the basis of cost, there is no clear technology winner once CCS is commercially established, the cost of deployment in China could be relatively cheap (approximately £25 per tonne of CO2) due to lower labour and construction costs in the Chinese power sector storage in oil reservoirs is possible but limited and may not support a commercial scale demonstration there may be significant storage in saline aquifers but further assessment is needed.

More information on the Initiative is included in the attached Summary Report.

These projects have built a significant amount of institutional capacity, expertise, and business interest in CCS in China, which will be essential to the success of the next Phases. It is notable that China's Ministry of Science and Technology now views successful demonstration as a critical pathway to any subsequent programme of deployment. The China-UK NZEC Initiative is also seen by many in the field as a potential blue print for project-based capacity building in developing countries. We should not downplay these achievements.

You are right to say that there is no agreed funding for Phase III, apart from the European Commission's contribution of €50 million, but the immediate objective has been and continues to be to agree funding for Phase II. We have pledged £6 million, on top of the European Commission's contribution of €7 million, on condition that other European countries also contribute. We would like to see further contributions confirmed before the EU-China Summit on 30 November 2009.

The Commission is currently working with the Chinese Government to agree detailed work objectives for Phase II. Once Phase II is underway in 2010, and starts to draw conclusions on what will be an appropriate technology and location for the demonstration plant, we will be in a much better position to estimate the costs and therefore the likely contributions to Phase III. After December's Copenhagen conference, there should also be more clarity as to whether or not the international climate framework will be able to contribute funding to CCS demonstration.

As regards the timing of Phase III, we would also like to see agreement before the EU-China Summit that the demonstration plant should be operational by 2015. The UK and China agreed this accelerated timetable at the China-UK Summit in February 2009. We are working with the European Commission to see how we can make this timetable consistent with their rules for issuing project grants.

Concerning the management of the NZEC project to date, the Chinese Ministry of Science and Technology have been extremely complimentary about how the China-UK NZEC Initiative has been co-ordinated and we have an excellent working relationship with them.

We will continue to work with the European Commission, the Chinese Government, other European Countries, and interested stakeholders in ensuring the success of the next phases of NZEC.

I thank you for your interest in this important subject.

124   See: Back

125   Co-operative action within CCS China-EU. See: Back

126   Support to Regulatory Activities for Carbon Capture and Storage. See: Back

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