Norwegian government pressured for CCS compromise
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Norway may be forded to reconsider its tough stance on CCS as its power supply tightens – and shadow energy spokesman Ketil Solvik-Olsen tells ICIS Heren that he may have the solution
13 Jan 2011 16:59:54 | edem
The Norwegian government is coming under increased pressure to compromise on its gas-fired power generation stance.
The Progress Party - the largest parliamentary party among the Norwegian opposition - is pushing for the government to take on any risk related to carbon capture and storage (CCS) technology, while any risk related to construction of the plant would be borne by the private sector, energy spokesman Ketil Solvik-Olsen told ICIS Heren on Wednesday.
The policy of the government - a left-leaning coalition of three parties - has for some time been that all new gas-fired power plants must be fully CCS-equipped from the outset, because of environmental concerns.
But the opposition is calling for an urgent rethink. "If all of the risk lies with the gas-power plant investor, then the government should take on the CCS risk, on the investor's behalf," Solvik-Olsen said.
The pressure on the government is growing in light of the country's reliance on hydropower generation to meet 99% of domestic demand, which leaves the power system extremely exposed to unpredictable rainfall patterns.
Last week, the energy ministry ruled out any prospect of reconsidering its stance, despite the country becoming a net-importer of electricity in 2010 due to historically low reservoir levels (see EDEM 7 January 2011).
But Oslo's progress towards commercially-viable CCS has been stunted, with delays to the country's first test facility, a 630MW combined heat and power plant in Mongstad on the west coast, pushing the project back to a 2018 completion date "at the earliest" (see EDEM 10 May 2010).
"On one hand, the government admits that developing CO2 sequestration technology is going to be harder and a lot more costly than we thought. That is why it is postponing its own project," Solvik-Olsen said. "But if you come to Norway as a private power company and want to build a gas-fired power plant, we still demand that you have CCS. It doesn't make sense."
Norway has accrued huge cash reserves through its gas export industry - the state controls the second-largest sovereign wealth fund in the world behind Abu Dhabi - but it prefers to focus its domestic investments away from gas when it comes to power generation.
The government's existing energy policy is to equip Norway to meet future demand by investing in renewable energy generation and the transmission grid. "This can enhance the security of supply in the areas where the concerns are greater," a spokesman for the energy ministry said.
Norway has two gas-fired plants that can come online at short notice in an emergency supply situation, but the opposition insists that a small number of plants running at Baseload in specific areas is necessary to ensure mid-term supply security.
However, it has a fight on its hands, with the next general election not due until 2013. "Politically, we have said that we don't want any more gas power plants in Norway," Solvik-Olsen said. "The technological demands from the politicians are too strict to be met." JS
This article was originally published at http://www.icis.com/heren/
The London-based ICIS Heren is the specialist information provider for the gas, power, carbon and coal markets. ICIS Heren publish price assessments, indices, news and analysis for the gas, liquefied natural gas, power, carbon and coal sectors.