Updated - EU opens chequebook for CCS

Updated - EU opens up its chequebook for Carbon Capture

Bids invited for first portion of €4bn carbon capture and renewable energy demonstration fund The EU has opened the first tranche of a £3.4bn green infrastructure fund, inviting applications from innovative carbon capture and storage (CCS) and renewable energy projects.

The so-called NER300 funding was initially approved in February and earmarked for eight CCS projects with over 250MW of capacity and 34 renewables projects, including wind, ocean thermal energy conversion and technologies to convert plant waste into biofuels, biogas or electricity. At least one project, and a maximum of three, will be funded in each member state.

The programme will fund up to 50 per cent of the construction and operation costs of the CCS and renewables projects, with member states providing the rest.

Climate Action Commissioner Connie Hedegaard officially launched the NER300 initiative, which she said could top €9bn (£7.8bn) and would provide new jobs and help the EU meet its 2020 climate targets.

"Europe has the know-how, the ability and the ambition to lead the world in developing the technologies required to tackle climate change," she said. "The NER300 initiative will act as a catalyst for the demonstration of new low carbon technologies on a commercial scale."

The subsidies will be funded by the planned sale of up to 300 million carbon allowances in the New Entrants Reserve (NER) of the EU Emissions Trading System (ETS).

Today's announcement covers 200 million permits, which will be sold by the European Investment Bank to raise cash for the successful projects, each of which is expected to be completed by 2015.

The EU aims to build 12 CCS demonstration projects by the end of 2015, as it looks to slash Europe's emissions 20 per cent by 2020 compared to 1990 levels.

When the funding was initially approved in February initial funding was announced in February, there was speculation that UK projects could account for three of the proposed 12 projects.

But Powerfuel's 900MW Hatfield site near Yorkshire has already received more than £160m of EU funding, while the withdrawal of E.ON from the UK's own CCS funding competition left Scottish Power as the sole entrant in the bidding for the £1bn of funding.

However, Chris Huhne's concurrent announcement yesterday that gas plants will be included in the race for the £9bn pot should improve the prospects of more UK projects coming forward.

Scotland's energy minister Jim Mather said the EU funding would give for country the opportunity to be at the forefront of technical advances in CCS and renewable energy.

"Today's announcement by the European Commission is of significant importance to Scotland - not only to the projects that stand to benefit directly should they be successful in attracting the funding, but to the wider low carbon economy agenda as we work towards a decarbonised energy sector and work to further develop our expertise and skills base in CCS and renewables," he said.

His comments were echoed by Chris Bronsdon, chief executive of the Scottish European Green Energy Centre (SEGEC) said the funding was crucial for large scale projects that carry significant costs and can struggle to move from demonstration stage to deployment,

"In areas such as CCS or marine energy the capital expenditure requirements can be considerable and often beyond the reach, or even the balance sheet, of the groups that have the knowledge and ability to deliver, he said. "This announcement has been eagerly anticipated by business and is vital in taking forward truly innovative projects that can make significant contributions to the generation of clean, emission free, and renewable energy in Scotland." Source: Business Green

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