The EU carbon price has, of course, dropped with the recession. It's a concern that this low price will stifle investment in CCS - after all what is the requirement to invest in CCS if the abatment cost (per tonne) is more than the cost of an emission allowance from the open market?
The report is that Ed Miliband is seeking to implement a floor in the price of carbon, therefore ensuring that the price does not drop too far.
Ofcourse this isn't popular - it will cost some people money (but make money for those people with allowances to sell, such as steel producers).
I doubt things will change.
Showing posts with label EUETS. Show all posts
Showing posts with label EUETS. Show all posts
Wednesday, March 4, 2009
Tuesday, February 24, 2009
Carbon capture with coal may be cheaper than gas
With the need to maintain grid stability (and until large scale, economic, energy storage is developed) fossil fuel will always be a part of our energy supply - the choice will be between gas and coal.
Bloomberg is reporting that coal with carbon capture and storage may be cheaper than gas. That's great news.
It also probably makes a few assumptions - noteably the price of gas and carbon dioxide - assumptions which may not be valid based upon the low price of phase II EUETS emission allowances (sub 10Euro).
Still, it's good news.
Bloomberg is reporting that coal with carbon capture and storage may be cheaper than gas. That's great news.
It also probably makes a few assumptions - noteably the price of gas and carbon dioxide - assumptions which may not be valid based upon the low price of phase II EUETS emission allowances (sub 10Euro).
Still, it's good news.
Monday, December 29, 2008
EUETS and the price of electricity
A report on the link between the price of electricity and carbon has just been published.
It concludes what we approximately already know - that the creation of a trading scheme has increased the electricity price, and that electricity companies have been making windfall profits on the back of the scheme.
The report says that there are two ways around this:
Windfall taxes (on the carbon dioxide based windfall profits)
Actioning of the allowances in the first place.
I suspect that actioning will take place in the third phase of the scheme - so there is no call of the windfall taxes (however popular this will be with the trade unions).
I've only skimmed through the report (not read it properly), but there seems also to be another useful nugget of information:
without emission trading combined cycle gas turbine power stations are more expensive than coal
with emissions trading combined cycle gas turbine power stations are cheaper than coal
...based on a 2004 fuel price (and probably carbon price).
That's a little bit like sticking your finger in the air and saying "it will snow next week", but it hints that coal can be economic in a low carbon economy.
It concludes what we approximately already know - that the creation of a trading scheme has increased the electricity price, and that electricity companies have been making windfall profits on the back of the scheme.
The report says that there are two ways around this:
I suspect that actioning will take place in the third phase of the scheme - so there is no call of the windfall taxes (however popular this will be with the trade unions).
I've only skimmed through the report (not read it properly), but there seems also to be another useful nugget of information:
without emission trading combined cycle gas turbine power stations are more expensive than coal
with emissions trading combined cycle gas turbine power stations are cheaper than coal
...based on a 2004 fuel price (and probably carbon price).
That's a little bit like sticking your finger in the air and saying "it will snow next week", but it hints that coal can be economic in a low carbon economy.
Tuesday, December 16, 2008
Financing CCS
Carbon capture and storage from coal is expensive - there is no doubt here.
It is, however, probably cheaper than the only alternative (and no - wind / renewables are not alternatives since they cannot comply with the grid code) - gas.
So it's good news that the EU have decided how to financially support carbon capture and storage.
I can imagine a few people saying that "this is a government policy which will support an unpopular technology that wouldn't otherwise happen". They are ofcourse right - but the money is coming from the generators themselves (via the price of carbon).
Hang on a moment. This sounds familiar - where have I heard it before?
Oh yes - wind. That very popular technology (so popular that 5% of planning requests are granted the first time around) that receives money from the generators via the renewables obligation.
It is, however, probably cheaper than the only alternative (and no - wind / renewables are not alternatives since they cannot comply with the grid code) - gas.
So it's good news that the EU have decided how to financially support carbon capture and storage.
I can imagine a few people saying that "this is a government policy which will support an unpopular technology that wouldn't otherwise happen". They are ofcourse right - but the money is coming from the generators themselves (via the price of carbon).
Hang on a moment. This sounds familiar - where have I heard it before?
Oh yes - wind. That very popular technology (so popular that 5% of planning requests are granted the first time around) that receives money from the generators via the renewables obligation.
Wednesday, November 12, 2008
Carbon
Carbon dioxide is a commodity that can be bought or sold like anything else. It has a price, which is set by the market. If there are too many emission allowances on the market the price falls.
The price has, over the last few days, been falling. I assume that this is because of the economic downturn - after all not as many people are going to buy cement or steel if the construction industry is bankrupt. This means less production at these plants and so more emission allowances on the market.
This, ofcourse, affects the power generation sector.
Fossil power stations emit CO2. Gas power stations emit a little over half of what a coal power station will emit for the same electrical output (7/11ths or something like that - not sure really). When the third phase of the EU emission tradeing scheme starts companies will have to buy all of their allowances on the market - and if you know how this affects the price of electricity from coal (when compared to gas) you're doing better than me. It could still be cheaper - but this depends on the price of gas (to which the price of carbon is also connected).
It's all rather complicated.
Two things are for sure:
A higher carbon price makes coal more expensive, but drives generators further towards carbon capture and storage.
A more stable carbon price gives greater confidence to investors, making it more likely that they will get their money back if they invest in carbon capture and storage.
So, generally, a weaker carbon price is bad news.
The problem is that these decisions need to be taken today (see the BBC blackout article published today to understand the scale of the problem).
From where we stand today I'd invest in coal - at least to replace the plants which are being shut down. After all it's a cheaper fuel (although the capital cost is high) and with CCS it can have lower CO2 emissions than gas (where CCS is more expensive - so less likely).
The price has, over the last few days, been falling. I assume that this is because of the economic downturn - after all not as many people are going to buy cement or steel if the construction industry is bankrupt. This means less production at these plants and so more emission allowances on the market.
This, ofcourse, affects the power generation sector.
Fossil power stations emit CO2. Gas power stations emit a little over half of what a coal power station will emit for the same electrical output (7/11ths or something like that - not sure really). When the third phase of the EU emission tradeing scheme starts companies will have to buy all of their allowances on the market - and if you know how this affects the price of electricity from coal (when compared to gas) you're doing better than me. It could still be cheaper - but this depends on the price of gas (to which the price of carbon is also connected).
It's all rather complicated.
Two things are for sure:
A higher carbon price makes coal more expensive, but drives generators further towards carbon capture and storage.
A more stable carbon price gives greater confidence to investors, making it more likely that they will get their money back if they invest in carbon capture and storage.
So, generally, a weaker carbon price is bad news.
The problem is that these decisions need to be taken today (see the BBC blackout article published today to understand the scale of the problem).
From where we stand today I'd invest in coal - at least to replace the plants which are being shut down. After all it's a cheaper fuel (although the capital cost is high) and with CCS it can have lower CO2 emissions than gas (where CCS is more expensive - so less likely).
Tuesday, October 7, 2008
It's passed...
Okay, that £8 billion? It's passed. It's there to be taken.
wow.
Also being reported is that all power generators will have to pay for all carbon credits in the third phase of the EU Emissions Trading Scheme - but that was likely, and to an extent forseeable.
The cap of 500g/kwhr is also in - applicable from 2015.
I'm not sure if this is law quite yet - some negociation to be done perhaps.
wow.
Also being reported is that all power generators will have to pay for all carbon credits in the third phase of the EU Emissions Trading Scheme - but that was likely, and to an extent forseeable.
The cap of 500g/kwhr is also in - applicable from 2015.
I'm not sure if this is law quite yet - some negociation to be done perhaps.
Friday, July 4, 2008
The price of carbon
As I'm sure your aware carbon dioxide has a price - set of course by the EU emissions trading scheme (EU ETS).
It's this emissions trading scheme which I hope will one day be able to financially support carbon capture and storage (CCS) - simplistically if the price of carbon rises above the price to run a CCS plant money can be made by capturing carbon.
It was with interest, therefore, that I noticed that the EU may have agreed a formula for including aviation within the scheme.
Aviation, of course, has the potential to become a large emissions sector and as such could have a very large impact upon the price of carbon.
Non domestic aviation is equally important (if not more so - since it covers more distance) and including travel from North America is important.
It is a political hot potato.
According to point carbon the EU may have found a way of saving the americans some face.
This could tie in quite nicely with longleaf power station.
It's this emissions trading scheme which I hope will one day be able to financially support carbon capture and storage (CCS) - simplistically if the price of carbon rises above the price to run a CCS plant money can be made by capturing carbon.
It was with interest, therefore, that I noticed that the EU may have agreed a formula for including aviation within the scheme.
Aviation, of course, has the potential to become a large emissions sector and as such could have a very large impact upon the price of carbon.
Non domestic aviation is equally important (if not more so - since it covers more distance) and including travel from North America is important.
It is a political hot potato.
According to point carbon the EU may have found a way of saving the americans some face.
This could tie in quite nicely with longleaf power station.
Thursday, July 3, 2008
Longleaf power station
The BBC have just picked up on Longleaf power station which is planned in Georgia, US.
It appears that is because no emissions limits were set for CO2. This is probably because the US didn't (until this ruling) recognise CO2 as being a polutant gas (actually it's not a pollutant - it occurs naturally, it is an undesirable emission though).
This complete mess of course can't happen in the UK. Our committments to the EU Emissions Trading Scheme (EUETS) and carbon capture and storage mean that we have effectively set CO2 emission caps.
Kingsnorth (and the others which will follow) still seem to be okay.
It appears that is because no emissions limits were set for CO2. This is probably because the US didn't (until this ruling) recognise CO2 as being a polutant gas (actually it's not a pollutant - it occurs naturally, it is an undesirable emission though).
This complete mess of course can't happen in the UK. Our committments to the EU Emissions Trading Scheme (EUETS) and carbon capture and storage mean that we have effectively set CO2 emission caps.
Kingsnorth (and the others which will follow) still seem to be okay.
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