Two weeks after ArcelorMittal pulled out from the Ulcos low-emission steelmaking project in France, EU Climate Commissioner Connie Hedegaard said new EU funding would be available for carbon capture and storage (CCS) projects within 12 months.
Hedegaard also said yesterday (18 December) that she believed some CCS demonstration projects would be ready to receive the EU grants.
“In the New Year we will start a second round of awards and obviously it will not take as long as the first call,” Hedegaard said. “Our intention is that within a 12 months time span, we will be able to award the second round.”
“I have reasons to believe that there will be some CCS projects that make it to the second call,” she added. “That will be where the government confirmation or whatever that is [currently] lacking will be ready.”
An earmarked €275 million of carbon allowances from the New Entrants Reserve (NER300) fund of €1.5 billion will now go forward to the second phase, the commissioner confirmed.
Hedegaard was speaking at a press conference announcing the awards of €1.2 billion to 23 renewable energy projects under the NER300 fund, which was originally set up to provide up to 50% of funding for innovative renewable and CCS projects – so long as member states promised to stump up the other half.
No EU states have been able to provide that sort of guarantee, and the last potential project – the steel giant ArcelorMittal’s planned Ulcos project for the Florange site in northern France – was put on ice earlier this month.
“CCS technologies are not taking off as once expected, which means CO2 emissions will keep growing substantially,” said Maria van der Hoeven, the International Energy Agency (IEA)’s executive director.
The IEA says that without CCS, the cost of reducing emissions to 2005 levels by 2050 will rise by 70%. The agency expects energy sector carbon dioxide emissions to have increased 130% above 2005 levels by that year.
What is CCS?
CCS is an expensive and often-experimental technology, involving the capture of carbon dioxide at the source of production, and transport to geological sites for long-term burial.
>> Read our LinksDossier: Carbon capture and storage
Only 238 megawatts of CCS capacity had been installed globally at the start of 2012, according to GlobalData, but another 10 gigawatts is planned by the decade’s end.
Most of the world’s existing CCS projects have been made financially viable by the pumping of their liquefied carbon byproduct into depleted oil and gas fields to assist in extracting the last remaining drops of fossil fuel.
This has led many environmentalists, already concerned about the potential for CO2 leakage, to question the process’s effectiveness in reducing greenhouse gas emissions.
Jane Paxman, director of 2Co Energy in Britain, told EURACTIV it was an “enormous shame” that no projects had won grants, but that the technology would not change the overall balance of CO2 in the world.
“It might have meant that marginally a bit more [fossil fuels] came from North Sea than the Mideast or Canada,” she said, “but it won’t change demand and therefore the amount of barrels that the world consumes.”
Even so, “it is more responsible if you’re on a road to a fossil-free future to make thorough and effective use of infrastructure in existing fields than it is to go off opening up whole new oil provinces,” she said.
CCS to cut 20% of global CO2 emissions
Around one fifth of the required CO2 emissions reductions by 2050 will need to come from CCS, according to IEA analyses, and those in turn spurred the EU to launch its NER300 programme in 2010.
It was originally expected to raise €4.5 billion of revenues but sagging carbon prices reduced that amount by a factor of three. Yet the scheme remains “very significant”, Paxman said, for its potential to leverage as much again from governments.
The NER300 disburses funds from the sale of 200 million carbon allowances on the EU’s Emissions Trading System to encourage investments in promising low-carbon technologies.
Yesterday’s awards were handed out to eight bioenergy projects, six wind energy schemes, four concentrated solar power projects, three tidal power plants, one distributed renewable management smart grid plan in Belgium, and a geothermal demonstration system in Hungary.
All of these projects must enter into force or start generating renewable energy within four years.
Hedegaard said construction of the projects would employ “several thousands of full time workers” over the next three-four years, and another thousand employees are expected to be kept on once the installations are up and running.
The EU estimates that the resulting combined energy output will increase Europe’s renewable energy production by some 10 terrawatt hours (TWh), the energy equivalent of around one million passenger cars.