According to official figures, last year saw several European countries rely more heavily on their existing coal-fired power fleet to generate electricity, at the expense of those plants fired by natural gas. The UK’s Department of Energy and Climate Change (DECC) released data that showed coal dominated the country’s energy mix in 2012, on the back of rising natural gas prices that makes the spark spread less favourable.

Similarly in Germany, the BDEW (the National Association of Energy and Water Industries) has reported that gas-fired power generation fell by an astounding 27 per cent last year, as many of the countries energy providers opted to switch to cheaper coal. According to the latest figures, both hard coal and lignite-fired plants rose 1.5 per cent on 2011, accounting for a 44 per cent share of gross electricity demand.

As Germany continues to implement its ambitious ‘Energiewende’ or energy transition towards greater reliance on renewable energies, the country’s power producers are clearly facing significant challenges, with gas-fired generation assets bearing the brunt.

One sobering illustration is E.ON’s announcement last month that it is seriously considering closing its ground-breaking Irsching 5 combined-cycle power plant (CCPP), which only came on line in 2010 and is one of Europe’s most efficient power plants.

According to reports, operators of gas-fired power assets in Germany are suffering from high gas prices and a big drop in wholesale power prices, plus a significant reduction in plant running hours, because renewables take precedence on transmission grids. I have heard stories of CCPPs running less than 1000 hours a year.

So you might think all this looks good for a longer-term revival in coal-fired power generation in Europe, but you’d be wrong. Although existing coal-fired assets are being fired-up, no-one in Europe is seriously looking at constructing new higher efficiency coal plants to replace the increasingly aged fleet – neither from an economic nor environmental viewpoint.

And new-build coal in Europe received a further knock back at the end of last year, when the first round of the European Commission’s (EC) NER300 funding was announced, with relatively little fanfare I have to say. The outcome, which some may argue was not unexpected, was that not one of the carbon capture and storage (CCS) projects shortlisted was awarded funding. Instead, 23 renewable energy demo projects will share a €1.2 billion pot.

It was initially reported that €275 million envisaged for CCS projects in the first round remains available to fund projects under the second phase of the NER 300 programme. However, subsequently on the NER300 website that has been described as ‘untenable’.

Before you start calling me a harbinger of ‘CCS’ doom, there have been some recent positive developments in the CCS area. Global Data released a bullish report at the end of last year, saying that current government plans and other initiatives mean that 10 GW of CCS capacity globally could be on line by the end of this decade.

A more practical development has been the recent establishment of a network of international test facilities, with the ultimate goal to help accelerate the commercialisation of CCS technologies. The network is being headed up by Norway’s CO2 Technology Centre Mongstad.

Finally, the European Commission is apparently preparing a EU CCS Policy document that Frederic Hauge, president of Bellona Foundation and an advocate of CCS, describes as”the most important document that the [EC] has produced on CCS for the last two years”.

There is little available detail, but allegedly the EC plans to go beyond the ETS and introduce new mechanisms such as Emission Performance Standards or a CCS certificate system. According to Hauge, such mechanisms should provide clear and predictable incentives for CCS deployment in Europe’s energy sector. As is so often the case, let us wait and see.

Dr Heather Johnstone   Dr Heather Johnstone, Chief Editor
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