From the “models didn’t predict this” and the “Climate Action” department:
An investigation found that Brussels blew the colossal sum of cash on a drive to build underground storage facilities for CO2 emissions – but no such facilities were ever constructed.
This week the architect of the scheme, a former Lib Dem MEP, admitted this was because officials bungled their predictions for the environmental costs facing businesses.
The revelations, uncovered by the website EUobserver, will heap further pressure on EU chiefs who are already facing increased scrutiny over their spending due to Brexit.
Britain’s departure from the bloc is set to blow a £9 billion a year hole in its budget, with a number of member states actively calling for Brussels’ largesse to be be reined in.
Eurosceptics in the UK have long complained about the cost and red tape related to European environmental regulations which they accuse of stifling entrepreneurial enterprise.
However, many academics and officials have raised concerns about Britain lowering standards once it leaves the EU and the detrimental impact this could have on the public health and the environment.
The reports concern a Carbon Capture and Storage (CCS) project the EU set up in 2007, which was designed to help companies reduce their emissions and so save money on Brussels’ green taxes.
Under the scheme businesses could buy pollution permits, or allowances, from eurocrats the proceeds of which would then be spent by the EU on capturing and storing carbon emissions.
However the fund, called NER300, did not support a single such project after officials catastrophically miscalculated carbon emissions pricing in Europe, which they expected to go up but which actually dropped drastically just after the programme was announced.
Reflecting on the scheme he helped create, former Lib Dem MEP Chris Davies told EUobserver: “The expectation was that the carbon price would rise from thirty euros up to a hundred euros.
“The incentive to not to have to pay a hundred euros a tonne for every tonne of CO2 emitted, was very strong indeed. The assumption was industry would do it, without us requiring any other means. Industry would take all these risks.”
However, he said that when the carbon price crashed – it now stands at just seven euros – the scheme attracted virtually no participants and only ended up funding projects already in the renewable category.
More from the Global CCS Institute:
The failure of NER300
But it should all have been so different. Back in 2008, collaborative advocacy from industry and non-government organisations helped the European Parliament and Member States to secure an innovative funding mechanism for CCS. Thescheme would sell allowances from the EU’s Emissions Trading System (ETS) to create a funding mechanism to support a suite of CCS demonstration projects, as requested by the European Council the year before. With carbon prices heading toward €30/tonne, it was hoped that up to €9 billion would be raised—providing the world’s largest fund for supporting innovative low–carbon technologies. Soon afterward, the European Energy Programme for Recovery (EEPR) selected six projects to receive fast-tracked assistance and a further €1.1 billion of public funding. The future looked bright.
In late December 2012, European Commissioner for Climate Action Connie Hedegaard finally announced the outcome of the first NER300 funding round—but could only award €1.2 billion to 23 innovative renewables projects across Europe. Not one CCS project was funded. What should have been the centrepiece of European CCS efforts had failed to deliver. It had taken EU institutions two years to finalise the programme, and a further two to scrutinise the bidding projects. This was far too long for a supposedly urgent process. But the roots of European difficulties on CCS reach far beyond the administration of the NER300 programme itself.
TWO FUNDING MECHANISMS, TWO FAILURES
Neither of the EC funding approaches has been able to cope with changed circumstances. But the blame must be shared beyond Brussels.
The EEPR funding provided by DG Energy has failed to secure a single project that has been able to move forward. Theproject at Jänschwalde pulled out due to public opposition and the failure of the German Government to pass an adequate CO2 storage law. Other projects have experienced technical delays or an absence of Member State support. Only Rotterdam’s ROAD project continues to sit in the starting blocks, but it is waiting for partners to emerge to share some of the funding gap. Its utility sponsors are unwilling to absorb on their own a financial hit anticipated to be in the region of €100 million. This is understandable from an individual company perspective, but mind-blowingly short-sighted from the energy sector as a whole. Other industrial players need to step up and provide support.
In respect of the NER300 funding process, it was primarily Member States that failed to deliver on the agreed milestones. They were asked to confirm the projects they would support, together with the level of co-funding they would contribute. Only the French Government confirmed co-funding for the proposedsteel mill CCS project at Florange, and €275 million was assigned by the EC. Bizarrely, ArcelorMittal withdrew at the last minute, citing technical problems. The CCS project had become a political football, kicked out of the ground rather than toward the goal.