ČEZ proposes a new source for financing CO2 Capture and Storage

The ČEZ Group is proposing that the Czech Republic utilise part of its emission credits, assigned according to the Kyoto Protocol, to design and build a CO2 capture and disposal storage unit into geological structures (CCS – Carbon Capture and Storage technology). One such suitable locality might be the Ledvice power plant in Northern Bohemia

According to ČEZ, the demonstration project for CO2 separation and storage in suitable geological structures can be supportedby utilising surplus AAU emission credits (AAU units – Assigned Amount Unit), which the Czech Republic has at its disposal pursuant to the Kyoto Protocol. The CzechRepubliccan sell the units to countries that lack them. ČEZ has already launched a dialogue with state administration authorities. Because the sale of some of the AAU credits is unlikely to generate enough funds more sources of funding will have to be identified. If the CCS unit becomes profitable, ČEZ will be prepared to return the state contribution, or to participate in further CO2 emission reducing measures together with the state.

ČEZ has already reported this proposal draft to the representatives of the Ministry of Industry and Trade and the Ministry of the Environment which consider it to be a promising solution. Moreover, the suggestion is in accordance with the government’s decision of November 2007 on the use of AAU credits for up-to-date technologies in the power industry.

“This concept has several advantages – the surplus of the Czech emission credits is large enough to support both a CCS demonstration project and other measures that are already being prepared by the respective ministries. In addition, these means do not burden the state budget or any other public funds,” stated Martin Cmíral, the Head of the Environmental Department at ČEZ, a. s.

Although several countries are considering the sale of surplus AAU credits, none of them has yet presented a specific proposal for its practical implementation. The CzechRepubliccould thus become a leader in this field and evoke interest on the part of prospective buyers and investors.

Implementation of the CO2 storage project in the CzechRepublicwould also send a strong signal to the research and development sector as well as technology manufacturers, as a significant amount of such technologies would be produced here in the CzechRepublicunder foreign licenses.

The European Commission has called upon EU member countries to search for suitable sources of funding for a CCS technology development testing period. For this reason it will be amending the rules applicable to state funds, since support by the state is not only necessary but also highly desirable in this context. Specific forms of support have already been prepared in Great Britain,Germanyand the Netherlands. Outside the EU, CCS grants exist in Norwayand in the USA.

 “The high-performance, state-of-the-art power plant we are building in Ledvice could possibly be suitable for the application of CCS technology. However, to build a CO2 separation unit next to the power plant would pose a demanding investment issue. The costs of a unit capturing a significant volume of CO2 will be more than ten billion Czech crowns,” explained Aleš Laciok, the Environmental Products Specialist at ČEZ, a. s. Captured carbon dioxide would be stored in deep sediment basins in the Northern Bohemian region.

The European Commission suggests that 10 to 12 CCS demonstration units be established across the EU territory to be set into operation from 2012 to 2015. The CCS technologies are expected to become commercially widespread, following successful testing, in the period after 2020.

AAU units (Assigned Amount Units) are emission credits allocated to a country under the KyotoProtocol that represent that country’s obligation to reduce emissions. In the case of the CzechRepublic, this amounts to emissions at the level of 1990 minus 8%. They should not be mistaken for CO2 emission allowances traded within the European Emissions Trading Scheme.


Tomáš Chmelík, Environmental Products Manager at ČEZ a.s., Tel.: (+420) 211 042 610, GSM: (+420) 606 666 148, E-mail: Tomas.Chmelik@cez.cz

Aleš Laciok, Environmental Products Specialist at ČEZ a.s., Tel.: (+420) 211 042 639, GSM: (+420) 724 979 097, E-mail: Ales.Laciok@cez.cz

Ladislav Kriz, Spokesman CEZ

November 2007