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European Commission
03 February 2010

Funding rules for green energy projects get go-ahead

EU member states have backed European Commission proposals on funding carbon capture and storage (CCS) and renewable energy technologies. The proposed rules would govern the allocation of 300 million emission allowances that have been earmarked to fund demonstration projects.

The allowances will come from the new entrants` reserve (NER) created under the revised Emissions Trading Directive.

The positive vote was given by the EU Climate Change Committee, comprising representatives of the 27 member states, on 2 February. The draft `NER 300` Decision now goes to the European Parliament and the Council for scrutiny, after which it will be adopted by the Commission.
  
The committee`s decision backs the four key elements of the Commission`s proposal. These are:

- European approach to project selection with involvement of the European Investment Bank (EIB), to ensure a comprehensive technology portfolio
- European approach to monetisation of the allowances, which will be sold by the EIB and distributed to the Member States for project support
- strong role for Member States in determining which projects are eligible and are suitable for support
- good balance between CCS and renewables demonstration, determined by demonstration needs.

Other important elements of the Decision include the following:

- at least one demonstration project will be awarded per Member State, but no more than three
- the NER will fund in principle 50% of the additional costs of demonstration
- member states` role in the selection process has been reinforced by a consultation step on the draft list of projects, before the Commission takes the final award decisions

Next and future steps

Assuming the European Parliament and the Council of Ministers raise no objections, the text would be adopted by the Commission in May 2010.

The call for proposals for the first round of projects would be issued shortly afterwards. Member states would subsequently submit projects to the EIB by the end of 2010, and the EIB`s due diligence and assessment will take place in 2011 so as to allow the final Commission award decisions to be made by end 2011. This timetable should ensure that CCS demonstration projects can be up and running by the end of 2015, as requested by the European Council.