News
Publish date: July 8, 2015
News
On 5 May 2015 the European Parliament and European Council reached an agreement on the reform package of the EU ETS. 1 January 2019 was the agreed upon start date for the reform. On the second key element subject to negotiations – the treatment of ‘backloaded’ surplus allowances, the co-legislators decided that these would be placed into the MSR rather than returned to the market.
While welcoming the decision to place previously backloaded allowances into the reserve, Bellona had hoped for an earlier start date for the reform than 2019.
Innovation and Modernisation Funds: two crucial opportunities for CCS deployment
The conclusion of an agreement on the MSR is of particular importance as it now allows important work on the Innovation and Modernisation Funds to go ahead. In March 2015 Bellona submitted its response to the Commission-conducted consultation on the design of the two funds.
“The early implementation and possibility to accumulate funds from the Innovation and Modernisation funds could offer important opportunities for the deployment of Carbon Capture and Storage (CCS)” says Bellona Europa Director Jonas Helseth.
For Bellona’s full response to the consultation see here.
CCS taken into account in Commission’s climate finance planning
According to a leaked draft of the ETS reform proposal, dated 30 June, there are some positive signals that funds from the Modernisation Fund could be channeled towards CCS deployment. Note that the Commission does not comment on drafts and the leaked document is likely to have been subject to some changes before publication on 15 July.
The draft text does however, outline that a Modernisation Fund would be established to support investments in the modernisation of energy systems and improving energy efficiency in low-income Member States. An investment board and a management committee, to be composed of Member States’ representatives, the Commission and European Investment Bank, are to determine project selection criteria.
Bellona lists its recommendations for the criteria which should guide the selection process of the Modernisation Fund on page 12 of this document.
On the other hand, the envisaged Innovation Fund, which now includes support for industrial low carbon technologies and processes in industrial sectors, will allow for up to 60% of the project to be covered, representing a 10% improvement in cost coverage from the NER300. The project eligibility criteria for the fund would be determined by the Commission through implementing measures after the proposal has been adopted.
Possibility of a much-needed bridge fund
The leaked Commission document proposes the creation of a bridge fund by making an additional 50 million unallocated allowances from the MSR available to complement existing NER300 resources for the funding of projects before 2021. Bellona shared its concerns about a potential funding gap in its response to the Commission of last March.
“This proposal would be in line with our recommendations and is part of ensuring continuity of funding to crucial climate technologies, such as CCS.” argues Helseth.
Recent attacks on Ukraine’s Zaporizhzhia nuclear power plant "mark the beginning of a new and gravely dangerous front of the war," the UN atomic agency's director general said last week.
After years of inaction, Germany is working on its Carbon Management Strategy to resolve how CCS can play a role in climate action in industry. At the end of February, the Federal Ministry for Economic Affairs and Climate Action published first key points and a proposal to amend the law Kohlenstoffdioxid Speicherungsgesetz (KSpG). Bellona Deutschland, who was actively involved in the previous stakeholder dialogue submitted a statement in the association hearing.
In the midst of a global discussion on whether natural gas should be used as a transitional fuel and whether emissions from its extraction, production, transport and use are significantly less than those from other fossil fuels, Russia has developed ambitious plans to increase its own production of liquified natural gas (LNG) in the Arctic – a region with 75% of proven gas reserves in Russia – to raise its share in the international gas trade.
In this news digest, we monitor events that impact the environment in the Russian Arctic. Our main focus lies in identifying the factors that contribute to pollution risks and climate change.