Feedback to the Commission’s proposal for revision of the EU ETS

ETS feedback cover

Publisher: Bellona Europa

The IPCC’s 5th Assessment Report makes clear the necessity of Carbon Capture and Storage (CCS) and negative emissions, attained via Bio-CCS, in halting global average temperature rise below 2°C. The Report warns that the exclusion of this technology from the mitigation portfolio would entail abatement costs more than doubling. Moreover, it is clear that the large emissions from energy-intensive industries like steel, cement and chemicals cannot be deeply reduced without CCS. In the light of these facts, the slow deployment of CCS in Europe is reason for great concern. Bellona, therefore, sees the Innovation Fund design as a crucial factor to enable strategic CCS deployment.

Bellona welcomes the European Commission’s proposal to continue the funding support for low-carbon innovation. Drawing on the NER300 experience, Bellona provides a number of recommendations for defining the Innovation Fund. Bellona believes that the Innovation Fund’s main objective is to enable Europe to reach its climate targets. As the Energy Roadmap 2050 spells out, the EU will have to decarbonise its economy by reducing 80-95% of its greenhouse gas emissions compared to 1990 levels by 2050. This in turn will be dependent on the large scale deployment of CCS technologies. The Innovation Fund will play an important role in fostering deployment of CCS and helping to reach the 2050 targets cost-effectively.

Europe’s electricity system is in the middle of a period of profound change and reform. Therefore, it is unavoidable that the energy and industrial products market landscapes in 2021 will look a lot different from that observed today and therefore Bellona believes it to be unwise to agree on too prescriptive selection criteria for the Innovation Fund. At this stage Bellona’s main recommendation would be for the Innovation Fund’s eligibility criteria to be as flexible as possible.

The following pages outline Bellona’s reflections on central aspects of design of the Innovation Fund and its relation to other relevant mechanisms such as the Modernisation Fund and Connecting Europe Facility.

Bellona Feedback to EC ETS revision proposal_Sept 2015