In a speech given on 10 November 2008, the European Commissioner for Energy, Andris Piebalgs, lent his support to the proposed funding of Carbon Capture and Storage (CCS) demonstration projects from the European Emission Trading Scheme (ETS).

Having recognised the continuing importance of coal in meeting the European Union’s energy needs, the Commissioner argued that the only way the European Union can meet its greenhouse gas emissions targets is through the CCS systems. However, these systems are expensive, adding approximately EUR 1 billion to the cost of a new coal-fired plant. Therefore, to encourage their implementation, the allocation of 500 million ETS allowances, worth approximately EUR 10 billion, has been proposed to fund 12 CCS demonstration projects.

Whilst the Commission is in favour of the ETS funding, it will insist on a clear set of criteria for its application. This will include ensuring the funding is technology neutral, will not result in windfall profits and is compatible with State aid rules. This proposal will be added to those relating to climate protection and renewable energy adopted by the Commission in January 2008. It should form part of the new CCS directive expected at the end of this year.