Dutch national policy package needed to really get CO₂ capture going

A policy package consisting of a CO₂ emission performance standard, financial support and an improved European system for CO₂ trade can realise CO₂ capture in new Dutch coal-fired plants in ten years’ time. This is the outcome of a study conducted by the Energy research Centre of the Netherlands (ECN) upon request of the European Climate Foundation (ECF).

Organisations such as OECD/IEA, the European Commission, IPCC, the Dutch Environmental Assessment Agency (PBL) and some environmental organisations consider deployment of CO₂ capture to be essential for realising sufficient decrease of CO₂ emissions in power generation.  It should complement other climate change mitigation options such as energy saving, renewable energy and nuclear energy. The geographical location and the presence of energy intensive industry allow CO₂ capture to play a large role in the Netherlands, which can act as a CO₂ hub in Northwest Europe. But CO₂ capture will not be realised straightforwardly. One of the vital preconditions includes the presence of sufficient incentives.

Costs
A combined policy package consisting of a national CO₂ emission performance standard (EPS), additional financial support and an improved European system for CO₂ trade can realise CO₂ capture in new Dutch coal-fired plants in ten years’ time. ECN Policy Studies has assessed this package by request of ECF. For this purpose, ECN took a closer look at CCS policy in the United Kingdom, Germany and the United States.
The costs of financial support aimed at realising about 18 Mton CO₂ capture annually at three coal-fired plants have been estimated to amount to approximately 300 million euro annually in the period 2020-2030. This is based on assumptions about a relatively low CO₂ price of 20 euro/ton and deployment in three coal-fired plants that are currently being built. The costs will decrease in case of a higher CO₂ price. CO₂ capture can be deployed in a cost-effective manner at a CO₂ price of about 75 euro/tonne.

Reinforcing measures
Implementing a CO₂ EPS as a single measure can lead to a slightly deteriorated competitive position of the Dutch electricity production sector: it leads to less production in the Netherlands, import instead of export of electricity and a higher wholesale market price. Due to the European emission trade system (EU ETS) a national CO₂ EPS will not decrease CO₂ emissions in Europe.  Financial support as a single measure will not guarantee the actual deployment of CO₂ capture. Combining both measures can offer the required certainty for investors in CO₂ capture. It also offers more certainty with regard to the supply of CO₂ being sufficient to develop the transport infrastructure to storage locations. The national package also offers the Netherlands favourable economic perspectives.
At the end of January, ECN will present the results of the study at a meeting with various stakeholders of the Rotterdam Climate Initiative, North Netherlands (Energy Valley), the Task Force CCS and Energie Nederland.
 
More information:
The (English) ECN report ECN-E--10-032 titled ‘Policy instruments for advancing CCS in Dutch power generation’ is available for download here.
Contact person: Ad Seebregts, ECN Policy Studies, seebregts@remove-this-part-ecn.nl, telephone number: +31 224 56 4090.

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