## Direct amendments affecting CCS funding:

The proceeds from auctioning 300 million allowances from the new entrants reserve will be used to support up to 12 CCS demonstration projects and projects demonstrating innovative renewable energy technologies. Projects shall be selected on the basis of objective and transparent criteria that include requirements for knowledge sharing. Support shall be given from the proceeds of these allowances via Member States and shall be complementary to substantial co-financing by the operator of the installation. There is a ceiling per project. No project shall receive support via this mechanism that exceeds 15% of the total number of allowances available for this purpose. The Member State may choose to co-finance the project as well, but will in any case transfer the market value of the attributed allowances to the operator, who will not receive any allowances.

## I ndirect measures that affect CCS:

It is estimated that at least half of the available allowances as of 2013 will be auctioned. All permits will be auctioned for power generators from 2013 onwards. The level of auctioning of allowances for industry not exposed to international competition will increase in a linear manner as proposed by the Commission, but rather than reaching 100% by 2020 it will reach 70%, with a view to reaching 100% by 2027. The share of auctioning revenues that Member States are recommended to use to fight and adapt to climate change mainly within the EU, but also in developing countries, is raised from 20% to 50%. There is optional delay of auctioning if member states meet certain criteria.

Based on these developments there is a substantial amount of the auction revenues that could be put towards CCS related research development and funding. The table below gives makes a few assumptions about EUA prices, percent of permits auctioned and the amount of the 50% of auctions revenues that is earmarked for climate change related projects that gets spent on CCS related activities. We follow the statement that overall auctioning will start at 50% and increase gradually thereafter. Direct CCS funding by way of 300 million permits to auction are available only until 2015 and do not provide all of the required funding for the proposed 10-12 demonstration plants. However, based on the recommendation of 50% of auction revenues be used for climate change related issues, if 25% of this climate change earmarked is used for CCS related activities, then total funding grows from 2.23 billion to 4.3 billion Euro annually over the this phase. Table 7 illustrates the possible CCS related funding according to the following assumptions:

- Column B: 50% of total 2013 cap is auctioned with an incremental increase (3%) per year. This assumption is supported by the fact that member states can delay auctioning in either power sector or non-power sector if they meet certain criteria, and industry at risk of carbon leakage is not subject to auctioning.

• Column C: EUA price of 20€ in 2013 and rising by 2€/year

- Column E: the amendment to the EU ETS directive has the recommendation that member states spend 50% of auction revenues on climate related issues. This column is 50% of total auction revenues at assumed prices and auctioning levels.

- Column F: we assume potentially 25% of total climate related auction revenues could be used for CCS related endeavours. Column F is the sum of column D plus 25% of column E.