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IP/08/1198

Brussels, 23 July 2008

Commissioner Piebalgs welcomes pioneering decision on state aid for a CO2 capture project

The ESA, EFTA Surveillance Authority, adopted last week a decision not to raise objections to the Norwegian State’s investment in a project in the western part of Norway (Mongstadt) whose objective will be to test, verify and demonstrate different concepts and technologies capable of reducing costs and risks related to large scale CO2 capture. "This decision provides an important precedent for considerations of state aid cases related to projects that will be necessary for further advancement of technologies for capture and underground storage of CO2 ("CCS") from industrial processes using fossil fuels, first and foremost power generation in coal- and gas-fired power plants", said Commissioner Piebalgs.

The Commission highlighted in its recent policy documents the importance of these technologies for future reductions of CO2 emissions and stressed the need to have in Europe a number of projects demonstrating these technologies on a large scale by 2015.

While CCS is expected to be commercially viable in the future, such early testing and demonstration projects are not likely to operate at first in favorable economic conditions allowing them to generate profits for their operators. The Commission has been therefore stressing the importance of public finance in providing effective assistance to such projects.

One of the first cases of active government involvement is the Mongstadt project for whom the Norwegian government notified intended state aid to the EFTA's Surveillance Authority in 2007. Last week's favorable decision is a welcome development which should serve as an encouragement for other European countries with potential suitable CCS projects to make substantial commitments of public resources to further development and demonstration of CCS technologies. So far, the UK is the only other European country with a government scheme for CCS of explicit and substantial character.


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