European Commission agrees to fund China carbon capture project

25 June 2009 13:05  [Source: ICIS news]

BRUSSELS (ICIS news)--The European Commission on Thursday set out plans to finance the demonstration of carbon capture and geological storage (CCS) in cooperation with China.

The document - adopted by the Commission and set to be discussed later in the day by EU environment ministers - pledges funding of up to €50m ($70m) for the construction and operation phase of the project.

A total budget of €60m has been earmarked to facilitate cooperation with emerging economies on cleaner coal technologies and CCS, said the Commission.

The EU's executive arm estimates that, depending on the choice of technology used, and assuming China introduces some form of carbon pricing instrument, the additional cost of constructing and operating a new power plant equipped with CCS over 25 years would cost €300-€550m.

The Commission said it would work closely with China, EU member states and and industry to secure the additional financing required. It proposed to combine these funding sources in a public-private partnership, possibly in the form of a Special Purpose Vehicle.

The UK has indicated its willingness to give €7m towards such a project if other EU member states make a similar pledge, but other countries are yet to take a stance on the issue. 

Coal, the fossil fuel with the highest emissions of the greenhouse gas carbon dioxide, is China's predominant energy source, contributing 70% to the energy mix.

($1 = €0.72)

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By: Philippa Jones
+44 20 8652 3214

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