Tuesday

16th Jan 2018

Investigation

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

  • The Janschwalde coal-fired power plant in Germany, near the Polish border. It was awarded millions of euros to develop a carbon capture and storage capacity, but the project never came to fruition (Photo: Tobias Scheck)

Ten years ago, EU leaders said there were "huge possible global benefits of a sustainable use of fossil fuels".

They said, after a summit in Brussels in March 2007, that a technology called 'carbon capture and sequestration', also known as carbon capture and storage (CCS), should be deployed with new fossil-fuel power plants by 2020.

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  • The Belchatow power plant was another candidate for CCS. Public opposition to storing CO2 underground did not help the business case (Photo: Greenpeace Polska)

This technology would reduce the negative impact the extensive use of energy sources coal, oil, and gas have on the earth's climate.

Brussels also said the EU should have twelve "demonstration plants of sustainable fossil fuel technologies in commercial power generation" operating by 2015.

EUobserver has found that a decade later, the European Union has spent at least €587 million in grants, subsidies, and public procurement on CCS.

This website has been able to identify 63 projects that received an EU subsidy or grant in the past decade, and another five public procurement projects, related to CCS.

But, as of 2017, the EU has zero CCS demonstration plants.

What happened?

European Energy Programme for Recovery

The biggest chunk went to recipients of the European Energy Programme for Recovery, set up in 2009, during the financial and economic crisis.

Under the plan, €1 billion would be made available to fund CCS projects. Six projects across Europe were selected.

However, these soon ran into problems.

Within five years, three of the projects – in Germany, Poland, and Italy – had been terminated, while the others, in Spain, the UK, and the Netherlands, had been considerably delayed.

According to a European Commission document from 2013, the German and Italian projects were cancelled because they were unable to acquire the required environmental permits.

The project in Germany also experienced fierce public opposition to the idea of storing carbon underground.

Poland had similar challenges. "Very limited progress was achieved in 2012 due to critical financing, legal, technical risks and public acceptance issues as regards CO2 storage," the commission said about the Polish CCS project.

2012 promotional video for the Don Valley project

By the time a new commission state-of-play report came out, last year, a fourth project had also been cancelled.

"In case of the Don Valley project (UK), the commission saw no reasonable prospect for the project to take a positive 'Final Investment Decision' in a timely manner since the project has not managed so far to secure the additional funding needed for constructing the CCS installation and the critical delay in project implementation," the report said.

The 2016 report did have some good news: the Spanish project "has been finished providing operational pilot plants for capture, transport and storage".

2012 report broadcast on regional television about the Compostilla project in Spain

But after that successful test, the technology was never scaled-up for commercial use.

Earlier this year, the Italian owner of the coal-fired power plant that was the site of the tests, announced that plant would close in 2020.

ROAD closed

That meant one CCS project funded under the European Energy Programme for Recovery remained: the ROAD project in Rotterdam, the Netherlands.

"ROAD would be the first project in Europe demonstrating the application of post-combustion CCS technology to a commercial scale coal power plant," the commission said last year.

"This would also mean the successful demonstration of technology capable of retrofitting existing coal power plants."

However, in June 2017 the Dutch government announced that the two energy companies behind the ROAD project have pulled out.

Jonas Helseth, of the CCS-supportive campaign group Bellona, told EUobserver he had no regrets about ROAD's demise.

"I'm happy it's cancelled because it was not a good project," said Helseth.

The CO2 capturing would apply to a coal-fired power plant, which, Helseth said, might not even have a long life.

"The Dutch parliament has actually voted for a coal phase-out, so this is not a place to spend public money," he said.

To Helseth, projects should focus on using CCS to prevent CO2 from being emitted by industrial processes, instead of from fossil fuel power-generation.

The six projects funded under the European Energy Programme for Recovery were all focused on the power sector.

It is somewhat unclear how much money will be spent. According to the document referred to above, the six projects received €432 million in EU funds from the available €1 billion. The paper does not provide a breakdown per project.

The Financial Transparency System database of the EU does have figures for each of the individual six projects, and suggests the full €1 billion has been paid. In that case, the total figure of EU spending on CCS in the past ten years would be almost €1.2 billion.

The commission did not respond to a request to clarify, or to a question on whether the commission will try to claw back some of the provided funds for projects that were cancelled.

NER 300?

They could have received even more.

Another programme that was aimed at promoting CCS in Europe was tied to the EU's emissions trading system (ETS).

The ETS requires thousands of companies to hand in carbon credits for every tonne of CO2 (or equivalent greenhouse gas) they emitted. These credits are called allowances.

In 2009, the EU legislators decided that the revenue from the sale of 300 million allowances, would be spent on commercial demonstration projects for CCS and "innovative renewable energy technologies".

The target was that eight CCS projects would be funded through the scheme, called NER300.

During the first call for proposals, member states initially submitted some 13 CCS projects to be considered. However, none of them were selected, the main reason being that national funding was lacking. Instead, the money went to renewable energy projects.

In the second call of proposals, one was submitted, and awarded a €300 million grant.

In an evaluation of the NER300 programme, published in June 2015, the EU commission said that financial risks were a major factor in the lack of CCS projects funded.

"There is evidence that, for CCS in particular, cost estimates are very uncertain until detailed engineering design work is done, which makes proper budgeting difficult," the evaluation said.

Rannveig van Iterson, campaigner at the European Climate Foundation and its Industrial Innovation for Competitiveness initiative, has a different analysis.

"The NER300 failed because the eligibility criteria were too strict," she told EUobserver.

"It required all three elements: capture, transport and storing. But why should a cement company be interested in the last two parts? Think of it as a waste disposal system: you need a separated value chain."

Another problem was that the value of the fund was dependent on the price of the carbon credits, which saw a sharp drop after the economic crisis helped create a glut of allowances.

UK pullout

Artist's impression of the White Rose coal-fired power plant, which was supposed to be built with carbon capture and storage technology (Photo: Department of Energy and Climate Change)

In the end, the only project that was accepted by NER300, also folded.

The UK-based White Rose project was supposed to provide coal-fired electricity to more than 600,000 homes, with CCS preventing the emissions of around 2 million tonnes per year, or 90 percent of its CO2 output.

However, the project was cancelled after the UK government decided to cancel a £1 billion (or €1.4 billion) funding scheme in January 2016, after already having spent £100 million.

The UK's National Audit Office later found that the cancellation was due to disagreements between the energy ministry and the treasury, and that the UK government "has not achieved value for money from the £100 million it spent on the competition".

EU commission spokeswoman Anna-Kaisa Itkonen told EUobserver that the commission has "not been notified yet" about the White Rose project's withdrawal from NER300.

"Nevertheless, no NER 300 funds were transferred to the project as NER300 rules allow to finance the projects only upon verified emission reductions/CO2 stored," she said in an email.

"Should the White Rose project be withdrawn, earmarked funds should become available for new investments under the forthcoming Innovation Fund."

The Innovation Fund is the proposed successor to NER300, part of the reform of the emissions trading system, currently under negotiation by the three EU institutions - commission, parliament, and council.

Scientific research

Additionally, the EU has also given smaller-scale grants and subsidies under its scientific programmes, some €154 million, according to this website's calculation.

While the NER300 funds "spectacularly failed to deliver anything", said campaigner Helseth, the funds for scientific research have been important to prevent a brain drain.

"I think the funding for research has been extremely important to keep activities going [and] to keep expertise intact in this period when we had projects falling apart and a lot of negative press," he said.

Researcher Douglas Connelly, from the National Oceanography Centre, agreed.

He coordinates a research project into the environmental effects of storing CO2 at the bottom of the ocean, which received almost €16 million from the EU's Horizon 2020 science budget.

"I think we can safely say that effectively they are keeping the technology development alive in Europe," he said of the EU commission.

Samuel Carrara, whose project on electricity modelling received €164,204, said he didn't want to say his research "wouldn't have existed" without EU funding, "but for sure European fundings in general are fundamental for us".

Helseth added that while "a lot" of expertise has been lost in Europe, a CCS community still exists.

"That is partially thanks to the EU funds," he said.

And even in 2017, CCS is not dead.

Last month, the Scottish government said it would make money available for a study into the feasibility of a CO2 storage in the North Sea. This week, three fossil fuel companies announced they would work together on a CCS project in non-EU country Norway.

This is the second in a series of articles about CCS in Europe. The first one was titled Europe holds off on storing CO2. Tips are welcome by sending an e-mail to the author's e-mail address, available under his name at the beginning of the article.

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.

Analysis

EU transport sector has a CO2 problem

Although car manufacturers are reaching their CO2 targets for their fleets, car usage has gone up in Germany, while the gap between lab results and actual fuel consumption has increased.

Norway offers EU €140m for carbon capture

Norwegian Prime Minister Jens Stoltenberg offered European Union countries some €140 million to support the development of carbon capture and storage projects - an experimental and highly controversial technology that aims to scrub industrial processes of their CO2 emissions.

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