February 10, 2011 / 1:34 PM / 7 years ago

Nine UK carbon capture projects bid for EU funds

LONDON (Reuters) - The UK energy ministry received nine applications by a Wednesday deadline for EU funding to build carbon-capture projects in Britain, a ministry spokesman said, with around 4.5 billion euros ($6.16 billion) at stake.

Three consortia, including Britain’s Scottish and Southern Energy (SSE) and Drax, have announced details of their project applications to date, but the energy ministry declined to give details of the other applicants.

Carbon capture and storage (CCS) is still a commercially unproven technology but is widely seen as a key mechanism to fight climate change by burying greenhouse gas emissions, while maintaining stable energy supply.

Utilities E.ON, RWE npower and EDF Energy, which all own or are planning fossil-fuel fired plants in Britain, said they had not submitted EU funding bids for CCS projects in Britain.

Power producer Drax, which owns one of Europe’s biggest carbon emitting power plants, and France’s Alstom applied for funding to build a 426-megawatt (MW) CCS demonstration project at Drax’s Selby site, the companies said on Thursday.

Britain’s energy network operator National Grid will develop the infrastructure to transport carbon emitted from the plant out to the southern North Sea, where it will be stored.

SSE also applied for money to capture and store carbon emitted from a 385-MW gas-fired unit at its Peterhead power plant in Scotland.

DEPLETED NORTH SEA GAS FIELD

Royal Dutch Shell and oil services company Petrofac will provide the offshore transport and storage elements of the SSE project, which will pump the carbon into a depleted gas field in the North Sea operated by Shell.

Peel Energy also announced it had applied for CCS funding from the EU on Wednesday for a coal and biomass-fueled power station at Hunterston, also in Scotland.

Petrofac is involved in Peel’s Ayrshire power plant as well, along with Korea’s Doosan Power Systems and U.S.-based engineering company Fluor.

Companies seeking EU funding for CCS projects need to lodge applications through their respective countries.

Around eight eligible EU projects are expected to be given a share of the proceeds from the sale of 300 million carbon permits called EU Allowances (EUAs) from the EU Emissions Trading Scheme’s (EU ETS) New Entrants’ Reserve.

The value of the credits is about 4.3 billion euros at the current carbon price, but could rise or fall with the market. The Commission estimates that with contributions from EU governments and the companies themselves, this could rise to 9 billion euros of investment.

Britain is running a separate CCS funding scheme which will cover costs for four projects of up to 9.5 billion pounds ($15.3 billion).

The UK competition was opened to gas-fired projects in November.

Editing by Anthony Barker

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