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CCS runs into financial difficulties

By Dave Keating  -  18.10.2012 / 05:43 CET
UK and others struggle to hit financing deadlines.

European Union member states, particularly the UK, are struggling to meet the European Commission's deadlines for securing funding for pilot projects to demonstrate carbon capture and storage (CCS) technology. Without the pilot projects, CCS is unlikely to contribute significantly to reducing the EU's carbon emissions.

At stake is €1.5 billion of EU funding that had been earmarked for CCS but can be secured only if member states put up co-financing.

In theory, CCS offers the prospect of low-carbon energy, because it uses fossil fuels but captures the carbon that is then released and stores it underground. In July, the Commission wrote to 20 member states that have been planning CCS demonstration projects, telling them they needed to confirm their co-financing plans by 1 October. When it became clear this deadline would not be met, it was extended to 15 October, or the end of the month in “exceptional circumstances”. Ten of the member states have so far responded.

The CCS projects are at the top of the list of low-carbon projects (both renewable energy and CCS) that are eligible for EU funding, largely from the sale of carbon allowances in the EU's emissions trading scheme (ETS). This NER300 list ranks the feasibility of projects and their potential to deliver returns. But the Commission has warned that if member states cannot adequately demonstrate that they have the ability to co-finance their CCS projects, then projects further down on the list will get the EU funding instead. A decision about which projects will get funding is due by the end of the year. There has been increasing concern that the projects at the top of the list, particularly those in the UK, will lose out on the opportunity because co-financing cannot be put in place quickly enough. The EU funding available is already lower than originally envisioned because of the low price of carbon in the ETS.

The UK appears to be particularly behind schedule to meet the Commission's deadlines because a competition to choose the best projects was launched in the UK only in April, a previous competition having been cancelled last year. Several companies have written to the British government expressing their concern.

Lagging behind

A survey released last week by the Global CCS Institute suggested that Europe may be falling behind in the development of CCS. In the past year, nine CCS projects have been launched worldwide, but only two of these are in the EU – the Sargas power plant in Malta and the Caledonia Clean Energy Project in the UK. Five are in China, one is in Norway and one is in the United States. Out of the 75 projects launched worldwide, only eight are operational.

The survey's authors said that at the current rate just 67 projects will be operational by 2020. The institute says that for the technology to be able to deliver a significant benefit to emissions reduction, 130 projects are needed by 2020. The slow progress in Europe has been part of the problem.

“The European Commission policy objective of having up to 12 commercial-scale demonstration plants operating in Europe by 2015 is no longer achievable, with four to five projects operating in the next five to six years being a more realistic scenario,” the report concludes.

© 2014 European Voice. All rights reserved.
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