European Commission eyes CCS for GHG reduction efforts
London, 24 January: The European Commission has proposed financial incentives to stimulate carbon capture and storage (CCS) investment, to help meet the EU’s target to reduce greenhouse gas (GHG) emissions by 20% below 1990 levels by 2020.

State aid for CCS development will be allowed, at the discretion of each EU country, suggested the Commission. This financial support can cover research and development, up-front costs and operational costs.

Around €1 billion is needed between now and 2020 for research and development to make CCS commercially viable, according to the Commission’s proposal. Early demonstration plants, based on a capacity of 300MW, require either an additional up-front cost of €300-500 million ($440-734 million) each or ongoing supplemental revenue of €45-125 million per year over the project’s life, estimates the Commission.

The state aid guidelines for environmental protection tabled by the Commission “open the possibility for innovation”, said competition commissioner Neelie Kroes. This would enable the EU “to be the world leader of the low-carbon economy”, she added.

But environment commissioner Stavros Dimas was more cautious on the technology’s role, saying that CCS is only an “intermediate solution” and that there are still environmental and legal questions to be answered. 

The Commission’s plans also call for the inclusion of installations with CCS technology in the region’s emissions trading scheme from 2013, and that they can opt in to Phase II, which runs from 2008-12. This means that installations will not have to buy EU allowances (EUAs) for any captured and stored carbon dioxide. This could be attractive for power generators in particular, as the Commission has also proposed that – unlike in earlier phases – the power sector receives no free EUAs from 2013.

Kroes is aiming to enact the new aid guidelines in February, she told a press conference.