The EU and member states’ governments are already taking this problem seriously and established a number of initiatives to promote the projects that produce renewable energy and reduce greenhouse gas emissions. These incentives are largely based around providing premium electricity prices to give a strong economic base for these projects so that long term finance can be raised from lenders.
Alkane’s recorded emissions savings for 2006 were approximately 450,000 tonnes of carbon dioxide equivalent.
Germany and France - Renewable Energy Laws
In Germany, the EEG 2000 (Renewable Energy Law), recognises the benefit of utilising waste gases from a range of pollution sources, including mine methane, biogas, sewage digester and landfill gas. Under this law, local network operators are obliged to purchase renewable electricity at prices fixed for 20 years. The effectiveness of the EEG is demonstrated by Germany’s leadership in the generation of electricity from mine methane, with projects developed since in the last 7 years totalling around 200MW of electrical output.
In France, the Electricity Act 2000 was modified to include recoverable energy from mine methane, landfills, biomass and sewage digesters. The feed in tariff with premium prices for renewable electricity generated from these sources has strongly incentivised the methane mitigation industry and a large number of new projects are already under way.
UK - Renewable Obligation (RO) and Climate Change Levy (CCL)
At the same time that Germany introduced its renewable energy law the DTI introduced the RO but did not include coal mine methane with landfill gas and digester gas. In contrast, the Treasury exempted electricity generated from mine gas from the Climate Change Levy in the Finance Act 2002 and this incentivised the industry to develop more projects as electricity prices rose in the past two years. The industry association, ACMMO strongly believes that if mine methane were included in the RO during the current revision of the framework then up to 150MW of decentralised electricity generation plants could be developed to save around 1.4 million tonnes of carbon dioxide equivalent per year. DEFRA reported on the extent of methane emissions from UK abandoned coal mines in 2005 and estimates that they will peak in the next five years at around 60,000 tonnes, equivalent to around 1.2 million tonnes of carbon dioxide per annum. The report states that methane will continue to leak out from abandoned coal mines and contribute to climate change well beyond 2050. For the first time, estimates of the emissions of methane from abandoned coal mines have been included in the National Atmospheric Emissions Inventory and should also be included in the UK’s revised 1990 Kyoto emissions baseline when negotiations are complete.
EU Emissions Trading Scheme
The first phase of the EU Emissions Trading Scheme (ETS), under which carbon dioxide emissions from various sectors are capped, became law on 1 January 2005 and its first phase will run until 2008. Negotiations are under way to include methane in the EU ETS in the second period from 2008-2012 which would allow Alkane to trade its emissions savings from its UK plants as well as those in Germany in the market. DEFRA emissions estimation methodology is now in place and if this could lead to Alkane’s UK carbon emissions savings being sold for additional income as the market expands. The value for one tonne of carbon dioxide saved, an Emissions Credit Unit or ERU, is currently around €20 per tonne.