EU split on carbon capture intensifies

By Joshua Chaffin in Brussels
Published: March 3 2009 20:19

The European Commission’s backing for carbon capture and storage technology has sparked fresh controversy in a €5bn ($6.3bn, £4.5bn) economic stimulus package that has already been riven with infighting among member states.
The package, unveiled in January by José Manuel Barroso, the European commission president, was intended to support long-term EU energy policy while also providing near-term stimulus for an ailing economy.

Carbon capture and storage emerged as one of the biggest winners from the package, snaring €1.25bn to partly fund five test projects in Germany, the UK, the Netherlands, Spain and Poland.
The technology aims to trap carbon emissions from power plants and other industrial polluters and then bury them underground in saline aquifers to prevent the release of greenhouse gases.
Since then, carbon capture technology has become central in a skirmish between member states over funding, which will also support offshore wind and inter-connections for gas pipelines. After some manoeuvring, Italy and France managed to snag an additional €150m of carbon capture and storage projects, according to a revised draft.
Yet some critics are questioning the inclusion of untested technology in the plan, arguing that many of the projects would do little for the economy in the near term because they still require additional financing and regulatory approval that could take years.
“As a stimulus for the short term, I think there are other projects,” Philippe Maystadt, president of the European Investment Bank, recently told the Financial Times, arguing that the money should be devoted to improve energy efficiency of buildings across Europe. “These projects can start right now,” Mr Maystadt said.
Claude Turmes, the Green Party MEP, was more outspoken, arguing that carbon capture technology featured in the plan because of the lobbying efforts of energy companies and as a way to buy political support from member states that might otherwise reject the package.
“The only thing the Barroso people are trying to do is win political support for their plan,” Mr Turmes said.
Ferran Tarradellas, an energy commission spokesperson, defended the carbon capture projects, saying that they would contribute to Europe’s energy security and also create jobs.
“We are talking about big projects that could move very quickly,” Mr Tarradellas said.
The commission has identified energy efficiency as a strategic priority, but Mr Tarradellas said building renovations were still too dispersed to quickly soak up large amounts of money.
Wrangling over the proposal is likely to intensify as policymakers scramble to draft a final version ahead of a two-day meeting of European heads of state starting March 19.
In the meantime, a host of big energy and engineering companies, including Shell, BP, Alstom and GE, among others, are pressing member states to maintain support for carbon capture.
Those companies helped to win billions of euros in funding for a dozen demonstration plants as part of the climate package the EU passed in December. In a recent letter to member states, they pointed to International Energy Agency findings that the cost of containing global warming would be 70 per cent higher without carbon capture and storage.
Supporters also argue that the technology will be essential since rising industrial powers such as China and India and will be burning coal to generate electricity for decades to come.
But some environmental groups note that the technology has not yet been proven to work on an industrial scale and could prove to be an expensive distraction from alternative sources of energy.
Copyright The Financial Times Limited 2009