The EU approach to financing CCS is part of a broader effort to stimulate the transition to less carbon-intensive energy generation. Financial support for CCS projects consists of two main instruments.
First, the revised Emission Trading Scheme (ETS) Directive (Directive 29/2009/EC) recognises the value of CCS technologies and provides the basis for a mechanism to drive investment in CCS. A European Commission Decision (Commission Decision NER 300 (C (2010) 7499 final)) details a mechanism to grant financial incentives for CCS and renewable energy demonstration projects in the EU.
Second, the 2008 European Economic Recovery Plan (EERP), which provides broad support for the EU economy in response to the global recession, has led to the adoption of a Regulation establishing a programme which gives financial assistance to projects in the field of energy: the 'European Energy Programme for Recovery' (EEPR) Regulation (Regulation No. 663/2009). This Regulation provides the legal basis for EU incentives for CCS, offshore wind energy and gas and electricity infrastructures.
What is their collective effect upon CCS activities?
In order to achieve the EU target of 12 operational CCS demonstration projects by 2020, more investment will be needed in the short and medium term. The aim of the EU financial strategy for CCS is to stimulate private sector investment by means of economic and legal measures which can reduce the initial financial burden on project developers.
What is their relationship with other incentives provided in national laws?
The EU strategy for financing CCS is intended to be complemented by individual Member States' strategies, based upon domestic incentives and public funds for CCS. Although independent, Member State financial initiatives still have to comply with EU competition law and EU legislation on state aid.
The newly amended Guidelines on State Aid for Environmental Protection recognise the tension between national subsidies, fair competition and trade in the EU, and provide legal rules for addressing any potential conflict.