CCS: Creating a secure environment for investment in Europe

CCS will play a critical role in meeting EU and global climate targets cost-effectively – as confirmed by the EU Energy Roadmap, the IEA and almost every global emissions reduction scenario. The technology is on a critical delivery path as demonstration projects must take FID imminently so that commercial projects can operate from 2020 with widespread deployment from 2030. However, the long-term business case – which relies on a strong EUA price – is now seriously undermined.

In response to this challenge, top economists from all of ZEP’s constituencies have produced a ground-breaking piece of work to resolve this blocker: a set of clear recommendations for action at EU and Member State level. While the ETS must remain the backbone of an overall incentive system, a wide variety of instruments were examined and recommended. These include, in the short-term, an EUA set-aside and capacity payments, amongst others, all the way to longer-term actions such as the need to extend the ETS cap from 2020 to 2030 and apply it across all sectors. All measures should complement the ETS – which should be adjusted to take them into account. Equally important is that while measures are divided into short, medium and long term, the earlier they are all adopted, the greater the impact on earlier stages due to anticipation effects.

To read the full report, click here.