Discussions between EU policymakers and energy sector stakeholders reveal sharp differences about how, and by whom, expensive CO2 capture and other ‘green’ technologies should be financed.
- Money’s tight
On 21 February, EU Energy Commissioner Andris Piebalgs reportedly told a group of representatives for 14 major energy sector firms that, until 2013 and possibly beyond, “there is no money” in the EU budget for supporting carbon capture and storage (CCS) projects.
CCS is considered a crucial technology for the prevention of CO2 emissions during the production of electricity in coal-fired power plants. But the techology is highly expensive, and both public authorities and the private sector have been reluctant to offer the financing necessary to jump start the uptake of CCS on a commercial scale.
The European Investment Bank (EIB) in 2007 put €8.2bn into green technology financing, and Citigroup is expected to invest €50 bn over the next five years in clean energies.
But Europe’s overall investments and venture capital flows into the sector have been steadily declining since the 1980s, and currently amount to only one-third of US efforts, according to figures presented during the closing plenary of the 21-22 February European Business Summit (EBS) in Brussels.
The energy sector “does not invest”, said Glyn Evans of the Commission’s Transport and Energy Directorate, who was among the panellists who debated the issue during a 26 February conference in Brussels.
- Carbon pricing
Most experts agree that the right price signals for carbon would encourage the private sector to sink more money into more expensive low carbon technologies, particularly if non-emitted CO2 can be credited to companies and sold at a high price in the EU’s (and eventually a global) carbon market.
Brussels has responded by revising the rules for the 2007-2013 trading period of the EU Emissions Trading Scheme (EU ETS) in order to allow CO2 captured through CCS to be sold in the form of emissions permits (EURACTIV 16/11/07).
But building CCS plants will become profitable only if the price per tonne of CO2 increases considerably to €40 or €50, according to Neil Eckert of the carbon-trading firm Climate Exchange. Currently, the CO2 price is hovering around the €20 mark, according to the latest figures cited by EU Environment Commission Stavros Dimas during the EBS.
- ETS auction revenues
The Commission has floated the idea of siphoning off a certain percentage of the proceeds obtained through the auctioning of CO2 permits under the EU ETS in order to transfer those monies towards a fund for clean technologies.
But Peter Vis of EU Energy Commissioner Andris Piebalgs’ cabinet says this is a “tricky issue” for member states, who are opposed to Brussels setting ‘earmarks’, or percentage-based obligations, on how the proceeds from auctioning should be spent (see EURACTIV 11/02/08).
Member states are also opposed to any specific time-frame and target for committing funds to the SET Plan, according to Evans.
Energy ministers will be in Brussels on 28 February to discuss the SET Plan during a meeting of the Energy Council. Apart from financing issues, ministers are expected to discuss the plan’s overall strategy.
Council sources indicate that Austria, for example, is opposed to the inclusion of nuclear fission as one the focal points of the SET Plan.