To maintain its leading global position on climate change, the EU must speed up its funding of carbon capture and storage (CCS) demonstration projects (see Carbon capture and storage). It is more important to show that very large amounts of low-carbon electricity can be generated than it is to debate endlessly about what international targets and timetables should be set. And if CCS works as well as it is hoped, and is then widely and quickly deployed, it will have major benefits, increasing EU energy security by enabling member states to burn more fossil fuels without damaging the climate. EU businesses could also benefit, by become world leaders in CCS technology.
In March 2007, the EU Council of Ministers agreed that 10 to 12 CCS demonstration plants would be funded and operational by 2015. Two and a half years later, not enough practical progress has been made. The December 2008 package of climate agreements says that “up to 300 million” Emissions Trading Scheme (ETS) allowances will be set aside for CCS plants and renewables. However, the value of ETS permits is not fixed – there is no floor price and the recession, which has caused carbon emissions to be lower than they would have been in a growing economy, means that the receipts from permits are lower than expected. In late June 2009, the Commission said that the value of the 300 million permits could be €7 billion (see EurActive.com: EU mulls €7 billion subsidy for carbon capture), but it is unlikely to be this high.
In July 2009, the Economic and Financial Council of Ministers agreed to allocate an additional €1,050m for seven CCS projects, as part of the EU economic recovery plan. This will cover one coal project in Germany, the Netherlands, Poland, Spain and UK, each getting €180 million, plus a coal project in Italy (€100m) and one to transport and store CO2 from a steel plant in France.
The July decision has good features. For example, it covers pre and post-combustion (the former is more effective in climate terms, but cannot be retrofitted, so both need to be demonstrated), and some projects will store CO2 in saline aquifers – which is where it is hoped that much Chinese CO2 can be stored. However, there are still bureaucratic and political hurdles – each of these seven member states will get a subsidy for one project, but the Council listed more than one potential project in Germany, the Netherlands and the UK, so decisions have still to be made between the projects. More importantly, the €180m per project is not enough to get energy companies to build the CCS demonstrations. Therefore, the Commission must make rapid progress on allocating and spending the 300 million ETS permits.