First CCS project receives EU funding

Although proceeds from emissions trading scheme were meant to fund 12 carbon capture and storage projects, only one such project will be funded.

Connie Hedegaard, the European commissioner for climate action, today (8 July) unveiled the final round of funding for the NER300 programme – which uses proceeds from the EU’s emissions trading scheme (ETS) to fund low-carbon technologies.

A total of €2 billion will be awarded to 19 projects. One of these is the UK-based White Rose Project, which will be awarded up to €300 million. It is the first carbon capture and storage (CCS) demonstration project to be awarded funding under the scheme. The other 18 projects are involve renewable energy.

This is the second and final round of funding for NER300, which runs until 2020. Enthusiasm for the emerging CCS technology, which captures carbon emissions and stores them underground, has waned. The technology is still unproven and there are a handful of demonstration projects around the world. But none have yet been built in Europe.

In December 2012 the Commission announced that no CCS projects would receive money in the first round of NER300 funding, because no member state was ready to put up the necessary matching funding. It had been hoped that the programme would provide funding to 12 CCS projects.

Hedegaard said today that the Commission still believes in CCS as “one of many tools” for tackling the climate challenge. “The debate has changed a bit; five years ago people thought ‘if only we had CCS, it could solve almost everything’. But it’s a very expensive technology,” she said. “CCS can play a role, but first we need to see it work on a big scale somewhere in the world.”

“Now there is one very concrete project, which will receive a grant of €300 million, so it really will have a good chance to make a substantial step forward for this technology in Europe,” she said. “In the UK they have been very keen on developing CCS technologies.”

The proposed 426MW coal plant is being undertaken by a consortium between Drax, Alstom and BOC. It is located in north Yorkshire and is projected meet the equivalent power needs of 630,000 homes. Around 90% of all the CO2 produced by the plant will be captured and transported by pipeline for permanent storage deep beneath the North Sea.

CCS proponents reacted positively to today’s news. “This decision sends a strong and positive signal, reaffirming the importance of CCS deployment and that we must keep pushing European projects with the continued support both at EU and member state level,” said Graeme Sweeney, chairman of the Zero Emissions Platform. “The EU’s long-term goal of reducing greenhouse-gas emissions by 80%-95% by 2050 cannot be met cost-effectively without CCS.”

However there is still concern that the technology has lost political support in Europe. The CCS lobby lost its biggest champion in the European Parliament in may’s elections – British Liberal Democrat Chris Davies, who was the rapporteur on the CCS directive. Many MEPs and national leaders have been wary of the technology because it is unproven and testing it is expensive.

Today’s funding round was the last opportunity for CCS projects to receive money under this scheme, as all the money has now been allocated. The Commission is still deciding whether to renew the fund after 2020.

There have been larger concerns about the way that EU funding for low-carbon technology is being dealt with. The European Court of Auditors today published a report that criticised, albeit mildly, the effectiveness of such funding.

The report, which looked at research and cohesion funding in the previous budgetary period, found that there were no significant cost overruns or time delays in the projects, and the renewable energy generation capacities were installed as planned and were operational.

However, the report also found that the energy production results were not always achieved or not properly measured. “The overall value for money of cohesion policy funds support to renewable energy generation projects has been limited in helping achieve the EU 2020 renewable energy target, because cost-effectiveness has not been the guiding principle in planning and implementing the renewable energy generation projects,” the ECA’s report concluded.

Hedegaard said that the Commission would take note of the report when deciding on funding vehicles for the next budgetary period. “The experience so far with NER300 has been quite good, so it’s one of the things we are considering when we are looking after 2020,” she said. “But we also have more instruments now in Horizon2020 – 35% of the whole budget will have to go for low-carbon technologies.”