Gordon Brown’s proposal for funding technology that would capture and bury carbon emissions underground suffered a significant blow at the EU summit on Thursday.
The European Council disagreed with the Prime Minister over the allocation of funds earned from selling carbon emission allowances to manufacturing industries.
Brown’s plan calls for 500 million pollution permits to provide as much as €15bn (£13.5bn) for testing carbon capture and storage (CCS) technology at a dozen plants by 2015. The council’s proposal only allocates money from 150 million permits for research at 12 sites. Brown and other leaders believe this amount is insufficient to test the full range of CCS technologies.
The European Parliament has already proposed that 350 million permits should be set aside to provide €7.9bn of support funding.
Before the European Council reached their agreement on Thursday, Chris Davies (Lib Dem, UK), the European Parliament’s rapporteur and chief CCS negotiator, announced he intended to cancel a meeting planned for Saturday, at which final details were to be agreed between European Parliament members and Member State governments, if the council could not agree on the 350 million figure.
‘The European Parliament has surrendered a lot in order to facilitate agreement, but for me this is the bottom line,’ he said. ‘I will halt the legislation if the Parliament’s demand is not met.’
The council’s plan also calls for increasing free pollution permits. If passed, industrial sectors would not have to buy more than 70 per cent of their carbon emission allowances at auction in 2020. An earlier proposal from the European Commission required companies to purchase 100 per cent.
It was good news for companies such as German chemical group BASF and others that argued that the added cost of buying CO2 allowances would force them to move production outside Europe. Yet there were some industry giants who were dismayed by the council’s proposals.
Power generation company Alstom sent an open letter to all EU heads of government in advance of the council meeting, calling on members to get in line with the European Parliament’s proposal. The letter was supported by 20 other organisations including E.ON, BP, Shell, General Electric and SINTEF.
Joan MacNaughton, Alstom’s senior vice president of power and environmental policies, stated that Alstom has developed three technologies for carbon capture: advanced amine scrubbing, chilled ammonia process and oxy-firing.
‘We expect to offer CCS technologies from about 2015, assuming that the policy and financial conditions for CCS to be deployed are met, which include the necessity of financing the industrial scale demonstration projects called for in this letter,’ she said. ‘If provision is not made in this legislative package, the roll out of CCS will be delayed by some years with major ramifications for the fight against climate change – the time for action is now.’
MacNaughton said it was not just the suppliers of CCS technology and equipment who are arguing this.
‘As the 20 signatures on the letter to the European Council show, Alstom’s views are shared by the electricity generators themselves and by leading oil and gas companies as well as by a large number of non-governmental organisations,’ she said.
‘We are hopeful that the European Council will make the decisions that are necessary to make progress on ensuring that CCS technology can play a vital role in addressing climate change.’