Italy Ruling Chokes Utility's Carbon Capture Hopes
Giant Italian utility Enel hit a roadblock in its plans to move forward with clean coal technology last week, when the country’s top administrative court ordered a halt to the conversion of a large fuel oil power plant to coal. This follows protests and objections from environmental groups against the environmental impact assessment for the project.
The Council of State in Italy overruled a decree issued by the Environment Ministry in 2009 that also permits the Porto Tolle plant in Veneto, northern Italy to carry out a EUR 1bn (USD 1.4bn) plan to fit to one of its units with carbon capture and storage technology for storing emissions underground.
The blow for CCS came as fresh disappointment for investors in clean energy in what has been a dispiriting month. Clean energy shares have been in retreat, with solar and power storage stocks particularly hard last week.
In an e-mailed statement to Bloomberg News, Rome-based Enel expressed “astonishment” at the decision. The court’s ruling cannot be appealed against, which means the company will have to give up on the conversion project, begin the lengthy application process from the start or consider moving that investment abroad.
Andrea Clavarino, president of the coal operators’ association Assocarboni, said the decision will discourage foreign investment. Blocking the conversion is “a big loss for the country, a big loss for research and development, as carbon capture and storage will not be applied,” he added.
Italian Industry Minister Paolo Romani said the “unexpected” decision runs the risk of eliminating an important project for the nation’s energy supply security. Enel said the decision threatens a project of “great importance for the security of the country’s energy supplies” and one aimed at reducing the final cost of energy. The overall project would involve an investment of EUR 2.5bn (USD 3.6m) and produce more than 3,000 jobs over a five-year construction period.
Italy relies on gas imports for most of its power. With nuclear development recently halted after the Fukushima incident in Japan, there is concern over whether the country will be able to obtain enough energy without the use of clean coal technology.
According to a company spokeswoman, Enel will next assess what steps need to be taken to put the Porto Tolle project and other Italian sites back on course. It said that “if necessary, it will have to reluctantly take investments to other countries interconnected with Italy.”
Porto Tolle was one of six CCS demonstration projects that received a share of EUR 1bn funding under the European Commission’s EEPR (European Energy Programme for Recovery) fund in December 2009. Other projects awarded money were Belchatow in Poland, Compostilla in Spain (also Enel), Hatfield in the UK, Jänschwalde in Germany and Rotterdam in The Netherlands.
This is a significant setback for Enel not only because Porto Tolle was one of the leading projects in Europe but it also casts doubt on whether it will still be awarded funding from the EEPR. Projects must be built within four years of the award of funding. With this ruling, that now seems unlikely.
The project is also one of 13 CCS projects involved in the first call for proposals under the so-called NER 300 initiative, one of the world’s largest CCS funding mechanisms. Seven of these CCS schemes – which includes submissions by Alstom and Scottish Power – were applications from the United Kingdom. Development in other EU countries has been more tentative, according to Bloomberg New Energy Finance analysts.
The European Union had pledged three years ago to become a leader in carbon capture and storage by setting a goal to have 10-12 large scale CCS projects in operation in Europe by 2015. Several European governments have prioritised carbon capture and storage for emissions reduction but as it stands, there is still no fully-integrated CCS power plant operating.
Enel had planned to begin conversion of the 2,640MW oil-powered plant to a 1980MW coal-fired plant which would also burn a portion of biomass.
Italy’s Industry Minister Romani pledged that he will “do all that’s possible” to “safeguard a productive investment.”
The news on CCS depressed Enel’s share price on the day of the announcement, and it came in a week in which clean energy shares generally continued to wilt after their promising first four months of 2011.
The WilderHill New Energy Global Innovation Index, or NEX, which tracks the performance of 100 clean energy stocks worldwide, fell from 221.65 at the close on Friday 13 May to 216.52 a week later, and by the finish on Monday were down at 210.40, below their level at the start of the year.
The latest drop means that the NEX has lost all of the ground gained from mid-March onwards, when investors were taking the view that the Fukushima crisis would prompt governments to invest more in renewables rather than nuclear.
The Council of State in Italy overruled a decree issued by the Environment Ministry in 2009 that also permits the Porto Tolle plant in Veneto, northern Italy to carry out a EUR 1bn (USD 1.4bn) plan to fit to one of its units with carbon capture and storage technology for storing emissions underground.
The blow for CCS came as fresh disappointment for investors in clean energy in what has been a dispiriting month. Clean energy shares have been in retreat, with solar and power storage stocks particularly hard last week.
In an e-mailed statement to Bloomberg News, Rome-based Enel expressed “astonishment” at the decision. The court’s ruling cannot be appealed against, which means the company will have to give up on the conversion project, begin the lengthy application process from the start or consider moving that investment abroad.
Andrea Clavarino, president of the coal operators’ association Assocarboni, said the decision will discourage foreign investment. Blocking the conversion is “a big loss for the country, a big loss for research and development, as carbon capture and storage will not be applied,” he added.
Italian Industry Minister Paolo Romani said the “unexpected” decision runs the risk of eliminating an important project for the nation’s energy supply security. Enel said the decision threatens a project of “great importance for the security of the country’s energy supplies” and one aimed at reducing the final cost of energy. The overall project would involve an investment of EUR 2.5bn (USD 3.6m) and produce more than 3,000 jobs over a five-year construction period.
Italy relies on gas imports for most of its power. With nuclear development recently halted after the Fukushima incident in Japan, there is concern over whether the country will be able to obtain enough energy without the use of clean coal technology.
According to a company spokeswoman, Enel will next assess what steps need to be taken to put the Porto Tolle project and other Italian sites back on course. It said that “if necessary, it will have to reluctantly take investments to other countries interconnected with Italy.”
Porto Tolle was one of six CCS demonstration projects that received a share of EUR 1bn funding under the European Commission’s EEPR (European Energy Programme for Recovery) fund in December 2009. Other projects awarded money were Belchatow in Poland, Compostilla in Spain (also Enel), Hatfield in the UK, Jänschwalde in Germany and Rotterdam in The Netherlands.
This is a significant setback for Enel not only because Porto Tolle was one of the leading projects in Europe but it also casts doubt on whether it will still be awarded funding from the EEPR. Projects must be built within four years of the award of funding. With this ruling, that now seems unlikely.
The project is also one of 13 CCS projects involved in the first call for proposals under the so-called NER 300 initiative, one of the world’s largest CCS funding mechanisms. Seven of these CCS schemes – which includes submissions by Alstom and Scottish Power – were applications from the United Kingdom. Development in other EU countries has been more tentative, according to Bloomberg New Energy Finance analysts.
The European Union had pledged three years ago to become a leader in carbon capture and storage by setting a goal to have 10-12 large scale CCS projects in operation in Europe by 2015. Several European governments have prioritised carbon capture and storage for emissions reduction but as it stands, there is still no fully-integrated CCS power plant operating.
Enel had planned to begin conversion of the 2,640MW oil-powered plant to a 1980MW coal-fired plant which would also burn a portion of biomass.
Italy’s Industry Minister Romani pledged that he will “do all that’s possible” to “safeguard a productive investment.”
The news on CCS depressed Enel’s share price on the day of the announcement, and it came in a week in which clean energy shares generally continued to wilt after their promising first four months of 2011.
The WilderHill New Energy Global Innovation Index, or NEX, which tracks the performance of 100 clean energy stocks worldwide, fell from 221.65 at the close on Friday 13 May to 216.52 a week later, and by the finish on Monday were down at 210.40, below their level at the start of the year.
The latest drop means that the NEX has lost all of the ground gained from mid-March onwards, when investors were taking the view that the Fukushima crisis would prompt governments to invest more in renewables rather than nuclear.
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