UPDATE 1-Britain's Drax wins 300 mln euro EU grant to trap and store CO2

Tue Jul 8, 2014 8:01am EDT

(Adds comments, details, background, LONDON dateline)

LONDON, July 8 (Reuters) - British utility Drax has won 300 million euros ($409 million) in EU funding to develop technology to bury carbon emissions from a new coal-fired power plant, the European Commission said on Tuesday.

Drax's White Rose project will receive the cash under an EU scheme to fund renewable energy and other initiatives to help cut greenhouse gas emissions, potentially making it Europe's first commercial-scale carbon capture and storage (CCS) facility.

Drax wants to use the funds to build a 450-megawatt coal-fired plant next to its existing power station in Selby, North Yorkshire, which is the largest single source of CO2 emissions in Britain.

The new plant would be capable of powering 630,000 British homes, with some 1.8 million tonnes of carbon dioxide emissions from the facility being captured and pumped annually into a depleted gas field in the North Sea.

"White Rose will create thousands of green, local jobs and make a real difference to cutting carbon emissions," British Energy and Climate Change Secretary Edward Davey said in a statement.

"And as a world leader in the technology, as carbon capture and storage is commercialised Britain will be in first place to export this knowledge to a decarbonising global economy."

EU Climate Action Commissioner Connie Hedegaard said the 28-nation bloc would award a total 1 billion euros to 19 projects in 12 member states, including a geothermal power plant in Croatia and a concentrated solar power project in Cyprus.

"With these first-of-a-kind projects, we will help protect the climate and make Europe less energy dependent," Hedegaard told reporters in Brussels, adding that the 1 billion euros would leverage additional investment from the private sector of 900 million euros.

"This is a contribution to reducing Europe's energy bill of more than 1 billion euros per day that we pay for our imported fossil fuels," she added.

Funds for the so-called NER300 programme were raised through the sale of 300 million carbon allowances under the EU's Emissions Trading System between 2011 and 2014 - a reserve of permits that had been set aside for new entrants in the scheme.

The Commission, the EU's executive arm, raised more than 2 billion euros, with around 1 billion euros of that going to 20 renewable energy projects since late 2012.

No CCS plants received cash during the first round of NER300 funding because they all withdrew from the competition due to a lack of government support.

Drax won cash in the second round after Britain last December announced 1 billion pounds in support for CCS projects.

CCS

"(Tuesday's) decision sends a strong and positive signal, reaffirming the importance of CCS deployment and that we must keep pushing European projects with the continued support both at EU and member state level," said Graeme Sweeney, chairman of Zero Emissions Platform (ZEP).

Brussels-based ZEP is a coalition of European utilities, oil companies, scientists, academics and environmental campaigners working together to advance CCS technology.

While some have called CCS a "silver bullet" in the fight against climate change, others say it is costly, has significant risks, and has not yet been proven on a large scale.

The Commission said Drax's CCS project, which is expected to capture 90 percent of the new plant's emissions, will reduce greenhouse gases by an amount equivalent to taking more than a million cars off the road.

It added that the 19 projects selected in the latest round of NER300 funding could raise EU renewable energy production by around 8,000 gigawatt-hours, equal to the combined annual electricity consumption of Cyprus and Malta.

($1 = 0.7331 Euros) (Reporting by Michael Szabo; Editing by Jason Neely and Dale Hudson)

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