No. 2, May 2004

Cover illustration © Lars-Erik Håkansson (Lehån)

Main articles in brief

Way off target
Most EU countries foresee difficulties in reducing their emissions of air pollutants sufficiently to meet the emission ceilings that are laid down in the NEC directive.

Air pollution trading - marketing failure
Emissions trading is not the success story it is so often made out to be, according to Curtis Moore.

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EDITORIAL

For or against emissions trading?

Is emissions trading really the success story it is so often made out to be? In light of the fact that emissions trading appears to be growing in popularity this is a highly pertinent question.

In the US, where this system has been practically applied for almost ten years to emissions of sulphur dioxide from power plants, a proposal to introduce a similar trading system for mercury emissions has led to intense debate.

One objection raised by environmental organizations is that the trading system is inappropriate for toxic air pollutants such as mercury, since it could give rise to more local hot spots.

In Europe the debate has so far centred primarily on the new EU directive on emissions trading for the greenhouse gas carbon dioxide. It appears, however, that emissions trading is growing in popularity, and the debate in Europe is no longer solely about emissions of greenhouse gases.

In several EU member countries, including the Netherlands and the UK, there are more or less far-reaching plans to introduce trading systems for "traditional" air pollutants such as sulphur dioxide and nitrogen oxides. Proposals have also been put forward to introduce trading systems for emissions of sulphur and nitrogen oxides from international shipping.

There are many different sides to this question. Some people believe that systems that are based on emissions trading can be regarded as better - above all more cost-effective - than more traditional systems that are based on regulation (such as emission standards), and that they should therefore replace them.

One possible alternative may be to use regulation to set minimum standards, and then to use economic incentives, such as emissions trading, to achieve further reductions in emissions.

In light of the above there is also the question of whether emissions trading is possibly more appropriate for certain types of air pollutants, and less appropriate - or simply inappropriate - for others.

In those cases where emissions trading is considered, for various reasons, to be an appropriate alternative or complementary approach, the actual design and application of this instrument are of critical importance.

One issue is the initial allocation of "emission allowances". Should these be auctioned off or doled out free of charge? Although economic theory points clearly towards the former alternative, practical experience has so far been based exclusively on free distribution. This has often taken place according to the so-called grandfathering principle, which in practice means that those who have caused the most pollution in the past get the largest allocation to continue polluting.

Because there are clearly widely differing opinions about emissions trading and its role in environmental policy, today and in the future, an open debate on this question would be valuable.

This issue of Acid News therefore includes a debate feature that examines and questions emissions trading. It is hoped that this will promote further thought and discussion, and we welcome further contributions on this highly topical and important issue.

Christer Ågren

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NATIONAL EMISSION CEILINGS

Way off target

A new report¹ from the European Topic Centre on Air and Climate Change (ETC/ACC) of the European Environment Agency shows that most EU countries foresee difficulties in reducing their emissions of air pollutants sufficiently to meet the emission ceilings that are laid down in the national emission ceilings directive (2001/81/EC).

The NEC directive covers the four pollutants sulphur dioxide, nitrogen oxides, volatile organic compounds and ammonia. Based on "business as usual" projections as reported by member states until 1 December 2003, only Finland and the UK will comply with all of their ceilings by 2010. If envisaged additional measures are considered, Germany will also meet all its emission ceilings.

On behalf of the European Commission’s Environment Directorate the ETC/ACC has examined whether each country’s report contains the information that is required according to the directive. On the basis of the information submitted by each country an evaluation was also carried out on emissions trends to date, as well as expected future emissions.

The study shows that there are major deficiencies in reporting. Four countries – Belgium, Greece, Ireland, and Luxembourg – had by 1 December 2003 still failed to report to the Commission how they propose to reduce their emissions of air pollutants so as to fulfil their commitments under the directive, despite the fact that the directive’s deadline elapsed over a year ago (Belgium had provided information for some of its regions, but not for the whole country). Moreover, many of those that have reported have failed to do as the directive requires – Spain, for example, failed to present any emission projections for 2010.

The national reports that were submitted (see table - available in pdf version only) reveal that the main problems foreseen by countries relate to emissions of nitrogen oxides, and that seven or eight – Austria, Denmark, Italy, France, Germany, the Netherlands, Portugal (high projection) and Sweden – out of ten countries project emissions in 2010 that are higher than their ceilings. By comparison, only four (Denmark, France, the Netherlands and Portugal) out of ten predict that they will not meet their ceilings for sulphur dioxide.

It is however not easy to determine how great the difficulties for meeting the ceilings are, since most of the national programmes lack the information needed for an analysis, namely, quantitative estimates of the effect of the measures proposed or undertaken.

Almost half of the reporting countries failed to provide any quantification of the effect of policies and measures in terms of kilotonnes of pollutant emissions abated. Only three member states – France, Germany and the Netherlands – provided an additional projection for each pollutant incorporating the effect of both adopted and envisaged (planned) policies and measures.

To assess whether countries are on track to achieve their emission targets or not the ETC/ACC uses a "distance-to-target" indicator (see graphs below). This is a measure of the deviation of actual emissions in 2001 from a linear path between 1990 and 2010. Since the assumption of a linear emission trend is somewhat hypothetical, the report stresses that this analysis is only indicative.

Based on these assumptions, in 2001 eleven member states were heading towards not meeting their emission ceilings for nitrogen oxides. Portugal, Ireland, Austria, Spain and Belgium appear to have the biggest problems in meeting their emission ceilings.

The trend appears more encouraging for sulphur dioxide – in which case twelve countries are on the right course. Only Portugal, Ireland and Spain have emissions that lie above the target path.

Regarding volatile organic compounds, there are six countries – Ireland, Spain, Portugal, Italy, Luxembourg and Denmark – that look as if they may have problems meeting their emission ceilings. Again in the case of ammonia there were six countries whose emissions were "too high" in 2001, namely Spain, Portugal, Belgium, Ireland, Greece and Denmark.

Full and accurate reporting by the countries is highly important not only for the implementation of the directive, but also for its review and revision. This is necessary to provide the information for the report that the Commission has to produce in 2004, in accordance with Article 9 of the directive, and deliver to the EU Parliament and the Council of Ministers. In its report the Commission must describe what progress has been made towards achieving the national ceilings, and state the extent to which the interim environmental objectives of the directive are likely to have been met by 2010.

In its conclusions the ETC/ACC makes four recommendations in which it proposes that member states should:

• Report two scenarios – a "business as usual" projection including current policies and measures, and a "with additional measures" projection, accounting for planned policies and measures.
• Quantify the effect of individual measures and policies, whether planned, adopted, or implemented.
• Report on changes in the geographical distribution of their emissions – or if there is no change, then make this clear (this is already explicitly requested in the directive).
• Report on key socio-economic assumptions underlying their emission projections.

The report constitutes an input to the Commission’s forthcoming review of the NEC directive. According to the directive, this review should be completed in 2004.

Christer Ågren

¹ An initial assessment of Member States’ national programmes and projections under the national emission ceiling directive (2001/81/EC). Summary paper. ETC-ACC Technical Paper 2003-8, published in April 2004. Available at http://air-climate.eionet.eu.int/announcements/ann1082666299

The reports on national programmes received by the Commission can be found on the environment directorate’s website.

Business as usual’ (BAU) projections for 2010 under the NEC directive. 2002 submission reported until 1 December 2003.

Distance-to-target" indicators for the targets in the NEC directive.

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LARGE COMBUSTION PLANTS

Majority of worst emitters are found in just a few countries

Coal-fired power plants dominate the twenty worst emitters, not only of carbon dioxide but also of sulphur dioxide and nitrogen oxides, in the former fifteen EU member countries. Five plants are among the twenty worst for all three pollutants.

Carbon dioxide
German plants fired with lignite are among the worst in respect of carbon dioxide. They are mainly situated close to the areas in western and eastern Germany where the deposits of lignite are found. But three British, two Greek and four Italian plants also figure in the list, as do one Spanish and one Portuguese. Of the twenty largest emitters, nineteen were power plants.

See table

Sulphur dioxide
Topping the list for sulphur dioxide is the coal-fired Puentes As Pontes power plant in Galicia, in the northwest of Spain. The plant is also among those topping the lists for carbon dioxide and nitrogen oxides. Because of the stricter regulations for emissions that will take effect in the EU in 2008 (through the LCP directive), the plant’s owners have decided to install emission control equipment that will reduce the emissions of sulphur dioxide by 95 per cent.

Second highest as regards sulphur dioxide is the Megalopolis A (I, II, III) complex on the Peloponnese peninsula in Greece. Close by is Megalopolis B (IV), with emissions of sulphur dioxide approaching 28,000 tonnes a year. All are fired with lignite from local deposits.

Third on the sulphur list is yet another Spanish power plant – at Teruel in the northeast of the country – and there are three more Spanish plants among the twenty greatest emitters of sulphur dioxide.

Half of those on the list are however British plants. It is worth noting on the other hand that, owing to strict national regulations, there is not a single German plant there – despite the fact that Germany has several of the largest coal-fired power plants in the EU15. Eighteen of the twenty largest emitters of sulphur dioxide in the EU15 are power plants.
See table

Nitrogen oxides
British plants also account for about half of the twenty worst emitters of nitrogen oxides. The only German plant on the list is Jänschwalde, which is also the largest emitter of carbon dioxide in the EU15. Of the twenty largest sources of nitrogen oxides, eighteen were power plants.

Five plants are among the twenty worst on all three lists. They are Drax and Longannet in the UK, Puentes As Pontes in Spain, Sines in Portugal and Taranto in Italy. The Greek Megalopolis can also be included if the A and B plants are considered together.
See table

The new member countries
All the above figures are for 2001. Information on emissions in 2004 will be published in 2006, and include figures for the ten new members of the EU as well. Data already exists however for Hungary, where two coal-fired power plants, Oroszlányi and Mátra, have emissions of sulphur dioxide large enough (87,000 and 43,000 tonnes respectively) to appear on the present twenty-worst list.

Per Elvingson
Christer Ågren

How to use the register

Start at www.eper.cec.eu.int/eper/

By using the search function, data can be obtained for individual plants, for all the plants in one country as well as for the whole of the EU, for each of the 50 pollutants that are included.

We obtained the figures in the adjoining tables by choosing the Pollutants option under EPER Search, and then proceeding to the required pollutant and the emissions for the whole EU15 area.

The first page that appears when you do such a search gives a summary. Under the heading "Facilities" the member states are listed as well as the number of plants in each country and for the EU15 as a whole.

Selecting the figure showing the number of plants (say, 1238 for sulphur dioxide in the EU15) brings up a list of all the plants, which can then be arranged in order of emissions.

Selecting the particular plant’s name brings up a page showing its location, type, and the pollutants it emits. In most cases satellite pictures are also shown.

One can also find the location of a particular plant by clicking on maps (select Map search on the home page).


The 20 worst in 2001 for carbon dioxide (EU15).

The 20 worst in 2001 for sulphur dioxide (EU15).

The 20 worst in 2001 for nitrogen oxides (EU15).

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LARGE COMBUSTION PLANTS

The biggest lignite-fired power plant in Europe

In 2000 the emissions of sulphur dioxide from Belchatow amounted to some 230,000 tonnes.

With a capacity of more than 4,400 MW, the Belchatow power plant in Poland is the biggest fired by lignite in Europe. While in generation capacity it represents approximately 15 per cent of the country’s total installed power, it in fact supplies almost 20 per cent of Poland’s power, mainly because it offers the lowest priced electricity on the Polish market.

The plant is located in mid-Poland, 180 km southwest of Warsaw, not far from the cities of Lodz and Belchatow, in a small village called Rogowiec. The reason for locating it there was the discovery in 1960 of a rich deposit – with some 2 billion tonnes of lignite – near Belchatow. Exploitation started in 1980 as a strip pit mine.

The power plant is located about two kilometres from the mine, and the first block came into operation in December 1981. Over the following six years, additional blocks were constructed, with the result that a total of twelve blocks have been brought into operation since 1988. Following modernization between 1999 and 2004, each will have a rated capacity of 370 MW, resulting in a total of 4,440 MW.

Each block consists of a steam boiler, a turbine and a generator. The three newest blocks have been constructed for the combined production of heat and power, together supplying some 600,000 MWh of heat to the city of Belchatow.

Because the lignite from the mine has to be brought on conveyors, the distance between the power plant and the mine has to be limited to avoid extra cost.

The Belchatow lignite is of declining quality, with increasing contents of sulphur and ash. Between 1995 and 2000 the ash content increased from about 8 to above 11 per cent, and average sulphur content from 0.6 to over 0.8 per cent, and the levels are still rising.

The quality will continue to worsen and it is presumed that the bed will be either exhausted or extraction will become impractical within the next 10 to 15 years. Since geological investigations have revealed an extension of the bed, a new mine is being opened a few kilometres further away, near the village of Sczercow. This new mine will supply lignite, but to a new power plant. As mentioned above, lignite supply is economically justified only when transported by conveyors, and the most economical solution was to construct a new plant – Belchatow II – close to the new mine.

The tender for the new 833 MW Belchatow II has been announced, and construction is expected to start this year, followed by operation in 2007. It will be run by ELBIS, a newly created company.

Environmental performance
The yearly average lignite consumption over the five-year period 1996 to 2000 amounted to around 35 million tonnes, resulting in annual emissions of the greenhouse gas carbon dioxide of approximately 24 million tonnes.

In 2000 the emissions of sulphur dioxide from Belchatow amounted to some 230,000 tonnes, or about 15 per cent of the country’s total emissions.

Construction of desulphurization installations started in 1994, so that by the end of 2003 eight blocks were so equipped. The four oldest have no desulphurization.

Emission control is based on calcium-gypsum wet technology. The desulphurizing efficiency is quite high – in 2002 about 94 per cent of the sulphur was captured. That same year, desulphurization had been retrofitted to six of the twelve blocks, and emissions of sulphur dioxide had been further reduced to 174,000 tonnes. If all blocks are fully retrofitted, annual emissions are projected to come down to less than 50,000 tonnes.

Although the desulphurization technology generates significant amounts of gypsum as a by-product, fortunately it is of fairly good quality and can practically all be utilized for making construction material.

Emissions of nitrogen oxides are being reduced only by primary methods, i.e. by modifying combustion. Compared to the previous situation, these modifications have resulted in emission reductions of about 40 per cent. Annual emissions of nitrogen oxides amount to approximately 40,000 tonnes.

Compared to some other Polish power plants, Belchatow is relatively new and was constructed using advanced technologies. On the other hand, despite considerable progress, the Belchatow power plant and lignite mine together represent one of the biggest projects in Europe as regards impact on the natural environment.

Legal aspects
In general, Belchatow complies with Polish environmental law. According to the IPPC directive (96/61/EC), which was incorporated in Polish Environmental Law in 2001, it should obtain a so-called integrated permit as a pre-condition of operation after 2007. The directive involves employing BATs (Best Available Technique) as one of the conditions of future operation. The BATs are described in so-called BREF notes. The BREF for large combustion plants is currently in the final stages of preparation, and will be adopted later this year. It is expected to set strict guidance on requirements regarding environmental performance.

In April 2003 Belchatow was granted an integrated permit under the IPPC directive – the first integrated permit issued in Poland and valid for the next ten years. To obtain it, Belchatow had participated in a pilot project with the support of Danish funds and specialists, making it possible to avoid obligations to fulfil the more strict regulations and benchmarks laid down in the new LCP directive (2001/80/EC) and draft BREF for LCPs that are currently being finalized.

According to the rules, both the application and the permit should be public documents, and the nature of the pilot project has led to increased expectations of a very open and truly public discussion.

Neither the application nor the permit are however available from the website of the pilot project or the Lodz Voivodship which issued the permit. Moreover, the Ministry of Environment, the beneficiary of the pilot project, does not allow these documents to be reviewed using its internet service. It seems that some people have forgotten that integrated permits are subject to reporting and monitoring within the EU, as regulated by Decision 2000/479/EC on reporting and registering of emissions.

Future developments
Belchatow supplies electricity to the Polish Power Grid (PSE) through five regional distributors in western Poland and some other local and regional distributors. In 2000 about 5 per cent of the energy in Poland was sold on the market, an amount that is expected to grow. Prices offered by Belchatow (and presumably by ELBIS) are still very competitive.

Other transactions, even long-distance ones, are also probable. The Laziska Steel Mill located in Silesia, close to the Czech border, has for instance recently contracted for a supply of electricity from the Konin power plant in central Poland. Developments in the energy market can, however, lead to other patterns of transactions, possibly reflecting commercial links between the distributors and producers of energy.

The Belchatow plant is a state-owned enterprise (as is the new ELBIS), although theoretically it could – like other companies in the energy sector – be subject to privatization.

Belchatow has a long-term-contract with the Polish power grid. This mechanism was used to support investments by providing a guarantee of a high price for energy sold to PSE, valid for several years. This is however in contravention of EU rules on fair competition, and to comply with EU legislation it will have to be terminated. The government will nevertheless pay compensation. In the case of Belchatow, the assessed value is around PLN 1 billion (ca 200 million euros), a sum that could roughly cover the cost of building the new Belchatow II power plant.

For the future it has been proposed that one of Belchatow’s boilers could be used for burning oilseed rape (Brassica oleifera) straw. This is a renewable source of energy and large amounts of rape straw are expected to become available since it is a by-product of the production of rape oil biofuel (to be used by motor vehicles). Burning biofuel in Belchatow will require other methods of waste management, as the resulting ash is not suitable for construction purposes. The burning of rape straw is in line with EU policies to increase the proportion of electricity generated from biofuels and to promote its use in the energy market.

This article is adapted from a manuscript delivered by the Polish Ecological Club.

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AIR QUALITY

Non-binding targets for heavy metals and PAHs

In a so-called first-reading agreement¹ in April the EU Council, Commission and Parliament have agreed on setting ambient air quality targets for arsenic, cadmium, nickel and polycyclic aromatic compounds (PAHs).

The new law will set non-binding target values for the four pollutants, and is more ambitious than the original proposal by the Commission, but less ambitious than the report from the Parliament’s Environment Committee, which called for the introduction of binding limit values and complementary long-term objectives.

Member states will have to take "all necessary measures not entailing disproportionate costs" to meet the ambient air quality targets for the three heavy metals, plus benzo-a-pyrene, a marker for PAHs.

"The targets are a step in the right direction, but they should be binding," said Kerstin Meyer, air pollution policy officer at EEB, the European Environmental Bureau. "I doubt that the target values will guarantee cleaner air in Europe, particularly in places where air quality is really bad. Air quality standards have to be legally enforceable to be effective in protecting people from these carcinogenic pollutants."

The currently proposed target values mean that member states should take measures to keep pollution levels below them. If levels are exceeded states have to draw up detailed maps and estimate the population exposed to the pollutants. They will also have to demonstrate what they are doing in order to attain the target values, specifying those measures directed at the most important emission sources.

For industrial installations covered by the IPPC directive, member states will need to demonstrate that these installations apply the best available technology (BAT) as defined under the directive. It does not require member states to go beyond BAT however, so this new directive will not form a basis for issuing stricter permits for industrial installations in pollution hotspots.

The Commission has been told to review the law in 2010, at which time it should "consider regulating" the deposition of all four pollutants. Member states are allowed to introduce more stringent standards nationally.

The new directive should come into force before the summer, with member states required to implement it within two years. It is the fourth daughter directive under the framework directive on ambient air quality (96/62/EC). It originally also aimed to cut ambient mercury levels, but this was dropped early on pending a wider strategy due later this year.

Per Elvingson

¹ A first reading agreement means that the three EU institutions negotiate a common text, which is then agreed to by the Parliament at its first reading. The legislative process is cut short and the directive could enter into force earlier as no second reading would be necessary in the Parliament.

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LINKING DIRECTIVE

No limit for the use of flexible mechanisms

On 1 January next year a system will be introduced that will allow more than 12,000 energy-producing and/or energy-intensive plants in the enlarged EU to trade emission rights for carbon dioxide.

Companies that need more allowances than they have been allocated can either buy them from other companies operating under the system or look outside the union. The latter was made possible when the Council of Ministers, Parliament and Commission agreed in April on the linking directive that the Commission put forward last summer (COM (2003)403; see AN 3/03, p.9).

This new directive - which complements the emissions trading directive1 - will allow companies in the EU trading scheme to use credits from projects under two of the Kyoto Protocol's so-called flexible mechanisms: the Clean Development Mechanism and Joint Implementation.

Each member country has to decide the extent to which its companies may be allowed to use these mechanisms, since the directive sets no limits, although the aim is that "a significant reduction" of greenhouse gas emissions should be achieved within the EU, and not abroad.

European firms will be able to use CDM credits from January 2005 and JI credits from 2008, independent of the entry into force of the Kyoto Protocol. Credits are not however permitted from nuclear energy projects and "carbon sinks" (temporary storage of carbon in forests). The use of credits from carbon sinks will be reviewed by the Commission in 2006.

EU environment commissioner Margot Wallström has declared herself satisfied with the new directive. She believes that it will reduce costs for the companies participating in emissions trading and promote the transfer of environmentally sound technology to developing countries.

Several environmental organizations, including the Climate Action Network, have strongly criticized the agreement, however, since they feel that the EU is undermining both its own climate policy and its international credibility by allowing unlimited volumes of cheap credits to be brought into the system, thereby greatly reducing the incentive for domestic emission cuts among EU industry.

The environmental organizations believe that urgent action must be taken at member state level if the EU's climate policy is to retain any credibility at all. Member states should agree to a strict and harmonized cap on the use of Kyoto project credits.

Per Elvingson

1 Directive establishing a scheme for greenhouse gas emissions trading within the Community (2003/87/EC). For more information, see the Commission's website. See the press release from the Climate Action Network at www.climnet.org/pubs/PR_LinkingDirective_20April2004.pdf