Coal power plant in Kosovo. Photo: Flickr.com/World Bank Photo Collection/CC BY-NC-ND
The health and environmental benefits for eight non-EU countries to comply with EU emission limit values for large combustion plants are on average 17 times the costs.
The Energy Community, an energy association of Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, Serbia and Ukraine, has published a study assessing the costs and benefits of modernising large combustion plants in their countries to comply with EU environmental regulations.
Established in 2005, the Energy Community is an international organisation dealing with energy policy, with a secretariat located in Vienna, Austria. Parties to the Energy Community Treaty (ECT) are the European Union and eight countries: Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, Serbia and Ukraine. Four more countries – Armenia, Georgia, Norway and Turkey – take part as observers, although Georgia is in the process of joining the Energy Community as a signatory.
Today, the main motive behind the ECT is the import of the EU energy policy into non-EU countries. The implementation of the EU directives on environmental impact assessment, sulphur in fuels, and large combustion plants’ emission standards constitute the core of the environmental acquis.
An assessment of the costs and benefits of upgrading large combustion plants in the countries was published by the secretariat last December. According to the study, the monetised benefits would outweigh the costs of compliance with the environmental standards by 17 times on average in the Energy Community region. This means that for every euro spent, there would be a seventeen euro return in terms of environmental and health benefits.
The EU’s 2001 Large Combustion Plants (LCP) Directive applies to all combustion plants with a rated thermal input greater than 50 megawatts (MW), irrespective of the type of fuel used. In late 2010, the EU adopted a new Industrial Emissions Directive (IED) that will replace the LCP Directive from 1 January 2016 onwards.
All contracting parties to the ECT have undertaken to implement the LCP Directive by 31 December 2017. This is of high priority politically and technically for these countries as well as for the EU. According to a decision of the ECT Ministerial Council in October 2013, contracting parties must also implement the IED provisions in the case of new plants.
The purpose of the secretariat’s study was to deliver an overall estimate on the amount of investment necessary for the modernisation of power plants located in the ECT countries, and of the benefits expected from the resulting emission reductions. All ECT countries, except Albania and Moldova, were shown to have high external costs related to emissions from power and heat generation plants, mainly due to the high average age of the plants and the low level of maintenance over the past decades.
Significant investments are required for the upgrades needed to ensure the implementation of the two directives. All in all, there are 183 LCP units, with a total power capacity of nearly 41,000 MW and with a net power output of 38 gigawatts (GW). The largest capacity is found in Ukraine, with 113 units and a total power output of 29.4 GW.
Investment costs are estimated at €6.7 billion for compliance with the LCP Directive, increasing to €7.8 billion for the IED. Around three quarters of these investments would take place in Ukraine.
According to the cost-benefit analyses, however, the estimated benefits significantly outweigh the costs. On a country-by-country basis, the benefits were found to be between 8 and 51 times higher than the costs for the LCP Directive implementation, and between 4 and 50 times higher in the case of IED implementation. Looking at all countries combined, the benefits were 16–17 times higher than the costs.
A third, alternative, scenario was also investigated. This would include the shut-down and replacement of some old plants and upgrading of the remaining ones, where needed. It would result in better overall energy efficiency with consequent fuel savings and lowered greenhouse gas emissions, as well as lower costs for operation and maintenance.
The study also includes a number of country-specific recommendations for achieving compliance with the requirements of both the LCP Directive and the IED.
The report Study on the need for modernization of Large Combustion Plants in the Contracting Parties of the Energy Community in the context of the implementation of Directive 2001/80/EC (December 2013). By South East Europe Consultants, Ltd. Published by the Energy Community secretariat, Vienna, Austria. Available at: www.energy-community.org