CCS demos at risk, says Eurelectric

20 September 2009


Plans to establish up to 12 carbon capture and storage (CCS) demonstration projects across Europe are at risk unless sufficient and timely financial resources are made available by the European Union and Member States, according to Eurelectric.

The Brussels-based industry association has published a paper commenting on plans to finance the proposed CCS projects with funds from the EU Emission Trading Scheme’s New Entrants’ Reserve (NER) and the European Economic Programme for Recovery (EEPR), details of which are being discussed in Brussels.

It believes that current proposals relating to project costs and project selection could mean that only a small number of projects in a limited number of countries will be realised, and that this would jeopardise the EU’s long and medium-term climate goals.

Eurelectric says that the proposed limit of 50 per cent of relevant project costs that can be covered by the two sources of funding is too restrictive, and warns that both operational and capital costs should be recognised as relevant costs.

It has also called on the European Commission to take a leading role in project selection and on Member States to facilitate the timely completion of the projects.

In 2007 the European Commission proposed called for the construction of 12 CCS demonstration projects to help boost development of the technology and cut carbon emissions. However, lack of access to funding could become a key obstacle to the realisation of these projects, says Eurelectric, which estimated in October 2008 that an additional EUR9 billion would be required to fund the proposed projects.

Eurelectrc also argues that rather than setting an exact minimum size of 250 MW for each project, projects should be run on a scale that will enable the next step project to be constructed at full commercial size. And while the organization largely supports the proposed project selection criteria, it wants member states rather than project backers to bear the risk of a shortfall in funding for the projects.

Under current proposals, the demonstration projects will have to bid for EU funds on the basis of the number of emission allowances it is estimated that they will require. This, says Eurelectric, will create a price-risk to the bidder.




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