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Demonstration of the capture and storage of CO2
The Commission presents the financial stakes and a European initiative for an early demonstration of the capture and storage of CO2.
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 23 January 2008 entitled: "Supporting early demonstration of sustainable power generation from fossil fuels" [COM(2008) 13 final – Official Journal C 118 of 15.5.2008].
The use of technologies for capture and storage of CO2 (CCS) is an essential instrument to achieve significant cuts in greenhouse gas emissions, and especially those from power plants fired by fossil fuels, such as coal or gas.
The development and commercial use of these technologies nevertheless represent a very high cost, in the order of several billion euros in total and several hundred million euros per power plant. However, according to the estimates of the European Technology Platform for Zero Emission Fossil Fuel Power Plants (ETP-ZEP), the cost of CCS can be brought down by 50% between now and 2020 if efforts are focused on research & development and demonstration. Furthermore, the planned increase in the cost of acquiring CO2 emission rights for conventional power plants puts the extra cost of the investments in CCS and the operation of such power plants into perspective.
The Commission has proposed a regulatory framework for the deployment of CO2 storage activities consisting of a proposal for a specific Directive on geological storage of CO2 and taking CCS activities into account in the greenhouse gas emission trading scheme. The European Union is also pressing for the inclusion of CCS activities in the appropriate international agreements. For reasons of legal certainty and confidence, it is essential for the Commission proposals to be quickly adopted and transposed and for the changes in international regimes to be ratified by the Member States concerned.
Under the Strategic Energy Technology Plan (SET Plan), the Commission proposes launching a European Industrial Initiative on CO2 capture, transport and storage, starting in 2008. The objective of this initiative would be to serve as a basis for the coordination of demonstration projects and ensure their transparency and visibility.
This initiative would initially consist of a project network, allowing CCS early-movers to exchange information and experience, maximise impact on further research & development and policy-making, optimise costs through shared collective actions (e.g. in relation to the public or third countries) and obtain recognition as parties to a crucial Community initiative (through a European logo). This European Industrial Initiative could subsequently be extended beyond the original project network.
Significant efforts are required on the part of industry, the Member States and the European Community to cover the substantial financial requirements of early CCS demonstration.
European industries using fossil fuels, not only in the energy sector but also in energy-intensive industries, should enter into clear, decisive commitments in favour of demonstration projects. Early investment decisions could generate a real commercial benefit for the enterprises concerned. They will also determine the level of public finance expected.
In fact, in view of the importance of fossil fuels in the energy mix of many Member States, national funding measures should be envisaged, at least temporarily, until the CCS technology becomes competitive. Such support could take the form of State aid, which in this case would be considered as compatible with the Community State aid rules. The Commission will examine such measures on a case-by-case basis.
Furthermore, the Commission will examine which Community resources could be allocated to the development of CCS technologies, for example under the 7th Framework Research and Development Programme. European financial institutions, such as the European Investment Bank, and other specific mechanisms, such as the Structural Funds, for example, could also provide financial support for these projects.
This Communication is part of the "energy and climate change" package launched by the Commission at the beginning of 2008.