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Only single CCS project funded by NER300 amid low CO2 price

05 Jul 2013 17:37:30 | edcm

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Only one project has applied in a second round of selected carbon capture and storage (CCS) and renewable-energy-fuelled electricity projects to be financed via the sale of 100m EU allowances (EUAs). An earlier EU document had listed nine potential projects in advance of member states carrying out eligibility assessments.

Only one proposal passed through to the European Investment Bank (EIB) under the NER300 funding programme by the 3 July 2013 deadline, for a single project in the UK, an EU document shows. No further details of the project were available at the time of writing.

The document also shows a further 32 applications for renewable energy projects for cash from the NER300 fund.

When the Commission announced the scheme in 2010, it said it would raise €4.5bn from the 300m allowances, but depressed carbon prices have brought only half the total the first tranche of sales was expected to raise.

The total sales of 300m allowances were supposed to fund eight CCS projects.

The low number of actual projects funded once again shows that companies are more dependent on direct government funding for their CCS projects, as money originally earmarked through the EU's NER300 fund has fallen short of the sums needed for significant CCS investments because of the low carbon price and the cost of the technology (see EDCM 30 October 2012).

The NER300 sales, which the EIB implements, are widely perceived as bearish for the carbon market as they compound its existing over-supply problem.

The EUAs are sold from the EU's new entrants reserve (NER). At the current carbon price of €4.55/tonne of CO2 equivalent for the benchmark 2013 contract, they are worth a total of €455m.

Last month, the EU Commission said that financing instruments, such as an NER300, would be needed for the next phase of commercial demonstration of CCS technologies for carbon-intensive sectors such as steel (see EDCM 12 June 2013). Marie-Louise du Bois

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