Europe's Carbon Capture Fund Shrinking

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- The main funding mechanism for carbon capture and storage (CCS) projects in Europe could be cut by as much as a third due to plummeting carbon prices.

The European Commission (E.C.) is to forge ahead with the sale of European Union allowances (EUAs). from its New Entrants Reserve 300 (NER300) funding programme, despite falling prices. The fund was unveiled in November last year to fund CCS and renewable energy projects. For additional information, see November 11, 2010, article - E.U. Unveils 4.5 Billion Euros for Carbon Capture and Renewable Energy Projects.

The proposed €4.5 billion ($6.2 billion) NER300 fund was to be raised through the sale of 300 million emission allowances on the E.U. Emissions Trading System (ETS). However, carbon prices have plummeted throughout the year, a situation further exacerbated by the Eurozone economic crisis. At today's prices, the allowances would raise less than €3 billion ($4.1 billion). However, rather than wait for things to improve, the European Commission has said that there can be no delaying the sale if the region is to drive forward the development of clean carbon and renewable energy technologies.

"Can we linger out? I'm afraid we can't," said Jos Delbeke, director general for climate at the European Commission, speaking in Brussels. "We have to spend the money by 2015. If we linger we'd miss the opportunity to move ahead with clean technologies. "We told the European Investment Bank (EIB) we won't tolerate any slippage in the timetable. It's better to be on time than take six or 12 months and not be sure if the price is going to improve."

The NER300 fund is supposed to cover up to half the costs of constructing of eight carbon capture and storage projects as well as more than 30 renewable energy projects ranging from wind and wave power to energy-from-waste (EfW) technologies.

Last month, the European Commission tasked the EIB with offloading the European Union allowances. Since then the EIB has chosen the EEX and ICE Futures Europe energy exchanges to handle the sale.

As part of the NER300 funding, at least three of the eight CCS projects to be selected for co-funding must involve carbon storage in hydrocarbon reservoirs, while another three must store it in saline aquifers. Power stations taking part in the CCS projects must have a generation capacity of at least 250-megawatts (MW) and be designed to capture at least 85% of their CO2 emissions. There also must be a minimum of one project, and a maximum of three, in each of the following categories:

• Pre-combustion

• Post-combustion

• Oxy-fuel

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