Thursday 23 April 2009

If you build it, they will come

Over the last few weeks, in the midst of a slew of conferences, U.S. and international politics were on the center stage of the carbon market arena. The Navigating the North American Carbon World conference in San Diego and Carbon TradeEx conference in Washington, DC were awash with analysis of the Waxman-Markey draft U.S. climate legislation (see Pew's Digest of the American Clean Energy and Security Act of 2009).
While many details are certain to be changed in later iterations of the bill, there are several general lessons for the U.S. pre-compliance scene from the Waxman-Markey draft:
• Offsets will be allowed into a federal cap-and-trade scheme, and certain early actor voluntary offset purchases will receive compliance credit (though likely at a discounted rate).• Forestry activities (especially those involving reduced deforestation in developing countries) will be eligible offset project types, but it will be a couple of years before we know for certain which activities will be compliance offset-worthy. • The EPA will likely oversee the cap-and-trade program (giving a nod to the EPA Climate Leaders voluntary offset purchase guidance) • The California Climate Action Registry and Regional Greenhouse Gas Initiative are likely “best bets” for US pre-compliance buyers or project developers looking to sell to US pre-compliance buyers.
Across the pond, climate negotiators met in Bonn from March 29 through April 8 to continue negotiations on a Kyoto successsor treaty. The meeting was noteworthy in that it was the first meeting to host a workshop on agriculture (largely neglected in the Kyoto markets). Select developing countries (including Argentina, Mexico, and South Africa) also agreed to shoulder more of the global reduction burden than they have. However, countries are still dragging their feet on emissions reduction targets to set in the medium or long-term, causing many to feel that this meeting was largely "more of the same."
As policy makers wrestle at the drawing board with a mantra of ‘if we build it they will come,’ major voluntary market infrastructure providers continue to launch new partnerships and products aimed at reducing confusion and increasing transparency in the voluntary markets (as well as trying to gain an edge on the steep competition among standards, registries, and exchanges).
Since last month's launch of the Voluntary Carbon Standard's (VCS) Project Database, the three registries endorsed by VCS (APX, TZ1, and Caisse de Depots) have already issued millions of VCS-certified credits, known as VCUs. World Energy announced that its World Green Exchange has taken on a new feel, operating less exclusively as an auction house and more as a “virtual shopping mall” for carbon commodities. The American Carbon Registry announced that it has linked with TZ1 “to stimulate the market for trading U.S. pre-compliance and global voluntary market offsets.”
Coupled with renewed demand from pre-compliance buyers in early 2009, these infrastructural changes are signs of a reviving market. Read on for more voluntary market news in the last three weeks.
—The Editors
For comments or questions, please email: vcarbonnews@ecosystemmarketplace.com

Toyota Is Urged to Speed Up Its Hybrid Production Plans

By NORIHIKO SHIROUZU and PATRICIA JIAYI HO
SHANGHAI -- A Toyota Motor Corp. official said the Japanese auto maker may need to consider bringing forward its original target of producing hybrid versions of all its models by 2020 because of rising interest in fuel-efficient cars.
"I believe Toyota needs to accelerate the 2020 goal to hybridize all the Toyota models," said Toyota Managing Officer Koei Saga, adding that the company has yet to make a decision on such a move.
Associated Press
A 2007 Toyota Camry Hybrid
Mr. Saga, speaking at an industry conference in Shanghai on environmentally friendly vehicles, also said Toyota plans to bring the hybrid version of its RAV4 sport-utility vehicle to China "as soon as possible." He didn't elaborate.
Mr. Saga said that because of "special circumstances," Toyota plans to sell concurrently in Japan the current Prius and the redesigned model, due for launch next month. However, he said that outside Japan, including in the U.S., Toyota plans to market only the new, redesigned model.
Mr. Saga said the new Prius will likely be slightly less expensive than the current model.
A spokesman for Toyota said pricing strategies for the redesigned Prius haven't been decided, and that it is up to the sales-and-marketing unit of each market to decide on its eventual pricing strategy.
Also Wednesday, an adviser to the Chinese government said that Beijing is likely to announce by the end of this year a consumer-incentive program to expand the use of all-electric battery cars and other "new energy" cars in China.
"Measures to encourage consumers to buy more new-energy vehicles are still in the making, but they should be released by the end of this year," said Huang Yonghe, director of the China Automotive Technology & Research Center. "At the least they should take clear shape by then."
Mr. Huang, who heads the semi-official auto-research institution in Tianjin, told the Shanghai auto conference that the central government already has a budget to support subsidies to consumers to purchase battery cars and plug-in electric vehicles, among other alternative-fuel cars. Those official subsidies, he said, will take the form of lower sales-tax rates and cash incentives for purchases.
China's central government is increasingly committed to electrified vehicles and its strategy to support auto makers developing various types of electric cars and components with research subsidies. In addition to environmental benefits, the government sees a chance for its car makers to gain ground on foreign rivals, because electric vehicles are simpler to engineer than gasoline-engine ones.
Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com and Patricia Jiayi Ho at patricia.ho@dowjones.com

Mixed response greets car-scrapping bonus

By John Reed
Published: April 23 2009 03:00

The car industry won its bid for a £2,000-per-car scrapping bonus yesterday, with the cost to be split between government and carmakers themselves.
Manufacturers welcomed the scheme, but said they were still studying how it would be implemented, while environmental watchdog groups criticised its failure to encourage consumers to buy cleaner cars.
The £300m programme will apply to buyers trading in vehicles 10 years or older. Government said it would take effect from next month, and last through March 2010 or until the funding had been used up. Similar trade-in schemes introduced in Germany, Italy, France and other countries over the past year have breathed new life into car markets. In January, Germany introduced a €2,500 (£2,200) bonus for cars nine years or older, attracting over half a million buyers into dealerships.
Carmakers and motor retail groups welcomed the plan, though some raised questions over government's requirement that they foot half the bill. "£1,000 is great, but it would have been nice to go the whole hog, considering that's what worked in Germany," said Tony Whitehorn, managing director of Hyundai Motor UK.
The Department of Business, Enterprise and Regulatory Reform is due to meet with manufacturers next week to discuss implemention of the scheme. "A large part of this programme falls on the car manufacturers," said Paul Ormond of Honda, whose plant in Swindon is in the midst of a four-month temporary shutdown. "We've got to study the implications of that."
The Society of Motor Manufacturers and Traders estimated that about 9.5m cars and 1m vans would be eligible for the scheme. "We need to see people coming back to showrooms, we need demand to move, and we think owners of the 11m vehicles that will qualify will find the incentives very attractive," said Paul Everitt, chief executive of the SMMT.
Because funds for the scheme are capped at £300m - enough for 300,000 cars - government may face pressure to top up the programme later. Responding to strong demand, Germany this month expanded funding for its scrappage scheme from €1.5bn to €5bn.
Like Germany's scheme, Britain's sets no emissions criteria, which brought accusations of "greenwashing". The Campaign for Better Transport yesterday claimed the scheme would "subsidise gas-guzzlers".
But industry officials say lower-priced vehicles - which tend to be smaller and have lower emissions - are likeliest to benefit from trade-ins by drivers of older cars, who tend to be less affluent.
The government acknowledged that the scheme would have only "a neutral or modestly positive environmental impact".
Copyright The Financial Times Limited 2009

White House Sets Rules for Offshore Wind Farms

By CHRISTINE BUURMA
NEW YORK -- The Obama administration took a step toward boosting development of renewable energy Wednesday, announcing final rules for offshore wind-power development.
The Department of the Interior announced a program to grant leases, easements and rights of way for the development of offshore wind farms. The program also puts in place methods for sharing revenue from offshore renewable energy projects with coastal states.
"On this Earth Day, it is time for us to lay a new foundation for economic growth by beginning a new era of energy exploration in America," President Barack Obama said Wednesday, according to remarks prepared for delivery in Newton, Iowa, where he traveled to mark Earth Day and tour a former Maytag plant that is now used to produce towers for wind-energy production.
Mr. Obama and congressional Democrats have touted wind power and other renewable energy sources as an alternative to power plants that run on fossil fuels that emit the heat-trapping gases blamed for climate change. The U.S. currently has no offshore wind farms, and the few plans that have gotten some traction, such as a project for a farm off Cape Cod, Mass., have at times been met with fierce opposition from local residents.
The guidelines from the department's Minerals Management Service are a "demonstration that the Obama administration recognizes the potential for offshore wind to enhance energy independence, contribute to addressing climate change and create new jobs," said Jim Gordon, the president of Cape Wind Associates, the company that is planning to build a 420-megawatt wind farm in Nantucket Sound, Mass.
MMS's final rule on offshore wind development came as the New York Power Authority said Wednesday that it will partner with several public and private organizations to develop wind power projects off the coast of the Great Lakes.
In March, the Department of the Interior and the Federal Energy Regulatory Commission resolved a longstanding regulatory dispute over which agency has primary authority to site offshore wind farms. Under the agreement, the MMS is responsible for rules governing the wind projects and FERC has approval over siting.
Lawmakers had expressed concern that an absence of offshore wind rules would allow speculators to seek permits for projects, blocking access to areas sought by wind developers.
Mr. Salazar said in February that the Atlantic coast has "huge potential" for offshore wind energy production, possibly hinting at an area his department would consider in early lease auctions. Mr. Salazar also said the Southwest and Great Plains regions were of interest.
A 2006 report by the Interior Department said wind energy in the U.S. outer continental shelf has the potential to generate 900,000 megawatts of power, roughly equal to total installed U.S. electrical capacity.—Henry J. Pulizzi contributed to this article.
Write to Christine Buurma at christine.buurma@dowjones.com

Texas Moves to Foster Solar Power

State Senate Passes Bill Offering $500 Million to Subsidize Small-Scale Users

By RUSSELL GOLD
AUSTIN, Texas -- The Texas state legislature is expected to soon approve one of the largest subsidy programs for solar-power in the U.S.
Long a leader in oil and natural gas-based energy, Texas embraced wind power years ago and generates more electricity from wind than any other state. Building on that, the state senate on Tuesday overwhelmingly approved $500 million over five years for a rebate program to encourage solar-power installations, while a senate committee advanced a bill that would mandate a roughly 60% increase in electricity derived from renewable sources other than wind.
At least 30% of the $500 million -- which is to come from electric-bill fees -- would be dedicated to small-scale installations. The legislation also bars homeowners associations from prohibiting residential solar panels. The bill awaits a vote by the Texas House of Representatives.
Jim Marston, head of the Texas chapter of Environmental Defense, said he expects the rebates would bring Texas about 250 to 500 megawatts of solar-power generation, which now costs more than other electricity sources but is being buoyed by government support and falling manufacturing costs. That is roughly equivalent to the output from a natural-gas power plant.
Bloomberg News
At Republic Services' Tessman Landfill in San Antonio, solar panels are estimated to generate enough electricity to power around 5,500 homes.
There are currently 590 megawatts of solar generating capacity in the U.S., according to the federal Energy Information Administration, and that is expected to grow to 900 megawatts by 2014.
Raymond Walker, general counsel of Standard Renewable Energy, a Houston company that installs solar panels for homes and businesses, said he was encouraged. The bill, he said, "signals to the industry that Texas is a good place to do business for the renewable-energy industry."
One potential drawback is the price at which homeowners would be able sell their excess solar power to utilities -- an important factor in calculating how long it takes to recover the cost of installing solar panels. The bill requires that utilities purchase surpluses at a "fair market price," which can be 20% less than the going rate for retail electricity.
Other states require utilities to match the going rate when buying excess solar power, said Rusty Haynes, a program manager at the North Carolina Solar Center, a government-funded information clearinghouse. That discrepancy will slow the adaptation by Texans, he said.
The bill approved by the senate panel, meanwhile, would require that Texas get 3,000 megawatts -- about 3.8% -- of its electricity from renewable sources other than wind. Texas already mandates that more than 5,000 megawatts come from wind. Solar advocates say this will help jumpstart a solar-manufacturing industry in Texas.
"These new bills would bring [Texas] into the forefront of states that have solar incentives and possibly help make them a leading producer of solar electricity," said Glen Andersen, who tracks renewable energy for the National Conference of State Legislatures.
Other states are being even more aggressive on this front. A new Arizona law requires that 4.5% of its electricity come from solar power by 2025, and New Mexico is aiming for 4% by 2020. California is considering a requirement that the state get 33% of its electricity from renewable sources by 2020.
Write to Russell Gold at russell.gold@wsj.com

Budget 2009: Darling gives renewables a £5bn shot in the arm

British Wind Energy Association welcomes package, but planning and grid connections still restrict renewables revolution

Terry Macalister
guardian.co.uk, Wednesday 22 April 2009 16.55 BST

The renewable power industry has been given a shot in the arm after Alistair Darling's budget announced over £5bn worth of new funding to hasten an offshore wind revolution and kick-start solar.
But there are concerns that oil and even nuclear were being given help and the British Wind Energy Association (BWEA) warned that other important obstacles, such as electrical grid connections and planning delays, remained for wind schemes.
Around £525m is to be pumped into the sector between 2011 and 2014 through the government temporarily raising subsidies for offshore wind projects from a current Renewables Obligation Certificates (ROC) banding level of 1.5 to 2.0.
A further £405m is promised "to support the development of a world leading low-carbon energy and green manufacturing sector in the UK" - something that should specifically benefit wind and tidal power.
And £4bn of new capital is to be injected by the European Investment Bank, which is owned by European Union member states but raises its money on the public capital markets. This will help green schemes overcome a serious lack of project money available from commercial banks which have become risk averse due to the credit crunch, said industry experts.
"They have given us what we asked for so it must give this a thumbs up," said BWEA spokesman, Charles Anglin. "But we are still faced with a £10bn to £15bn cost of an offshore grid, a cost that needs to be accepted as a social cost and spread across all users including coal and nuclear. There is also the need for changes in the planning system which remain unaddressed," he added.
Derry Newman, the chief executive of photovoltaic installer Solar Century, said an additional £45m for the Low Carbon Buildings Programme should end the current suspension of solar grant applications and enable the sector to plan with confidence for the launch of the feed-in tariff in April 2010.
"The Treasury is to be congratulated for recognising the important contribution that technologies such as solar PV can make to delivering a low-carbon Britain. We look forward to working with the Department for Energy to ensure that the current hiatus in solar PV support is lifted urgently," he argued.
John Sauven, the executive director of Greenpeace, said the European bank money and the various government initiatives should begin to unlock some of the 8GW of wind power that has secured planning permission but has not yet been built. "E.ON and its partners should now give an immediate green light to the proposed London array, which if built will be the largest offshore wind farm in Europe," he added.
The government also pledged £750m strategic investment fund for backing business with £250m steered towards low-carbon business opportunities and innovation.
"This will include initiatives on low-carbon vehicles, as well as the nuclear and renewable energy industries," it said in a formal statement which raised questions from environmental consultant, David Lowry, about whether this was a small but significant breach of its promise not to give any kind of subsidies to the atomic power sector.
Doug Parr, the chief scientist at Greenpeace, said: "Nuclear has had 50 years to get its act together. It should not need more money and this is cash that could and should have all all gone to renewables."
The government also frustrated green activists but delighted the oil industry by giving tax breaks to smaller North Sea fields with the aim of bringing 2m extra barrels of crude into production.

Budget 2009: £1.4bn package to create low-carbon economy is inadequate, campaigners say

Chancellor, Alistair Darling has allocated £375m for home energy efficiency, £525m support for offshore wind power and £405m to develop low-carbon technologies
John Vidal, Terry Macalister and Juliette Jowit
guardian.co.uk, Wednesday 22 April 2009 20.40 BST

A £1.4bn package to reduce UK carbon emissions and create a low-carbon economy was criticised by environment and business groups as inadequate in delivering the huge greenhouse gas cuts the government embraced in the budget, though they welcomed support for renewable energy.
Funding announced by the chancellor, Alistair Darling, included £375m for home energy efficiency, £525m support for offshore wind power and £405m for the development of low-carbon technologies.
Initial analysis of actual government spending – rather than support – for green measures suggests it totals £510m over the next two years - 9.6% of the chancellor's total spending commitments. This appears to be a higher proportion than in November's pre-budget report, but Wednesday's budget was widely viewed as a missed opportunity to match other countries' multibillion dollar "green new deals" designed to create millions of new jobs and significantly reduce emissions. As part of the budget, the government accepted a recommendation to cut 34 % of UK emissions by 2020.
"This budget fails to include an ambitious green economic stimulus that would have supported job creation, economic development and environmental protection. The extra £1.4bn ... is timid and inadequate – and puts the UK at a competitive disadvantage," said Adrian Wilkes, chief executive of the Environmental Industries Commission, a grouping of 200 environmental technology and services companies.
The economist Lord Nicholas Stern, who has recommended 20% of all new spending be devoted to green measures, said. "The additional expenditure ... must be the initial step along the path towards a major structural shift in policy which we trust will follow over the coming decade."
Friends of the Earth's director Andy Atkins said: "The government has squandered a historic opportunity to kick-start a green industrial revolution and slash UK carbon dioxide emissions."
Wind power
Around £525m is to be pumped into offshore wind generation between 2011 and 2014 through the government temporarily raising subsidies. Offshore wind farms will benefit from increased Renewables Obligation Certificates, which they then sell.
A further £405m is promised "to support the development of a world-leading low-carbon energy and green manufacturing sector in the UK", something that should benefit wind and tidal power.
And £4bn of new loans are to be injected by the European Investment Bank, which is owned by European Union member states but raises its money on the public capital markets. Industry experts said this will help green schemes overcome a critical lack of commercial money due to the credit crunch, which has seen projects cancelled and jobs lost.
"They have given us what we asked for so we must give this a thumbs up," said BWEA spokesman, Charles Anglin. "But we are still faced with a £10bn to £15bn cost of an offshore grid, a cost that needs to be accepted as a social cost and spread across all users including coal and nuclear. There is also the need for changes in the planning system which remain unaddressed."
John Sauven, executive director of Greenpeace said the funds should unlock some of the 8GW of wind power that has secured planning permission but has not yet been built. "E.on and its partners should now give an immediate green light to the proposed London array, which if built will be the largest offshore wind farm in Europe," he added.
Carbon balance
Emissions will be reduced by fuel duty increases, energy efficiency and renewable measures, but will be raised by other policies announced by the chancellor, including the recovery of a further 2 billion barrels of North Sea oil and gas, the use of which would release carbon dioxide approximately equivalent to the entire annual emissions of Britain, about 630m tonnes. Other measures likely to increase emissions are the £750m to be spent on infrastructure building, only one third of which is earmarked for low carbon projects.
That third will "include initiatives on low carbon vehicles, as well as the nuclear and renewable energy industries," the government said in a formal statement. This raised questions from environmental consultant, David Lowry, about whether this was a small but significant breach of its promise not to give any kind of subsidies to the atomic power sector.
Nef's policy director Andrew Simms said: "The commitments on energy efficiency and low-carbon industry are obscured by a cloud of greenhouse gases spewing from the prop-ups given to the car and oil industry. It's as if the chancellor wants to 'have his planet and eat it'."
Energy efficiency
Building firms welcomed the total of £435m of home energy and efficiency measures to be spent in the next two years, but said it was much too little to kickstart an ailing construction industry. Darling praised energy efficiency as "the easiest and quickest" way to reduce carbon emissions and said the benefits would be distributed between homes, offices and public buildings.
"These measures will support employment and save 380,000 tonnes of CO2 and around £60m in energy bills each year," said the full budget report. At least 27% of all UK greenhouse gas emissions come from houses and 4 million people are now classed as "fuel poor" – meaning they spend more than 10% of their incomes on energy.
But Greenpeace dismissed the measures as "woeful". "The emissions saved per year from the energy savings represent about two weeks' emissions from Radcliffe-on-Soar coal-powered station," said a spokesperson.
The Housebuilders' Federation chief executive, David Orr, said: "Ministers should simply have put more money into this scheme as the scale of the challenge is just so great."
Coal burning
The controversial issue of new coal-fired powered stations was addressed with the announcement of at least two, and up to four, demonstration carbon capture and storage (CCS) plants. They will probably be funded by money from the European commission and an unspecified "new mechanism", likely to end up as a levy on consumer bills. The previous policy promised one demonstration. An announcement on CCS is expected tomorrow.
But the government also has a policy of building up to eight new coal plants , and CCS demonstration projects only trap a fraction of emissions.
Another difficulty is that the technology has never been proved on a large scale, so nobody knows how much it will cost. But the first demonstrations, at least, will be hugely expensive – current estimates to build and run the first proposed demonstration are £750m-£1.5bn.
Environmental campaigners want ministers to commit to building no new coal plants without CCS. "Building CCS demonstration projects is pointless unless there are strong regulations that prevent the prospect of the energy companies building regular highly polluting coal plants with the odd small CCS experiment bolted onto the side," said Greenpeace's Sauven.
The Aldersgate Group, a coalition of businesses and environmental groups pushing a green agenda, praised the budget but said it did not go far enough.
"The chancellor should be commended for outlining the world's first carbon budgets but there is a real risk these will not be met without further commitments for environmental technologies," said Peter Young, the chairman of the Aldersgate Group.

Budget 2009: Darling promises 34% emissions cuts with world's first binding carbon budgets

Environmentalists warn that emissions targets are out of date

Juliette Jowit
guardian.co.uk, Wednesday 22 April 2009 16.53 BST

If they can actually do it, the government's pledge to cut global warming emissions by one third in just over a decade should transform the way the UK economy works.
However, critics warned that the cuts would still not be enough to avoid dangerous climate change, and warned that other spending pledges were not nearly enough to meet the target.
Darling has now promised to cut greenhouse gases by 34% by 2020 through so-called carbon budgets, which fix binding limits on greenhouse gas emissions over five-year periods. The 34% target is in line with the advice of the government's independent watchdog, the Committee on Climate Change. "This represents a step change in the UK ambition on climate change," said the budget report.
The budget report said the government "aims" to do this without purchasing controversial carbon credits from cuts made in other countries, but said these "offsets" could be a "fallback option". It also said the target cut would be higher if there was "satisfactory" global agreement on cutting emissions, but stopped short of committing to the higher 42% cut recommended by the CCC in those circumstances.
"These budgets give industry the certainty needed to develop and use low carbon technology – cutting emissions, creating new businesses and jobs," said the chancellor.
Nobody expected the government to reject the emissions targets put forward by its watchdog, which are designed to help reach a promised reduction of 80% by the middle of this century.
However, the formal announcement makes the UK the first country in the world to set legally binding targets.
Environmental campaigners and business groups commended the government on committing itself to firm targets. However, there were immediate warnings that not enough was being done.
Friends of the Earth, the charity which led a mass public campaign for the Climate Change Act which created the targets, said the 34% cut was no longer enough.
"Setting the first ever carbon budgets is a ground-breaking step - but the government has ignored the latest advice from leading climate scientists and set targets that are completely inadequate," said Andy Atkins, the organisation's executive director. "A 42% cut by 2020 is the minimum required if we are to play our part in avoiding dangerous climate change."
There was also widespread criticism that the rest of the budget did not include enough money for renewable energy like wind and tidal power, and energy efficiency for homes and other buildings. The budget also promised up to four "demonstration" projects for carbon capture and storage for coal and gas power plants, and £60m of new spending on research and development of the unproven technology, but critics said these partial capture schemes were not enough if the government goes ahead with plans for up to eight new coal plants.
James Cameron, vice-chairman of Climate Change Capital, a low-carbon investment fund with more than US$1.5bn (£1bn) under management, said: "The idea of a carbon budget is to be applauded and must become a permanent feature of how we direct our economy. But the reality is that creating a low carbon economy requires more than high-level commitment. The scale of investment required is huge, and thus far the commitments to stimulate the economy and reduce emissions have been small gestures, albeit in the right direction. They have identified the correct areas to be targeting with strategic intervention but the orders of magnitude are much too small."
The budget report said a full strategy on how the targets will be met is due this summer, but that the "latest government modelling" showed it was on course to meet the 2020 and two interim targets.
"The strategy will strengthen the long-term policy framework, taking into account recent consultations on heat and energy saving, renewable energy and zero carbon homes," added the report.

Budget 2009: Funding for carbon capture projects

Chancellor pledges up to four demonstration carbon capture and storage plants in 2009 budget

Juliette Jowit
guardian.co.uk, Wednesday 22 April 2009 15.13 BST

A big increase in support for equipment to capture and store pollution from coal and gas power plants was announced in today's budget (pdf), although many details are yet to be decided.
The chancellor pledged up to four demonstration projects for carbon capture and storage (CCS), far more than the current policy of just one.
But the government also has a policy of building up to eight new coal plants , and CCS demonstration projects only trap a fraction of emissions.
£90m was announced in the budget to pay for more research into the technology, but funding for the demonstration sites is likely to come from the European commission and what the chancellor called a "new funding mechanism" - likely to end up as a levy on consumer bills.
Another problem for government is that the technology has never been proven on such a large scale, so nobody knows how much it will cost. They only know that, at least at first, it will be eye-wateringly expensive - current estimates to build and run the first proposed demonstration are £750m-£1.5bn.
Environmental campaigners now want ministers to commit to building no new coal plants without CCS. "Building CCS demonstration projects is pointless unless there are strong regulations that prevent the prospect of the energy companies building regular highly polluting coal plants with the odd small CCS experiment bolted onto the side," said John Sauven, the executive director of Greenpeace.
The government is expected to make a major announcement on its plans for CCS tomorrow.