BRUSSELS (Reuters) - Innovative carbon-trapping technology might barely get past the testing phase in Europe after the economic crisis and a shift to green power destroys incentives, a new study warns.
Massive European investment in renewable energy will reduce demand for carbon emissions permits in 2020, dragging down their price and undermining investment in Carbon Capture and Storage (CCS), says the report "EU Energy Trends to 2030" by the National Technical University of Athens.
The complex computer modeling exercise, commissioned by European Union Energy Commissioner Guenther Oettinger, factors in all of the EU's latest climate and energy legislation, most importantly the 2008 renewable energy directive.
"The lower carbon price does not allow a competitive marketing of CCS," says the report.
The report is correct to say that CCS deployment depends heavily on carbon prices, but they are very hard to predict, said Oettinger's spokeswoman, Marlene Holzner.
The study, led by Professor Pantelis Capros, sees carbon prices rising just 7 percent to the equivalent of 16.5 euros ($21.59) a tonne in 2020 and 18.7 euros a tonne in 2030.
The power industry hopes CCS will allow it to continue burning cheap and abundant coal supplies, trapping and burying waste emissions in underground cavities such as depleted gas wells to prevent them from exacerbating climate change.
But additional costs of around 1 billion euros per power plant have prevented CCS from taking off.
To get past the initial hurdles, the EU plans at least eight demonstration projects in the years ahead and will agree billions of euros of subsidies for them in coming weeks.
But the Greek study cast doubt on whether those subsidies would catalyze any more meaningful investment. "The already planned demonstration power plants will be constructed and only marginal further development is projected until 2030," it said.
Luxembourg Green politician Claude Turmes commented: "This is a step back toward reality, and people are realizing this is a non-mature technology that will be difficult even at demonstration level."
Holzner said many more factors would come into play.
"It was not the aim and would be beyond the scope of this study to take account of all influencing factors of the carbon price," she said. "The current legislation for the emission trading system is only in place until 2020."
"A new legislative proposal for the trading periods after 2020 will be made which will largely be based on the experience made within the third trading period from 2013 - 2020 and in view of reaching the climate change objectives for 2050."
In another study "Power Choices" for power industry body Eurelectric, Professor Capros showed that CCS might become competitive with conventional fossil fuel plants with a carbon price above 30 euros a tonne.
The cost of transporting and storing captured carbon dioxide ranges from 6 to 25 euros a tonne, that report said.
Renewable energy is seen accounting for 80 percent of energy investment in 2015-2020, but then to slow dramatically after the EU's climate targets are met, says the "Energy Trends to 2030" report -- a finding that sparked criticism.
"I find it unrealistic that after 20 years there would suddenly be a dramatic decline in wind power investments," said Christian Kjaer, chief executive of the European Wind Energy Association.
Turmes, who helped broker the EU renewable energy laws in the European Parliament in 2008, said the scenario was not logical given that countries around the North Sea are on the verge of investing heavily in a power grid for massive wind expansion there.
"This is about politics and not realism," he said.
Editing by James Jukwey