Energy companies are trying to safeguard European Union funding for carbon capture and storage (CCS) projects after several member states, in particular the UK, failed to meet a deadline to secure funding.
CCS is an unproven technology that offers the prospect of low-carbon energy, because it uses fossil fuels but captures the carbon, which is then stored underground. The British government has said that demonstration CCS projects should be an important part of the country's climate-change strategy. In 2008, the British government pushed hard for CCS projects to be eligible for money from the NER300 fund, made up of proceeds from the EU's emissions- trading scheme (ETS).
But the UK did not satisfactorily meet an end-of-October deadline to pledge that it would match EU funding. The European Commission will not reveal which projects will get funding until next month, but Commission sources say it is already clear that the British government has not provided adequate guarantees for national co-financing.
Other countries have not done much better. Only France has provided an iron-clad commitment to fund a CCS project, according to sources, and it is possible that this will be the only project to get NER300 funding. The remainder of the money in the fund would then go to renewable- energy projects.
Plea for more time
Last week, a group of energy companies – including Alstom, E.On and the Carbon Capture and Storage Association – wrote to the Commission asking for an extension of the deadline to allow for more discussion with member states. “It is our firm belief that the necessary co-funding commitments can be made if such dialogue is vigorously pursued,” they wrote. They said if the deadline was not extended, and only the French project received funding, “it would expose the EU to the charge that it is simply not ‘walking the walk' on CCS”.
Chris Davies, a British Liberal MEP who led the European Parliament's negotiations with the Council of Ministers on CCS legislation, said the UK should have done more to secure EU funding. “The UK is the best location in Europe for CCS development,” he said, because of numerous potential storage sites under the North Sea and support from all three main political parties. “The Treasury [finance ministry] has put one obstacle after another in the way of CCS development,” he said.
Commitments for national funding in the UK were delayed after a competition launched last year to choose the best British projects was cancelled because of irregularities. A new contest was launched in April this year, but the finance ministry has been slow to make commitments.
It was expected that more than €4 billion would be handed out from the NER300 fund, but a drastic fall in the price of carbon in the ETS means that less money is available. The industry fears that, without EU funding, the CCS demonstration projects will not get off the ground.