First round of NER300 revenues fail to fund CCS demonstration

Publish date: December 18, 2012

Written by: Sirin Engen

EU Climate Action Commissioner Connie Hedegaard announced today that 23 highly innovative renewable energy demonstration projects will be awarded € 1.2 billion from the first round of the NER300 funding mechanism. But CCS projects in Holland, UK and Romania did not figure on the list. “This is a huge disappointment and a serious set back for CCS in Europe” says Paal Frisvold, Chairman of Bellona Europa.

Even the ULCOS project in Florange, France, was withdrawn at the last minute, but today’s decision to bring forward the 275 million euro funding to the next round, give hope that the French Steel factory in Florange can still be realised once the technology is in place.

Efforts are now made to facilitate an acceleration of the second round of NER 300 funding scheme with a view to funding another three projects maximum out of the remaining 100 million Emission Unit Allowences, hopefully already in 2013 or early 2014. The Dutch Green Hydrogen project and two UK projects could benefit from the second round of funding. So could the Romanian project, Getica.

There is still hope that Europe can see 3-4 demonstration projects by around 2017, which will provide valuable experience for testing capture technologies and storage options at large commercial scale towards 2020, says Frisvold. “But we need better and clearer dialogue between the involved parties, be it the European Commission, Member States governments and the CCS consortia. We cannot afford another failure.”

Renewable projects

The renewable industry was completely unaware of the NER 300 funding scheme until after its adoption. It was Sweden and Austria that insisted on including renewable projects at the last minute of negotiations in the European Council in December 2008, as a compromise to agree to funding CCS demonstration projects.

The renewable projects awarded EU funding today cover a wide range of technologies; bioenergy (including advanced biofuels), concentrated solar power and geothermal power, wind power, ocean energy and smart grids. According to the Commission, the projects will increase the EU’s renewable energy production by around 10 TWh. We are glad the NER 300 funding can stimulate up-scaling of non-commercial renewable projects – which can give European renewable industry a competitive edge.

Rising coal demand

The importance of the continued development of CCS projects was highlighted by the International Energy Agency’s latest report. According to the IEA’s Medium-Term Coal Market Report from 17 December, coal demand is increasing in nearly every region of the world and it is probable that coal will surpass oil as the world’s leading energy source in 2017.

Following the presentation of the report, IEA Executive Director Maria van der Hoeven, said that since “CCS technologies are not taking off as once expected, CO2 emissions will keep growing substantially. Without progress in CCS […] coal faces the risk of a potential climate policy backlash”.

This underlines the need for the Commission and Member States to get it right during the next round of distributing the NER 300 money,” ends Frisvold.