Interviewee: Jason Anderson, Institute for European Environmental Policy

Chris Slatter: You've just spent two hours listening to various experts on carbon capture and storage and you raised some doubts about whether the current commercial model is actually workable. Would you like to expand on that?

Jason Anderson: What concerns me about the Commission's proposal is that it's essentially saying to industry, first develop some demonstration projects and then later rely entirely on the Emissions Trading System to finance the commercialisation of the technology. And there's two problems with that. The first is that the commercialisation element in the future is going to rely on an uncertain price signal. The technology is expensive at the moment - we're anticipating something along the lines of a sustained signal of 40 Euros a tonne, or something higher than that potentially to develop CCS. If you don't know what the signal's going to be, you have essentially a risk premium. You're working in a market where you have to have an even higher price signal for those times when it might dip down below that. You have to have long term sustainability of the price and you don't know that that's going to be there. So you have to be quite confident that you can compete in an environment where you don't really know what the support is going to be for your technology. So that concerns me that we're leaving it simply to that mechanism.

The second element is getting from here to there during the demonstration projects. It was hinted at by the Commission that if we prove the technology beyond a doubt, then maybe in the future we'll recognise that we can actually require it rather than just leaving it up to the market. That's basically like saying to the industry, first you develop the technology and then we'll decide that perhaps we'll require you to use it, which strikes me as a recipe for dragging heels, because I don't think any industry is going to be moving as quickly as they could do if they felt the result of it would be an imposition on them.

Chris Slatter: Do you have any ideas on a solution to this?

Jason Anderson: Well, I'm not exactly sure that a requirement along the lines of a mandatory use of CCS at a particular date is the right way forward. It might be. I think this is something that actually needs to be better discussed right now, and it's a perfect opportunity with the Parliament looking at it to have this discussion out in the open, and much more specifically around the trade-offs between these incentives. I think you might have something of a halfway house which is where you had the industry required to work on certain technologies, to show progress to those technologies and that they would only receive support if their effort towards developing them was independently verified to be wholehearted. And at the point at which you could say that certain levels were met, then it could be required in the future. However, if the effort to reach those levels of proof was not made, then the subsidies would be pulled. So the industry will find itself in the position of pretty much having to move forward as quickly as it can.