Mar 04 2015

More NER300 might come from 2018 and yet more from 2020

More NER300 in the period 2018-2025…

Further funding for innovative renewable energy technologies and CCS could come from 2018 under proposals from the European Parliament’s Environment, Public Health and Food Safety Committee, which last Wednesday adopted a Report (unofficial version available here) on the Emission Trading Scheme’s carbon Market Stability Reserve (MSR). The MSR is a measure that would be applied to Europe’s Emissions Trading Scheme to adjust the amount of carbon allowances that are in the market. 300 M allowances might be drawn from the MSR and ‘gradually’ made available in the period 2018-2025 for low carbon projects, according to the Committee’s amendment 18. At the current price of 7 EUR, 300 M allowances would fetch 2.1 bn EUR when monetised.

The Committee wants the scope of the future scheme to be broadened to include so-called ‘Annex 1’ installations. These are the industrial plants covered by this list.

…and even more in the period 2020-2030

EU Heads of State agreed in October 2014 to create ‘NER400’, insisting as they did so on the inclusion of ‘industrial sectors’ in its scope. The EC interpreted that mandate restrictively in its Energy Union Communication of 25 Feb 2015 compared to the position it laid out in January 2014 in the Communication A policy framework for climate and energy in the period from 2020 to 2030.

EC in January 2014

In line with the Union’s innovation and industrial policies, the concept of an expanded NER300 system will, therefore, be explored as a means of directing revenues from the ETS towards the demonstration of innovative low carbon technologies in the industry and power generation sectors.

EC in February 2015

[…]there are additional research priorities which merit a much greater level of collaboration between the Commission and those Member States who want to use these technologies:

  • A forward-looking approach to carbon capture and storage (CCS) and carbon capture and use (CCU) for the power and industrial sectors, which will be critical to reaching the 2050 climate objectives in a cost-effective way. This will require an enabling policy framework, including a reform of the Emissions Trading System and the new Innovation Fund, to increase business and investor clarity, which is needed to further develop this technology.

‘Innovative renewables’, the primary beneficiary of NER300 in its first two rounds, are not linked to ETS-related funding schemes here, nor are non-CCS or non-CCU approaches to decarbonisation in industry.

Member States do not so far share the European Parliament committee’s view that before 2020 there should be an interim scheme. It remains to be seen whether, in the closed-door Council-Parliament negotiations that will now start, the lead MEP in the negotiations, Ivo Belet, can change their minds.