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18th Aug 2018

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Ex-MEP pushes CCS projects, despite 'wasted money'

  • '...if you don't develop CCS, we cannot meet the global carbon reduction ambition that was set in Paris' (Photo: European Parliament)

A former member of the European Parliament who helped set up the fund to promote carbon capture and storage (CCS) projects, has admitted the fund had design flaws and was based on the assumption the carbon price would skyrocket, when in fact it plummeted.

The fund, called NER300, has failed to support any CCS projects, but will be succeeded by a new Innovation Fund. EU negotiators will meet next week to discuss the legislation that will make the new fund possible.

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Despite the failure of NER300, Chris Davies remains a strong advocate of using the CCS technology to help limit climate change, he told EUobserver in an interview at the European CCS Forum in Rotterdam last week.

"In 2007 the European Council said that we need to have up to twelve CCS demonstration projects by 2015, which was a very nice press release for the heads of government to issue, but they didn't say how this was going to be realised," said Davies, who was an MEP for the UK Liberal Democrats from 1999 to 2014.

The EU lawmakers realised that companies needed an incentive if they were going to trap their own CO2 emissions and then store them underground.

"So we were exploring ways of finding a means of getting the public support necessary to bring these projects to fruition."

Davies then wrote the amendment which would set up a fund tied to the EU's emissions trading system (ETS).

The ETS requires large emitters to hand in pollution permits, or allowances, which could be bought from the EU. The proceeds of 300 million of those permits would go to CCS projects, or to innovative renewable energy projects.

Ultimately, only projects in the renewable category were funded.

But according to Davies, including renewable energy was needed for his amendment to acquire the necessary political support.

Looking back, Davies said the incentive for companies that were part of the ETS was not big enough.

"The expectation was that the carbon price would rise from thirty euros up to a hundred euros. The incentive to not to have to pay a hundred euros a tonne for every tonne of CO2 emitted, was very strong indeed.

"The assumption was: industry would do it, without us requiring any other means. Industry would take all these risks."

But the carbon price dropped sharply, to below €10, and is now hovering around €7 per tonne.

Cheaper to pollute

"It was frankly cheaper for industrial emitters or power emitters to buy CO2 allowances than it was to invest in CCS as an alternative," he said.

This also had as a consequence that less money was available to finance CCS projects, because the fund's budget was agreed not in euros but in ETS allowances.

"[The NER300 fund's] value depends on the carbon price and so does the incentive to people to invest in CCS," said Davies.

Next Wednesday (8 November), MEPs and representatives of national governments will meet to negotiate on a new ETS period, which would include a successor fund, based on the same principle of setting aside proceeds of the sale of ETS allowances.

"It's not sufficient. It's certainly not sufficient as long as the carbon price lingers around five euros or six euros a tonne, so we'll need other mechanisms. At the moment that's not going to happen – we are not going to get stronger support for CCS out of the European Union's general budget, unless this is regarded as a political priority," said Davies.

Wasted money

Despite the fund's failure to deliver any CCS demonstration projects, the former MEP is still lobbying hard for governments to support CCS.

"A lot of money has been wasted, a lot of projects have come and gone. Yet what is very clear from the International Energy Agency, and the IPCC, is that if you don't develop CCS, we cannot meet the global carbon reduction ambition that was set in Paris," he said.

The IPCC is the International Panel on Climate Change, which provides the science on which politicians rely their decisions on mitigating climate change.

Two years ago, world leaders agreed in Paris that they would try to limit global warming to "well below 2C" since pre-industrial times.

After leaving the parliament, Davies became a self-employed environmental consultant.

He is registered as a lobbyist in the EU's transparency register, and was an active audience participant at last week's CCS conference.

"This is a lovely cocoon of people who believe passionately in the need for CCS and its urgent implementation," Davies told the conference participants at one point.

"In Brussels, there is no political support for CCS. Most member state governments are indifferent or downright hostile to CCS," he added.

Speaking to EUobserver, the former MEP noted that CCS projects will only be successful if national governments support them.

"We want some European mechanisms, but you can't have a CCS project unless you have support from a government in the country where it is going to be built."

He said that it "should have been obvious to people at the very beginning, including myself", that you cannot expect an emitter, for example a gas power station, to be responsible for the full chain of capturing, transporting, and then storing the CO2 molecules.

"There is much greater recognition now that ... the public sector, governments have to have a direct role, through agencies or whatever, in providing the infrastructure necessary to make it happen."

Davies also said more needs to be done to explain to the public and to non-governmental organisations why CCS is needed and that it is not the "spawn of the devil".

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