Oslo to fund EU carbon storage projects

By Joshua Chaffin in Brussels
Published: May 28 2009 03:00

Efforts to deploy carbon capture and storage technology got a fresh boost yesterday when Norway said it would contribute at least €140m to help fund projects in the European Union.
Jens Stoltenberg, Norway's prime minister, said the technology was an "essential" element in the fight against global warming. The EU has committed to building roughly a dozen CCS pilot plants, which would capture carbon dioxide emissions from power plants and other industrial facilities and then bury them underground.
"Studies show that in the short and medium term, a large share of the world's energy supply will continue to be based on fossil fuels," Mr Stoltenberg said at a CCS conference in Bergen. "At the same time, we must make deep cuts in global greenhouse gas emissions. Developing and promoting the diffusion of CCS technologies will be important in resolving this dilemma."
European leaders courted controversy in March when they agreed to devote €1.05bn from a €5bn ($7bn, £4.3bn) European economic recovery plan to fund CCS projects. CCS projects will also receive revenues from the sale of hundreds of millions of carbon permits in the next phase of the EU emissions trading system.
The debate over CCS is likely to intensify as negotiations heat up over a global climate agreement to replace the Kyoto Protocol.
Several environmentalists and members of the European Parliament have argued that other efforts, such as promoting energy efficiency in buildings and renewable energy, would yield more immediate and cost-effective effects.
Critics have also complained that CCS technology is untested, and that it would prolong the EU's reliance on carbon-emitting fossil fuels such as coal.
But CCS backers - particularly in the energy industry - are urging the European Commission and member states to move more quickly to fund and select projects if the EU is to achieve its goal of reducing greenhouse gas emissions by 20 per cent from 1990 levels by 2020.
"We need another push to get to the next station," one energy executive said, arguing that the quick deployment of pilot plants would be crucial to make it commercially available in a reasonable timeframe.
Although Norway's contribution amounts to a fraction of the roughly €1bn cost of each pilot plant, it comes at a time when the economic crisis has stretched government budgets. Norway's funds will be earmarked from the country's pending contribution to the European Economic Area, of which it is a member.
Norway views CCS as a way to reconcile its ambitions to lead the fight against climate change with its standing as one of the leading oil and gas exporters. It already has pilot plants including the Sleipner facility in the North Sea, which is operated by the state-owned StatoilHydro.
Mr Stoltenberg also called yesterday for greater investments in energy efficiency projects and renewable energy, saying CCS - while "essential" - was not the only tool needed to fight global warming.
Copyright The Financial Times Limited 2009