Crediting co2 sequestration – An alternative approach to integrating CCS into the EU ETS

Carbon Capture and Storage (CCS) technologies are currently discussed as a promising measure by stakeholders in the power industry sector, who see it as an opportunity to both continue using fossil fuels and to comply with the challenges of climate protection by reducing carbon dioxide emissions. Initial demonstration projects have already been launched.1 According to the European Commission, it can be expected that, by 2020, up to 7.6% of the carbon dioxide emitted by power stations will be captured and sequestered using CCS technologies.2 Still, many crucial questions remain unanswered. The European Commission recently presented a package of legislative proposals,3 including proposals for a directive on the geological storage of carbon dioxide4 and for the integration of CCS in the European Emissions Trading Scheme (EU ETS);5 these proposals have recently been discussed in the European Parliament, and are scheduled for adoption by spring 2009, at the latest. The provisions they set out would have to be implemented by the EU Member States within one year after entering into force.6 This article deals with the integration of the different steps of the CCS technology and the approach proposed by the European Commission. The authors examine the approach critically from the point of view of emissions trading, and propose an alternative model that might also serve as a pragmatic solution until European legislation would enter into force. Furthermore, this alternative model addresses several aspects not considered by the Commission’s approach.

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