News story

Hendry: Excellent response to EU funding call for CCS and innovative renewables

An impressive total of 14 UK projects have applied for funding from the EU’s New Entrant Reserve (NER) scheme - a fund worth between EUR4.5 …

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

An impressive total of 14 UK projects have applied for funding from the EU’s New Entrant Reserve (NER) scheme - a fund worth between EUR4.5 billion and EUR9 billion to support carbon capture and storage (CCS) and innovative renewable projects across the European Union.

Energy Minister Charles Hendry said:

“The strong level of interest received for CCS projects in particular is heartening - it shows that UK industry is keen to move forward in the development of CCS and confirms the lead that the UK is taking in this critical technology.

“The commitment this Government has shown for CCS is world-leading and it is encouraging to see that UK industry matches this ambition. Cleaner fossil fuel technologies present a huge opportunity for the UK and could potentially support up to 100,000 jobs in the country by 2030.”

The Energy Minister also noted the strong interest in marine energy technologies.

Of the 14 applications received, nine were for CCS projects and five for innovative renewables.

Of the nine CCS applications:

  • three are based in Scotland, six in England - with four in the Humber and two in the Teeside regions;
  • seven are to capture CO2 from coal-fired power stations and two are to capture the emissions from gas-fired plants;
  • two are retrofits to existing power stations, and the other seven are new power plants providing vital additional energy supply capacity; and
  • five are for pre-combustion technology, three for post-combustion and one is for Oxyfuel.

Of the five innovative renewable applications:

  • three are tidal stream projects based in Scotland;
  • one is a wave project based in Scotland; and
  • one is an offshore wind project based in the North East of England.

The Government has until 9 May this year to assess the applications against the NER and UK criteria and decide which to put forward to the European Investment Bank for further consideration.

Given the significant progress expected on CCS in 2011 the Government has decided to publish the CCS Roadmap in the Autumn rather than the Spring as originally planned. This is to ensure that we capture all the lessons learnt from: the Electricity Market Reform consultation, completing the Front End Engineering Design studies for the first demonstration project, finalising our approach to three further demonstrations, as well as assessing the nine projects applying for NER funding.

Notes for editors

  1. The NER is a financing instrument, whereby 300 million allowances under the EU Emissions Trading System are set aside and sold-off to provide funding for innovative renewable and CCS technologies. The scheme is managed jointly by the European Commission, European Investment Bank and Member States. The sale of allowances could raise between €4.5bn (at a carbon price of €15 per allowance, just over today’s price) and €9bn (at a carbon price of €30 per allowance). Successful projects will secure funding for up to 50% of their relevant costs over a 10-year period for CCS / five years for innovative renewables and the maximum number of projects in any Member State is three. Further information on the NER can be found on the European Commission’s dedicated webpages and in the Office of Carbon Capture and Storage (OCCS) NER guidance document.

  2. The following applicants have issued press releases concerning their applications:

  • Scottish and Southern Energy
  • Powerfuel Power Limited
  • Alstom UK Limited
  • Ayrshire Power Limited
  1. By 2020 well over half of the UK’s electricity generation will still be fuelled by coal and gas. That is why CCS is such a crucial element of this Government’s energy and climate change agenda. It is the only technology that can significantly reduce CO2 emissions from fossil fuel power stations - by as much as 90%. IEA analysis has shown that without CCS, halving global emissions by 2050 will be 70 per cent more expensive. And it will play an important role in balancing the electricity system - underpinning intermittent and less flexible contributors like wind and nuclear. Studies by AEA Technology estimate the value to the UK from global markets for new advanced coal and gas-fired generation plant, including that fitted or retrofitted with CCS, could be worth £1.5-3 billion a year by 2020, rising to 3-6.5 billion a year by 2030. This represents the retention or creation of 70,000 - 100,000 high value jobs in the UK by 2030.

  2. The coalition Government is providing up to £1 billion in funding for the first commercial-scale CCS project and is committed to providing public sector investment in three further commercial-scale CCS projects.

Published 17 February 2011