Thursday, December 10, 2009

A core group of energy pioneers

Any lingering doubts about the European Union's commitment to finding and implementing solutions to climate change should be addressed by the announcement that the European Union Commission is investing over a billion Euros (~$2.4 billlion) into offshore wind and carbon storage projects.

Some of the funds will be used to interconnect German, Swedish and Danish offshore wind farms -- and important step towards the creation of an EU "Supergrid". (GW)

EU clears extra funds for carbon storage, offshore wind

December 10, 2009

The European Commission yesterday (9 December) approved a series of offshore wind and carbon capture and storage (CCS) projects that will receive over €1.5 billion from the EU's economic recovery fund.


In March 2009, EU leaders approved a plan to spend €3.98 billion in support of clean coal projects and offshore wind farms as part of a broader European recovery plan (EurActiv 20/03/09).

Some MEPs nevertheless strongly criticised the plan for leaving out energy-efficiency measures. The European Parliament's industry committee adopted a report calling for money not committed before September 2010 to be redirected to energy efficiency and renewable energy projects (EurActiv 02/04/09).

The compromise struck between the institutions on 16 April allows the European Commission to propose the use of recovery money that is not committed by the end of 2010 for energy-efficiency and renewables projects. However, the EU executive must prove in a report that priority projects will not be implemented (EurActiv 17/04/09). The report is due in March 2010.

Six CCS demonstration projects were deemed mature enough to qualify for the €1 billion designated to support the fledgling technology (see EurActiv LinksDossier).

These include Vattenfall's Jaenshwalde power plant in Germany, Endesa's Compostilla plant in Spain, Maasvlakte plant in the Netherlands, Hatfield in the UK and Belchatow in Poland, which will each receive €180 million. In addition, Enel's Porto-Tolle plant in Italy gets €100 million.

These projects were selected out of a total of 12 proposals, with a further four put on a reserve list should one of the selected projects fall through. But the EU executive stressed that this would be extremely unlikely.

On offshore wind energy, nine projects out of the 29 proposed will share a total of €565 million. These range from €150m for an interconnection of German, Swedish and Danish wind farms in the Kriegers Flak area, to 10 billion for Belgium's Thornton Bank deep-water off-shore park.

Energy Commissioner Andris Piebalgs defended the selection, which was made with a view to rewarding demonstrations that are mature enough to aid economic recovery. The signing of contracts will start this month, and the money will be made available to companies between 2010 and 2012, depending on their stage of development, he said.

According to the commissioner, helping the six CCS projects get off the ground will create a "core group of pioneers".

"Six is really the minimum to start with," Piebalgs said, adding that Europe is the first to contribute public money to real projects. But the EU is still far from achieving its ambition to have 10-12 CCS projects up and running by 2015, in order to make the technology commercially viable by 2020.

"Without CCS, we really can't make a sufficient contribution to capping greenhouse gas emissions," Piebalgs warned. But the technology comes at a high price and would require the EU to look into other financial sources, he added.

The EU is currently debating how to divide the 300 million allowances set aside from the new entrants reserve of the its emissions trading scheme for CCS and innovative renewable energy projects, which the Commission calculates could amount to a €6-billion subsidy at a carbon price of €20 euros. But how meaningful the sum will be is entirely dependent on the development of carbon prices, which the EU hopes will rise from their current lows once stricter auctioning rules kick in after 2012.

Funding for interconnections delayed

The EU is yet to approve a list of infrastructure projects that will soak up the remainder of the recovery funds in the field of energy.

The lion's share of the energy funding – €2.37 billion – was allocated to gas and electricity interconnections, which can be more complicated to agree on, Commissioner Piebalgs admitted. He cited as an example a plan to build an interconnector between Hungary and Romania, which has hit the rocks because Romania is not a member of the Schengen passport-free travel zone.

The main reason for delays on the infrastructure side is patchy information provided by project developers, officials said. The Commission is expected to make a decision on 18 December, which will then have to pass a scrutiny period by the Parliament and member states to be officially adopted in February, an official told EurActiv.
Next steps:

* Dec. 2009: Signing of grant agreements for CCS and offshore wind starts.
* 18 Dec. 2009: Commission to take a decision on infrastructure projects.
* Feb. 2010: Formal approval of infrastructure projects expected.


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