EU law makes power firms pay for all emissions

Australian
Thursday 9/10/2008 Page: 8

THE future of coal-fired power generation in Europe has been called into question after the European Union backed laws that would force power companies to pay for all their carbon dioxide emissions from 2013. The decision, which could cost the power industry 30 billion ($56 billion) a year and could trigger a steep rise in electricity bills, represents a huge boost for the renewable energy industry.

Chris Davies, an MEP who supported the legislation, said the decision by the EU's environment committee "effectively prevents the building of new coalfired power plants from 2015 unless equipped with CCS (carbon capture and storage technology)' . The new rules require final approval from the European parliament and EU member states. If granted, they would transform the economics of burning coal to generate electricity.

The move came despite fierce resistance from power industry lobbyists, who said the EU's aggressive emissions-cutting targets should be weakened because of the global financial crisis. Avril Doyle, an Irish MEP on the committee, said: "For all the trouble we have, the single greatest challenge facing us is climate change." The committee backed proposed changes to the EU emissions trading scheme, a program in which the bulk of permits are handed out to companies for free.

Members voted in favour of auctioning all emissions permits after 2013 for power companies. The committee proposed that other polluting industries, such as steel making, should pay for 15 per cent of permits in 2013, rising to 100 per cent by 2020. It had been unclear how the ETS program would evolve after 2012. The committee also offered to plough $14 billion from the scheme into carbon capture and storage research, an untried technology designed to strip out greenhouse gases at source and store them underground.

The bill is a key plank of the EU's plan to cut Europe's carbon dioxide emissions by 20 per cent by 2020. The CBI welcomed the scheme yesterday, saying it would provide greater clarity for businesses. Europe's renewable energy industry endorsed the decision. "This new target underlines the urgency of action to deliver clean, sustainable energy now if we are to keep global temperatures within acceptable limits," said Maria McCaffery, of the British Wind Energy Association.

A vote before the full European parliament is likely in December, although opposition is expected from some heavily coal dependent countries, such as Poland. France, which has the EU presidency at the moment, wants to enshrine the bill in law by the end of the year.

Democratic leaders in the US House of Representatives yesterday proposed to reduce by 80 per cent in the next 42 years the gases from power plants, transportation and factories. The draft legislation would begin slowly, capping emissions of heat-trapping gases released by transportation and power plants first, then moving to other sectors of the economy.