Barriers continue for Germany’s clean coal

• 12 years ago (2011-08-05)
• David Flin

Europe 1061

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The German Bundestag has passed a carbon capture and storage (CCS) technology bill allowing demonstration projects at carbon-emitting power plants until 2016 to pump CO2 emissions underground. Despite this political success, there remain numerous political and economic challenges facing expansion and adoption of CCS technology in Germany.

The world’s first CCS pilot plant was installed in Germany in 2008 at Vattenfall’s 30 MW Schwarze Pumpe, but local residents have continued to express concerns over the potential risks of CO2 storage.

Despite the efforts of federal-level administrators to introduce the technology, opposition forced an opt-out option for states to be added to the bill. Critics say this will greatly reduce the effectiveness of the CCS bill, as the biggest opposition to CCS is located in some of the most geologically suitable sites in Germany – the states of Schleswig-Holstein and Lower Saxony.

The long-term project length and extensive capital costs also make CCS projects economically uncertain at present. Cost-effective projects will need constant streams of CO2 to overcome the entry costs, but at present, the vocal local opposition makes that revenue stream uncertain.

European carbon credits will play a role in CCS development. The higher the level of the price of carbon allowances, the greater the economic benefit of CCS. European carbon credits are currently trading below €12/MT for the December 2012 contract, its lowest level for over two years.