Financing instrument for CCS included in the EU’s 2030 climate and energy framework

Financing instrument for CCS included in the EU’s 2030 climate and energy framework

Photo: Press conference by Connie Hedegaard, Commissioner for Climate Action on the second call of the NER 300 funding programme. 08/07/2014 Source: European Commission, Audio-visual services

Financing instrument for CCS included in the EU’s 2030 climate and energy framework

As part of the European Council conclusions on the 2030 framework for climate and energy policies, the EU leaders agreed on the 23rd October to continue and extend the NER300 facility, a financing instrument launched in 2010 which raised over €2 billion for supporting installations of CCS and innovative renewable energy technologies. The new instrument will be “extended to low carbon innovation in industrial sectors” with “the initial endowment increased to 400 million allowances”.

The renewal of financing instrument for CCS alongside other low carbon technologies under the 2030 framework is seen as a welcome step in the right direction by the community of European CCS project proponents.  The members of the European CCS Project Network called for an ‘extended’ NER in a letter to the representatives of the EU Members States in advance of the European Council in June 2014 – a meeting which laid the ground for the final Council conclusions.  According to the signatories of the letter, many of whom were unsuccessful in the first round of the NER300, the efficacy of the new scheme will depend on its design. The overall allocation rules should be made more flexible and take into account the long lead times of CCS projects, their first-of-a-kind nature, and lack of national support schemes that other low carbon technologies benefit from.


In 2012 in the first round of call for proposals under the NER300 the European Commission has awarded over €1.2 billion to 23 innovative renewable energy technology projects. The funds came from the sale of 200 million allowances from the new entrants' reserve (NER) of the EU ETS managed by the European Investment Bank (EIB). The applicant CCS projects were not considered for funding awards for a number of reasons including lack of complementary national-level support, funding gaps and permitting delays.  An over-reliance on trading price of EUAs to support both the capital investment costs and provide long term price signal for commercial operation was a critical factor leading to a failure of CCS projects in the first round. The EIB achieved an average price of €8.05 during the sales of 200 million allowances from the first tranche of the NER300, much below the price levels forecasted at the setup of the NER300 instrument, which greatly reduced the pot of available funds. Moreover, constant low trading price of EUAs reduced the appetite of emitters to include the development of CCS technology in their long term business plans.

In the second round of the NER300 the funds were raised from the sale of remaining 100 million allowances with an average price of €5.48, topped up by the unspent funds from the first call. In total €1 billion has been made available to 19 innovative renewable energy projects and the UK’s White Rose CCS Project which will receive up to €300 million to build the first large-scale oxyfuel CCS power plant in the world with the ability to use biomass fuel for co-firing. Additional backing for the White Rose Project comes from a multi-million GBP contract awarded in December 2013 under the UK CCS commercialisation programme to carry out Front End Engineering and Design (FEED) study and the perspective of an early agreement with the UK government on a contract for difference (CfD) regime to support the operating expenditure of the project.