ECN publication
Klimaatneutrale elektriciteit en de MEP
Published by: Publication date:
ECN Policy Studies 1-4-2005
ECN report number: Document type:
ECN-C--05-033 ECN publication
Number of pages: Full text:
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The report ?Climate-neutral electricity and the MEP? explores the possibilitiesfor including climate-neutral electricity under the Dutch Electricity Law on environmental quality of power production (MEP). The MEP provides a subsidy to cover the financial gap between the climate-neutral power production costs and a pre-determined market price. The MEP is currently used for renewable electricity and combined heat and power. This study is motivated by an initiative by SEQ Nederland B.V. to deploy a 50 MW oxyfuel gas-fired power plant with CO2 storage in a producing gas field in the direct underground of the oxyfuel plant. Climate-neutral fossil electricity is electricity generated from fossil fuels combined with the capture and permanent storage of CO2 in a geological reservoir. Capture and storage of CO2 is increasingly seen as a viable and promising climate change mitigation option, also by the poli-cymaking community, but is not yet widely implemented. Currently, six demonstration projects are active globally, which however do not make use of CO2 emitted by the power sector. When putting the provision for climate-neutral electricity into practice, the varying immaturity of the technologies and the lack of reliable estimates of production costs should be taken into account, as they lead to uncertainties in the actual financial gap. Also, the legal framework for long-term liability for the stored CO2, and public perception can be barriers to implementation. In addition, there could be interaction with other policy instruments such as the EU Emissions Trading Scheme. Storage and especially capture applications for climate-neutral electricity show significant dif-ferences in technology and in costs. Because of this, the financial gap varies. In addition, the CO2 transport distance is of importance. It therefore seems appropriate to differentiate the MEP tariffs based on type of power plant and the capture system. The financial gaps for conventional or new power plants equipped with pre- or post-combustion (ca. 360 to 660 MW) capture systems are between 1.8 and 4.7 ?ct/kWh. It should be noted, however, that these numbers are subject to high uncertainties. Moreover, the size of the facilities is in such an order that the captured and stored CO2 amounts to several Megatonnes CO2 per year; numbers which are unprecedented in CO2 capture and storage demonstration projects. In addition, reservoirs need to be available that can store such amounts of CO2, which could theo-retically lead to higher transport costs. For the specific oxyfuel project proposed by SEQ, the financial gap is significantly higher: between 7.2 and 8.9 ?ct/kWh, depending on the conversion efficiency and the investment costs. If oxyfuel combustion could be realised on a similar scale as post- and precombustion capture technologies, the financial gap would be lower.

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