EU puts carbon capture funding on hold

Brussels - The European Commission has opted to not to award any of the €275-million fund earmarked for carbon capture and storage (CCS) demonstration projects, under the first call of the NER300 programmes.

The funding process was halted because EU Member States were unable to confirm the feasibility of the CCS projects – due mainly to funding issues, or because work was behind the schedule required by the timeframe for proposals.

In a recent joint letter, a group of companies involved in UK CCS projects, including Alstom, BOC, Drax, E.ON, Linde, and National Grid - urged the Commission to defer its selection of first-tranche CCS projects for a few months.

This, they argued, would allow discussions to take place before the launch of the second tranche and could deliver two more CCS projects - in line with the original goal of the NER300 programme.

Under NER300, projects must enter into operation within four years of the funding award. The date of entry into operation of individual projects must take place between 2013-16, with two thirds of projects scheduled to be operational before the end of 2015.

The support envisaged for CCS projects in the first call remains available to fund projects under the second phase of the NER300 programme, according to an EC statement.

“The Commission will proceed swiftly with the implementation of the second call for proposals, covering unused funds from the first call as well as the revenues of the remaining 100 million allowances in the new entrants’ reserve,” the EC said 18 Dec.

NER300 is implemented by the EC with the collaboration of the European Investment Bank (EIB) both in the project selection, the sale of 300 million carbon allowances from the EU Emissions Trading System, and the management of revenues.

On a more positive note, the Commission awarded over €1.2 billion funding to 23 renewable energy demonstration projects(See EC statement for details) under the first call for proposals for the NER300 funding programme.

The projects are to be part-financed through the sale of 200 million emission allowances from the new entrants’ reserve (NER) of the EU Emissions Trading System.

The projects cover a wide range of renewable technologies - bioenergy (including advanced biofuels), concentrated solar power, geothermal power, wind, ocean energy and distributed renewable management (smart grids).

“The NER300 programme is in effect a ‘Robin Hood’ mechanism that makes polluters pay for large-scale demonstration of new low-carbon technologies,” declared climate action commissioner Connie Hedegaard.

“The €1.2 billion of grants - paid by the polluters - will leverage a further €2 billion of private investment in the 23 selected low-carbon demonstration projects,” she said. This will help the EU keep its frontrunner position on renewables and create jobs here and now, in the EU.”

The 23 projects could together increase annual renewable energy production in Europe by some 10TWh, according to EC estimates.

Collectively, the award-winning projects will engage several thousands of full-time workers during the construction phase over the next 3-4 years.

Once operational, about a thousand full-time workers will be engaged for the next 15-20 years to keep the installations running, the EC also reckons.

NER300 funding will provide up to 50% of the ‘relevant costs’ of the project; the rest will be covered by private investment and/or additional national funding. Funding will be an annual basis, based on the amount of ‘green’ energy produced and the meeting of knowledge-sharing requirements.