The way towards implementation of carbon capture and storage projects in Europe

frontpageingressimage_Prosjektlab_PowerPlantCCS.jpg Photo: Prosjektlab

The panel included Jan Panek from the European Commission’s DG Transport and Energy, Pjotr Tulej from DG Environment, Guy Turner form New Energy Finance, as well as Graeme Sweeney, Chairman of the European Technology Platform for Zero Emission Fossil Fuel Power Plants (ZEP). The panel was moderated by MEP Chris Davis and Jeff Chapman from CCSA.

The aim of the hearing was to identifying appropriate financial mechanisms to enable the 10-12 carbon capture and storage (CCS) projects across Europe to be rolled out by 2015.

To this end the European Union (EU) agreed, as part of the Emission Trading Scheme Directive approved in December 2008, to allocate 300 million EU emission allowances (EUAs) to support the CCS demonstration plants.  

How these EUAs will be spent for the projects is currently being discussed in a so-called comitology process in the EU’s Climate Change Committee, where the European Commission along with national experts will define the detailed criteria and procedures.

One of the debated issues is the way to allocate the EU emission allowances and the risk of investment because of the uncertain future value of the allowances on the open market.  

In addition to the financial risk, Guy Turner explained that despite the newly adopted funding mechanisms for CCS, there is still a funding gap to deliver a sufficiently speedy deployment of CCS by 2020.

Eivind Hoff, Director of Bellona Europa, pointed out that regulation effectively banning coal-fired power plants without CCS, that is, through a CO2 emission performance standard (EPS), could be a way to push the industry to fill that gap.

The funding through the EUAs will be split between two non-competing portfolios of CCS and renewable energy sources. The Commission’s general criteria for both portfolios are level of innovation, technological readiness, scale of technology, risk and the CO2 emission reduction potential.

The European Commission has an ambitious timetable for adopting the criteria and procedures for allocating the 300 million EUAs to CCS and renewables projects entry into operation.

In May 2009, the Commission will make an informal proposal to the Climate Change Committee with a following vote hopefully in September 2009. The publication of the first call for proposals will take place at the earliest in December 2009 and the final deadline for proposals will be hopefully in April 2010.

A shortlist will be established by September 2010 and final selection and award will take place at the end of 2011. The CCS projects are scheduled to start operating by the end of 2015.