Tuesday

21st Aug 2018

EU to have third attempt at financing CO2 storage

  • A CCS installation in non-EU member Norway. There is currently no CCS installation operational in the EU (Photo: Kjetil Alsvik/Statoil)

The European Parliament is due to vote on legislation on Tuesday (6 February) which would set up a potentially multi-billion euro fund to support projects in the field of innovative renewable energy, carbon capture and storage (CCS), and recycling CO2 as a resource.

However, the final criteria of the fund will be decided by the European Commission, in a legal act which MEPs would only have the power to veto or rubber-stamp.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • MEPs will vote on Tuesday about the reform of the EU's emissions trading system, which would include an Innovation Fund (Photo: European Parliament / Pietro Naj-Oleari)

The 'Innovation Fund' will be deployed to give an incentive to companies to develop new energy technologies, which should help the EU reach its long-term climate goals.

It is part of the reform of the emissions trading system (ETS) on which MEPs will vote on Tuesday.

The size of the fund will not be known until after the new ETS period kicks in, in 2021.

The fund will be filled with the revenue of sales of at least 400m ETS credits, which certain companies need to buy to be permitted to pollute.

However, it is impossible to predict the price of these credits beforehand.

The past six months, the price of a tonne of CO2 has increased from around €5 to €9. At current prices, 400m of ETS credits translates into roughly €3.6bn.

It is a successor to a previous fund, called NER300, which has some €436m left over. That money will be transferred to the Innovation Fund.

Several factors, including the financial crisis, made it difficult for NER300 projects to find the required co-financing from other non-EU means.

In particular projects developing the CCS technique, which prevents release into the atmosphere of the climate-changing CO2 gases, proved difficult to finance.

In the end, not a single CCS project was funded through NER300.

"The carbon capture and storage side of it was disappointing," said Jonathan Taylor, vice-president of the European Investment Bank (EIB) in charge of climate action.

The EIB was in charge of assessing whether a proposed project could be funded through NER300, and will be in charge of the Innovation Fund.

"I would hope we can do more with CCS. If you look at the IEA projections, a certain amount of CCS is assumed. So far, it's fallen well short of those expectations," Taylor told EUobserver in an interview recently.

The International Energy Agency (IEA) has said in its forecasts that widespread use of CCS is essential to keep the rise in the world's average temperature at manageable levels.

All projects failed

EU countries have been unable to fulfil their 2007 promise that there should be twelve CCS installations up and running in the EU by 2015. They made €1bn available for a European Energy Programme for Recovery, but in the end all of the proposed CCS projects folded.

The EIB's Taylor said he was optimistic that the new fund would be able to finance more CCS projects, but noted that CCS uptake had been slow all over the world.

"There are probably a lot of reasons behind that, many of which may not have a particular bearing on the availability or otherwise of European money from different funds," he said.

"I wouldn't really want to speculate as to whether or not there would be the same problems, or whether those problems will have been overcome, because they seem to be largely problems which are external to the existence of funds."

John Scowcroft, Europe adviser at the Global CCS Institute, said there had been positive changes in the design of the follow-up fund and that it will push for more commercial roll-out of CCS projects.

"The proposed Innovation Fund shows policy-makers have learnt from the inadequacies and rigidity of the NER300," he said in an emailed statement.

"It's great to see that the Innovation Fund has broadened its scope to include low-carbon innovation technologies for industrial production sectors. The financing modes seem to be more flexible this time around," said Scowcroft.

Another lobby group supporting CCS, Bellona, also said the new fund was an improvement.

However, its director Jonas Helseth noted that the actual criteria are not yet known.

The directive on which MEPs will vote on Tuesday, which reforms the EU's emissions trading system (ETS), only includes general provisions about the Innovation Fund.

Negotiators for the parliament, commission, and member states agreed that the details will be decided later, in a so-called delegated act.

"It was the previous NER300 implementing decision that created many of the barriers for CCS projects and without substantial improvements here the bankability of innovation funding and prospects for CCS projects may be unlikely to change," said Helseth.

One change compared to NER300 is that also carbon capture and use (CCU) projects are eligible. CCU treats CO2 as a resource, but there are doubts about how climate-friendly it can be.

Adoption of the delegated act is planned for the first three months of 2018, but could still be delayed.

EU to embrace CO2 recycling

The EU is getting ready to increase its support for the development of carbon capture and utilisation, a technology to recycle CO2 as a usable material. But some warn against CCU as a possible means for 'greenwashing'

Investigation

After spending €587 million, EU has zero CO2 storage plants

The EU has spent at least €587 million so far on carbon capture and storage, and was willing to spend millions more. However, after a decade not a single power plant in the EU is currently using the technology.

Europe holds off on storing CO2

Most reports looking at long-term climate scenarios agree that some form of carbon capture and storage is needed. However, its deployment has been stalled in the EU.

News in Brief

  1. EU Commission: efforts 'ongoing' over Italian migrant ship
  2. Italy allows boat with migrants to dock
  3. France's Total pulls out of Iran due to US sanctions
  4. Trump accuses EU and China of currency manipulation
  5. Swedish conservatives regret unsuccessful integration policies
  6. Record high measles cases hit Europe
  7. Swedish politician declares war on media
  8. Italy threatens to return migrants to Libya

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. UK sanctions appeal risks highlighting EU divisions
  2. Wind delays launch of European wind-mapping satellite
  3. Greece 'normal' again after end of crisis, EU says
  4. Putin strikes blow against Russia's isolation by Europe
  5. EU-China cooperation on CO2 storage lost in limbo
  6. Greece exits bailouts, but difficult path ahead
  7. EU gets record response on 'summertime' consultation
  8. 'Nativism' and the upcoming Swedish and Bavarian elections

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Join EUobserver

Support quality EU news

Join us