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Using the Kyoto Protocol to clean up coal

Milton Catelin, Chief Executive, WCI

Last week, the Guardian newspaper ran an article entitled “Rich countries to pay energy giants to build new coal-fired power plants”. Given the nature of the title, the article unsurprisingly generated a lot of interest!

It opened up with: “The UN is set to channel billions of pounds of public money from rich countries to giant energy companies to build 20 heavily polluting coal-fired power plants on the basis that they will emit less carbon dioxide than older ones”. That sort of statement is always guaranteed to create a bit of a stir! But unfortunately it’s not accurate and the criticism is based on a flawed understanding of how a specific UN programme works.

The real focus of the article is the UN Clean Development Mechanism. The CDM is a mechanism included within the Kyoto Protocol to help countries meet their emissions targets and to encourage the private sector and developing countries to contribute to emission reduction efforts. The CDM has been operating since 2006 and allows emission reduction projects in developing countries to earn Certified Emission Reduction (CER) credits. These CER credits can be traded and sold, and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol. The CDM is designed to stimulate sustainable development and emission reductions, while giving industrialised countries some flexibility in how they meet their emission reduction targets.

Public Funding?

The CDM does not provide a direct cash injection for projects and does not involve direct government or UN funding. The economic benefit of a CDM project arises from the issuing of CER credits which can be sold in emissions trading schemes under the Kyoto Protocol, thus enabling funds to be raised. The credits purchased can be used by Annex I Parties to the Kyoto Protocol (i.e. developed countries) in order to meet their emissions quotas and the funds from those sales support projects registered under the CDM – so there isn’t a cash injection from UN or public funds.

Rushing projects through?

The article also suggested there has been a ‘rush’ by companies to take advantage of the CDM ‘subsidies’ for coal. This is difficult to explain when the CDM has already been operating for four years and the approval process itself can take a number of years. Only one coal project to date has been registered under the CDM (in India) and two further Indian projects are under review. These are not ‘rushing’ timeframes or out of control numbers – it is a difficult and slow process. And this has actually been the criticism levied at the CDM to date – the speed at which projects get approved and the complexity of the process.

UN – fossil fuels part of energy mix for years to come

The UNFCCC states: “Fossil fuels will be part of the energy mix for many years to come. It makes sense that the CDM should be used to reduce the emissions associated with that fossil fuel use”. The CDM is not used to ‘subsidise’ any fossil fuel-fired power station that developers construct – it can only be used with fossil fuel-fired power stations that actually use technology that can significantly reduce CO₂ emissions – technology that otherwise would not be deployed in that location.

The idea of technologies that improve the ‘efficiency’ of coal-fired power stations is something that is often derided – many people think ‘coal is coal’, and hence it is bad. But improving the amount of energy we can get out of each tonne of coal used is essential to meeting the challenge of climate change. Using these efficient technologies does make a significant difference in reducing emissions from coal-fired power plants. Replacing all older and smaller coal power stations with best available, most efficient technology and larger plants could globally reduce GHG emissions by 5.5%. To put this 5.5% global GHG emission reduction figure into context, the intended effect of all the measures included in the Kyoto Protocol on Climate Change is 5%.

This is not about taking money from renewable energy and putting it into coal. It’s about using all options open to us, including mechanisms set up under the Kyoto Protocol to achieve significant emissions reductions at a global level. India, South Africa, China, Indonesia…the list could go on…coal is critical to all these countries and projections show this role will continue. Reducing emissions from coal-fired power stations worldwide is a critical part of any effective response to climate change. Arguing that developing countries shouldn’t use coal and shouldn’t get any form of support, such as through the CDM, to actually clean up their coal burn is not helpful – either to the sustainable development of these countries, or to the global response to climate change.

AFRICA!

I will be in Johannesburg, South Africa, next month to talk at the ‘Coal Energy Africa’ event. The event, taking place 16-17 August, is a niche forum that addresses energy challenges facing Africa. Electricity demand in Southern Africa is increasing at a rate of 1000 MW per year. The abundant reserves and low cost of coal make it the preferred energy source to meet increasing electricity demand for the foreseeable future. The challenge is to enhance the efficiency and environmental acceptability of coal use. Full details on the event are available on the ‘Coal Energy Africa’ website.

July 23, 2010 | Categories: Climate change
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Setting standards or providing solutions – why an EPS won’t tackle climate change

Milton Catelin, Chief Executive, WCI

The new UK government has pledged to introduce an Emissions Performance Standard (EPS) for CO₂ emissions from new power stations. On the surface, introducing standards for CO₂ emissions seems like a positive step – who could possibly have a problem with governments setting targets to limit CO₂ emissions? Dig a little deeper and the complexities and pitfalls of using an EPS to tackle the long-term challenge of climate change become clearer.

Emissions performance standards have long been used by governments to limit the release of pollutants. The successful use of an EPS to limit sulphur emissions from power stations in the USA in the 1970s and 1980s is often held up as a positive example. However, in terms of drawing parallels between the reduction of sulphur emissions and CO₂ emissions, you’re really comparing apples and oranges. The two issues are on a completely different scale. Retrofitting a coal-fired power plant to reduce some tens of tonnes of sulphur dioxide per day is not comparable with retrofitting a plant to control the release of 20,000 tonnes of CO₂ per day. It is a more difficult, more complicated challenge and one that will not simply be solved by slapping standards onto power plants!

Technology is available to make significant reductions in CO₂ emissions. Carbon capture and storage (CCS) is the only currently available technology that allows very deep cuts to be made in CO₂ emissions to the atmosphere from fossil fuels at the scale needed. Yet, an EPS will not encourage power plant operators to invest in technologies such as CCS. Rather it will lead operators to simply switch to the cheapest, short-term option to meet energy demand and the standards set by an EPS…and that is unabated gas.

This switch will reduce energy security by weakening the energy mix, driving up gas (and therefore electricity) prices and will only deliver modest, short-term emissions reductions – natural gas is not a low emission energy source, it needs CCS as well.

It is now generally accepted by groups including the G8 that governments and the private sector must work together to deploy CCS to all fossil fuels and other industrial sectors and that this will involve policies that reduce the commercial risk of CCS, enabling the private sector to make the massive investments that are required. An EPS does not reduce commercial risk – it does the opposite. To a CCS developer, an EPS is simply another regulatory risk, which increases the challenge of investing in first-of-a-kind plants.

What’s the alternative? In Europe a mechanism already exists which is supposed to encourage power plant operators to invest in low CO₂ emitting technologies – the Emissions Trading Scheme. The World Coal Institute has been supportive of an effective carbon pricing system to support the deployment of CCS and other low carbon options. But current CO₂ prices are below the level necessary to drive early investment and there are no signs that this is likely to change. In the face of a low carbon price, further public financing incentives are needed to help bridge the investment gap. ‘Feed-in tariffs’ have been effective in incentivising other new energy technologies – such as renewables – and could do the same for early CCS deployment. The levy on electricity proposed by the UK to directly support CCS deployment is also an option that could help to successfully bridge the gap. In addition, the inclusion of CCS in the Clean Development Mechanism would act as a means of driving down early costs via large scale deployment in developing countries.

Implementing a combination of these incentives domestically and internationally should see CCS costs driven down to a level where deployment can be successfully supported by an effective cap-and-trade system.

If the aim of setting a CO₂ EPS on power stations in the UK is to push the UK once again down the path of a dash for gas, then this is the perfect step to take. If the aim is to tackle CO₂ emissions and the long-term challenge of climate change, then a rethink is needed.

July 9, 2010 | Categories: Climate change, WCI
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World Bank made the right decision on South Africa coal loan

Milton Catelin, Chief Executive, WCI

The controversy over the World Bank decision to help fund a coal power station in South Africa has highlighted the difficult question of how we meet increasing demands for energy, whilst minimising environmental impacts.

Coal is not popular. It has environmental impacts which have to be – and are being – minimised. But coal is absolutely essential to meeting energy demand worldwide. It is particularly important in supplying electricity, providing over 41% of global electricity. And access to energy is absolutely essential to human development.

If you think of everything you do every single day which requires electricity you get a sense of how vital electricity is to every facet of modern, developed societies – using your computer, charging your mobile phone, turning the lights on, refrigerating food. At the same time, industries cannot operate without access to energy; they rely on a regular, affordable supply of electricity.

So for a developing country like South Africa, with its own large resources of coal, the idea that it should not be allowed to use this coal to generate affordable electricity for its development is irresponsible.

South Africa’s Finance Minister, Pravin Gordhan, said: “If there were any other way to meet our power needs as quickly or as affordably as our present circumstances demand, or on the required scale, we would obviously prefer technologies…that leave little or no carbon footprint. But we do not have that luxury…”

Over 80% of the growth in electricity demand over the next 20 years will take place in developing countries. At the same time, 1.5 billion people – or 22% of people worldwide – still do not have access to electricity and this figure will only drop to 1.3 billion by 2030. In Sub-Saharan Africa, only 29% of the population has access to electricity today. And despite increasing electrification rates, the total number of people in the region without access to electricity has actually grown by 78 million since 2001 – more than the total UK population.

This is not to argue that environmental considerations have to take a back seat to the basic need to meet energy demand. It is important that technologies are used which reduce environmental impacts. The Medupi coal power station will be the first in Africa to use the supercritical technology used in most high-income countries for new coal power generation. Using these efficient technologies does make a significant difference in reducing emissions from coal power plants. Replacing all older and smaller coal power stations with the sort of technology that will be used at Medupi could globally reduce greenhouse emissions by 5.5% – more than the intended effect (5%) of all the measures included in the Kyoto Protocol on Climate Change.

Without coal, South Africa would find it impossible to meet its energy needs going forward and economic and social development would flounder. It has been suffering an energy crisis since 2007 and the construction of baseload power is absolutely essential to getting back on track. As controversial as the World Bank decision has been, it was absolutely the right decision for South Africa.

Note
The World Bank is now undertaking a review of its energy strategy and investments. The World Coal Institute has already submitted a response to the consultation. We would encourage anyone concerned about poverty and development to send a submission through to the World Bank Group.

June 25, 2010 | Categories: Sustainable Development
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Friday December 18

The Road to…Mexico…

Two years of negotiations ‘ended’ tonight with little clear and much confused.

As we leave Copenhagen Friday evening, we hold a leaked draft “Copenhagen Accord” which appears to contain the outcome of these talks. Its status is unclear.

The Accord is non-binding and contains no individual national targets. It leaves details – just about everything – to be worked out be COP16 in Mexico City. It also ensures the continuation of the confusing two track negotiation process.

The presence of a small galaxy of celebrities was impressive but ultimately proved another source of unwanted distraction to negotiations attempting to finalise a deal.

Ultimately, however, it has been the unwillingness of both developed and developing nations to move from long-held positions that has ensured that our road to Copenhagen has been extended to Mexico City and beyond.

December 18, 2009 | Categories: WCI at Copenhagen
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Thursday December 17

If there was any doubt remaining, the US Delegation has now confirmed that there will be no treaty coming out of Copenhagen.

Two years of negotiations at the bureaucratic level have failed to create the grounds for bridging significant remaining gaps between developed and developing countries over a post-2012 climate change regime. No number of Heads of State at this point could resolve these differences in the hours remaining.

There will be a political statement at best confirming the continuation of the two track negotiation process (LCA and Kyoto Protocol), with a new timetable to complete a treaty by mid or late 2010.

Today has been more focused on work than at any previous time over the past fortnight. If a developed/developing country consensus can be reached overnight, this fortnight will be the beginning of a negotiation to finalise the detail of a treaty that can be signed by the end of 2010.

With less than 24 hours remaining, attention is turning toward a warmer climate at COP 16 in Mexico City.

December 17, 2009 | Categories: WCI at Copenhagen
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Wednesday December 16

Crunch!

The Bella Centre was finally closed to all non-government stakeholders in the face of violent demonstration and a pronounced escalation of security. We believe even the Executive Director of the International Energy Agency may have been caught up in the lockdown while outside the Centre.

With just two days left, the talks took a dramatic turn of events, as the President of the conference, Connie Hedegaard, unexpectedly resigned this morning. She will be replaced by her boss the Danish Prime Minister. There are competing explanations for this development. The Danes themselves argue this was always planned and an appropriate step in light of the numbers of Heads of State participating. An incredulous audience questioned this:

if it was planned why was it not announced at the outset? Connie resigned around 5 am this morning;
if it was protocol to handover to the PM, why has this never happened in any other COP or under any other treaty?

The only certainty is that whether by design or disaster they have succeeded in merely further focusing attention in these remaining hours on process rather than outcome.

There was more confusion within the hall – the Brazilian Delegation took the floor to say that their head negotiator was not present because he was being held at the doors by Security and was not being allowed in, the South African Delegation ‘on behalf of the G77’ asked for another day to finish some issues, and tensions only grew as the day progressed.

It finally fell into turmoil when the Chair said that they would again use the controversial ‘Danish text’ in an effort to move the process along. This predictably inflamed the developing countries and prompted China, India, Brazil and others to proclaim they would formally refuse to continue with any of the talks.

Meanwhile a bomb threat closed the central station and the UK PM Gordon Brown was told it was not safe for him to leave the Bella Centre. Whether it is now safe for any of us to remain in the Bella Centre is another question.

Copenhagen is now covered in deep snow, police and protestors. Comfortingly, Blackhawks now whir through the leaden skies!

December 16, 2009 | Categories: WCI at Copenhagen
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Tuesday December 15

Frozen out

Another day in Copenhagen; another day of queues. At least today they were a little more organised … but no more successful, as after two hours of shuffling, the queues came to a halt and did not move again. During that time, secretariat staff paraded up and down the line telling all that anyone with a press pass could make their way to the front of the queue. Many did. Media were now at the front of a queue that did not move. One quipped, “At least we’re travelling first class on the Titanic!” He was mocked; the Titanic was a ship that moved.

Inside the Bella Centre, the climate glitterati were starting to arrive … Prince Charles, Al Gore, Arnold Schwarzenegger and so on.

The past few days of negotiations were replaced with the ceremonial opening. Negotiations that did continue were almost all closed to non-government stakeholders.

There was no movement on CCS in the CDM but Saudi Arabia is insisting that this is one issue that needs to be moved from bureaucrats and ministers to Heads of State.

However, the reality is that at this point all the minutiae of any post-2012 agreement is secondary to the bigger picture. Despite global expectations of a success in Copenhagen, developed and developing countries remain well apart and getting any area of agreement between them that can be portrayed as a ‘success’ is the primary and possibly only focus of frantic late night closed meetings.

Back outside the Bella Centre, after two and a half hours of shuffling progress, a message was finally broadcast that the frozen masses could expect to wait at least another five hours before collecting their badges. We had hit rock bottom.

And then it started sleeting.

December 15, 2009 | Categories: WCI at Copenhagen
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Monday December 14

Whatever is happening to the world, there is no warming in Copenhagen.

Delegates queued for over four hours outside the Bella Centre this Monday morning in zero degree (centigrade) temperature waiting to enter the compound. Around midday came the first official announcement to a now almost frozen mob of 5000 that it would be at least another 3 – 6 hours before they would gain access to the compound (where they would have the pleasure of further queuing to actually register).

Apparently the machines issuing photographic passes had broken down and the UNFCCC secretariat were now only able to process 50 people per hour!

Meanwhile, inside the Bella halls, there was a similar (if more comfortable) cooling. Both developed and developing nations had walked out of talks over specific targets for each group.

This morning African nations led a boycott of a key session led by the President of COP 15 and CMP 5, Connie Hedegaard (who is set to become the new European “Commissioner for Climate Action” in 2010), bringing negotiations to a halt. After a suspension of nearly four hours, during which Australia also led a developed nations walkout, the delegates returned later and the talks resumed. These tactics have only increased the pressure and lost time for both sides.

The briefing for non-governmental organisations by Yvo de Boer, the UNFCCC Executive Secretary was cancelled again. Instead for almost an hour, other UNFCCC representatives took questions on the logistics (or lack of logistics) for the Conference rather than on the actual issues before negotiators.

Later in a Q&A for NGOs, President Connie Hedegaard also answered questions about the logistics of the conference, the status of the negotiations, and gave a candid assessment of where she sees the process going. She confirmed that it is still a two-track process that the delegations are working on, with the details in annexes to be worked out later in the year. She said that while there has been a lot of noise throughout the weeks, she has confidence that the ‘world leaders won’t go home empty handed’.

Hits of the day:

The comment by the Executive Director of the International Energy Agency, Nobuo Tanaka, that “carbon capture and storage is the most important technology to achieve the 450 scenario.”

The charm and good humour demonstrated by our colleagues from Friends of the Earth International for their camaraderie in the horrendous queues to enter the Bella Centre.

Miss of the day:

The failure of the UNFCCC Secretariat and the Danish Government to plan and then cater for the thousands who had booked for the Conference but were left stranded and uninformed for over four hours outside the Bella Centre in zero degree temperatures.

December 14, 2009 | Categories: WCI at Copenhagen
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Sunday December 13

A day of rest for many, negotiators from key countries were locked behind closed doors feverishly attempting to provide some basis for a successful second and final week of these negotiations. Meanwhile, demonstrations continued on the streets with Danish police providing a physical reminder of the need to avoid earlier ‘excesses’.

For business and industry there were numerous side events, lunches and workshops. A key event for us today was supporting an EU Zero Emissions Platform (ZEP) event on CCS at the Danish National Museum.

Speakers included Graeme Sweeney (Shell and Chairman of ZEP), Frederic Hauge (President Bellona Foundation) and Rajendra Pachauri (Chairman Intergovernmental Panel on Climate Change).

All speakers spoke strongly in favour of CCS with Sweeney remarking that it was the missing element in the mitigation armoury. Pachauri emphasised the need to be realistic, stating that coal cannot simply be ‘wished away’ and will be an important feature of the global energy scene for decades to come. Given this reality, CCS needs to be commercialised, and will only be successfully deployed if there is a partnership between government, industry and civil society.

Next week

Tomorrow formal negotiations resume with a heightened sense of urgency. After two years of negotiations it comes down to this week.

Rajendra Pachauri, head of the IPCC, speaking at the Zero Emission Technology Platform CCS event

December 13, 2009 | Categories: WCI at Copenhagen
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Saturday December 12

Saturday is usually the beginning of a weekend and a time to relax; but not in Copenhagen.

Inside the Bella Centre there is tightened security, with more police patrolling around the halls. With many ministers arriving this weekend, organisers have been working on ramping up security precautions all week – security blocks have been created inside the Bella Centre itself, in addition to the normal airport-like metal detectors and scrupulous bag and identity checks.

Outside the Centre, preparations are being put in place for the thousands of protestors expected to mark the “Global Day of Action on Climate Change”. It is noticeable that many of the environmental NGOs are not inside the Centre today but at camps around the city.

Stocktaking

Today is considered a day of stocktaking as many of the formal and informal negotiation groups report back. The suspension earlier in the week meant that the process had slowed considerably; but it resumed slowly this morning as different Parties are focusing on the two new draft texts introduced yesterday.

CCS Developments

The process on CCS in the CDM is becoming more and more complicated, even as the result is looking bleaker by the hour.

There are currently three different texts being considered, while the contact group addressing the recommendations made by the CDM Executive Board is still in consultations and still closed to non-government stakeholders. Another contact group created on Tuesday in SBSTA (Subsidiary Body for Scientific and Technological Advice) reported back on their negotiations. The SBSTA has agreed with that group’s recommendations – this means that the SBSTA will next week recommend to the CMP (Conference of the Meeting of the Parties to the Kyoto Protocol) that the matter should again be deferred to the SBSTA meeting scheduled for June 2010! Comments of disappointment were made by both Australia and Saudi Arabia after the gavel fell.

Yet another delay in this area is a strong loss for the environment which needs, according to both the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), all the mitigation options available to ensure the planet avoids harmful global warming. CDM may not be the best delivery mechanism for CCS but it is, at this point in time, the only mechanism to finance the deployment of low carbon technologies to the developing world.

Miss of the day

The obfuscation of the SBSTA to agree a final decision on the eligibility of CCS projects under the CDM is a disappointing blow to our industry; but it is a tragic outcome both for the environment and for developing countries attempting to balance economic development (and poverty alleviation) with effective action on climate change.