Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Supporting early demonstration of sustainable power generation from fossil fuels {COM(2008) 30 final} {SEC(2008) 47} {SEC(2008) 48}
Date: 2008-01-23
Institutions: European Commission
Subjects: energy policy, energy production, energy technology, financing, fossil fuel, greenhouse gas, reduction of gas emissions, research and development, sustainable development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.1.2008 
COM(2008) 13 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Supporting Early Demonstration of Sustainable Power Generation from Fossil Fuels 

{COM(2008) 30 final} 
{SEC(2008) 47} 
{SEC(2008) 48} 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

5.1. 

5.2. 

5.3. 

6. 

7. 

Introduction .................................................................................................................. 3 

Costs and benefits of CCS............................................................................................ 4 

Overcoming obstacles to CCS ..................................................................................... 5 

An EU Structure to stimulate the demonstration of CCS in Power Plants .................. 6 

Catalyzing the finance for CCS.................................................................................... 8 

Mobilizing decisive industry commitment will be crucial............................................ 8 

Paving the way for strong Member States' involvement .............................................. 9 

Identifying sources of financing at EU level .............................................................. 10 

Preparing early for wide-scale deployment................................................................ 10 

Conclusions ................................................................................................................ 11

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Supporting Early Demonstration of Sustainable Power Generation from Fossil Fuels 

(Text with EEA relevance) 

1. 

INTRODUCTION 

Recognizing  that  human  activities  contribute  significantly  to  climate  change,  the  EU  has 
adopted  ambitious  targets  for  reducing  the  emissions  of  green  house  gases  in  the  coming 
decades.  These  targets  will  not  be  achieved  without  significant  reduction  of  CO2  emissions 
from  the  energy  sector,  where  the  use  of  fossil  fuels,  primarily  coal  and  gas,  in  power 
generation leads to approximately 40% of all CO2 emissions in the EU.  

As  fossil  fuels  remain  important  parts  of  the  EU  and  global  energy  mix,  strategies  for 
addressing climate change must include solutions for power generation from fossil fuels with 
radically  reduced  carbon  footprint.  In  this  context,  technologies  for  capture  and  storage  of 
CO2 (CCS) represent a crucial element in a portfolio of existing and emerging technologies 
with  the  potential  to  bring  the  cuts  of  CO2  emissions  needed  for  meeting  targets  beyond 
20201. 

Wide-scale application of CCS in power plants can be commercially feasible in 10-15 years, 
enabling CCS by 2020 or soon after to stand on its own feet in an Emission Trading Scheme 
(ETS) -driven system as a crucial instrument for the elimination of CO2 emissions from fossil 
fuels in power generation.  

This  will  not  happen  without  an  immediate  start  to  necessary  preparatory  steps;  early 
demonstration  is  particularly  needed  for  CCS  technologies,  already  globally  developed  and 
used  in  other  applications,  to  be  adequately  adapted  for  a  large-scale  application  in  power 
generation. 

Calling  for  enabling  low-CO2  power  generation  from  fossil  fuels  by  2020,  the  European 
Council endorsed in March 2007 the Commission's intention to stimulate the construction and 
operation by 2015 of up to 12 demonstration plants of sustainable fossil fuel technologies in 
commercial power generation.  

1 

While  improvements  in  combustion  efficiencies  will be  indispensable,  they  alone  will  not  deliver  the 
necessary reduction of CO2 emissions. 

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In  November  2007,  the  EU  Strategic  Energy  Technology  Plan2  (SET-Plan)  recognized  the 
demonstration of the use of CCS in fossil fuels-based power generation as one of the areas on 
which European technology  development should focus resources. This will allow Europe to 
capitalize  on  achievements  to  date  and  translate  its  current  lead  in  CCS  development  into 
commercial opportunities for European businesses, creating new high-skilled jobs in Europe.  

Complementing  the  Commission  proposal  for  a  Directive  on  Geological  Storage  of  CO2 
creating the legal framework for CCS in the EU, the present Communication takes the efforts 
on  CCS  forward,  aiming  at  the  creation  of  a  structure  to  coordinate  and  effectively  support 
large-scale  CCS  demonstrations  and  creating  conditions  for  bold  industrial  investments  in  a 
series of plants. These investments will need to be sustained for a relatively extensive period 
of time, starting now and lasting until 2020 and possibly even beyond. 

It  is  imperative  that  European  efforts  on  CCS  demonstration  within  an  integrated  policy 
framework  including  focused  R&D  efforts  and  public  awareness  and  acceptance  measures 
start as soon as possible. A delay of 7 years in demonstration leading to same delay in global 
introduction of CCS can mean over 90 Gt of avoidable CO2 emissions being released by 2050 
worldwide3, equivalent to over 20 years of current overall EU emissions of CO2. 

2. 

COSTS AND BENEFITS OF CCS 

The investments to bring CCS to market are substantial. Around €1bn will have to be spent 
between now and 2020 on R&D activities to bring CCS technologies to a state in which they 
can be widely deployed commercially4. 

In addition, early demonstration of CCS in industrial-scale power plants will require further 
spending in the order of billions of euros: at current technology prices, up-front investment for 
CCS-equipped  plants  is  due  to  the  costs  of  capture  elements  and  transportation  and  storage 
equipment approximately 30-70% (i.e. several hundred million euros per plant) more than for 
standard plants; moreover, operating costs are currently 25-75% more than in non-CCS coal-
fired plants, mostly due to efficiency losses and costs of capture and CO2 transport. 

However,  the  European  Technology  Platform  for  Zero  Emission  Fossil  Fuel  Power  Plant 
(ETP-ZEP),  gathering  European  energy  companies,  equipment  suppliers  and  oil/gas 
businesses  as  well  as  NGOs,  estimates  that  with  a  focused  R&D  and  demonstration  effort, 
costs of CCS can be brought down by 50% between now and 2020, facilitating commercial 
deployment5.  Incremental  capital  and  operating  costs  associated  with  CCS  are  expected  to 
drop  further  thereafter  through  learning  curve  effects  and  economies  of  scale  as  generally 
observable in industrial technology development.  

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The  SET-Plan  provides  policy  orientation  for  European  R&D  efforts,  identifying  several  key 
technologies required for its vision of a Europe with a thriving and sustainable economy keeping world 
leadership in a diverse portfolio of clean, efficient and low-carbon energy technologies. 
IAES. 
Industry estimates; see also IAES for details. 
www.zero-emissionplatform.eu. 

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Investment  in  the  development  and  deployment  of  CCS  technologies  will  bring  major 
benefits.  International  Energy  Agency  (IEA)  analyses,  using  several  scenarios  to  2050  with 
varying  conditions,  show  that  CCS  can  contribute  between  20  and  28%  of  the  achievable 
global CO2 emission reductions6, complementing those from efficiency and renewables. 

In the EU alone, power sector CO2 emissions reductions through CCS will reach in a market-
based scenario 161 Mt in 2030 and 800-850 Mt in 20507, representing respectively 3.7% and 
18-20%  of  current  overall  CO2  emission  levels.  In  addition  to  its  deployment  in  power 
generation,  CCS  may  provide  solutions  for  energy  intensive  industries,  contributing 
significantly to reducing the emissions also in those industrial sectors. 

CCS will be equally important for managing future CO2 emissions of countries such as China 
or  India,  already  the  largest  coal  users  and  emitters8.  Maintaining  the  EU's  global  lead  in 
developing CCS technologies and their early market deployment in the EU will generate new 
commercial opportunities for European businesses in these countries. 

If  efforts  to  make  CCS  commercially  feasible  in  the  EU  by  2020  are  not  supported  by 
policies, new coal-fired power plants may be built without CCS or retrofitting features. This 
would risk locking carbon-intensive technologies for several decades into as much as 70GW 
of capacity installed in the coming 10-15 years, representing over a third of the current coal-
fired capacity.  

3. 

OVERCOMING OBSTACLES TO CCS 

First steps to enabling CCS in power generation can be taken without  substantial additional 
costs.  The  Commission's  proposal  for  CCS  Directive  aims  to  resolve  all  the  major  CCS-
related legislative issues and to provide a comprehensive regulatory framework to ensure the 
safety of CCS deployment. With risks mitigated, legal barriers to CCS can be addressed and 
the proposal includes the appropriate provisions. Furthermore, the Commission confirms that 
the current ETS, before 2012, can recognize CO2 captured and safely stored as not emitted9.  

With  active  involvement  of  the  European  Commission,  changes  in  international  regimes  as 
regards CCS acceptance have recently taken place10. The changes show that the EU can take 
leadership  in  shaping  international  regulation  for  CCS.  Once  the  amendments  are  ratified, 
large storage capacities under the North Sea seabed can be opened up. 

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IEA Energy Technology Perspectives 2050 and Stern Review. 
Impact Assessments for the CCS Directive and the SET Plan. 
Two-thirds of the increase in global coal use will come from China and India. Already today, one new 
coal-fired power plant is put into operation every week somewhere in the world. 
CCS projects can be opted in for 2008-2012. 
Following  the  amendments  to  the  1996  Protocol  to  the  Convention  on  the  Prevention  of  Marine 
Pollution  by  Dumping  Wastes  and  Other  Matter  (the  "London  Protocol"),  an  agreement  of  signatory 
parties  to  The  Convention  for  the  Protection  of  Marine  Environment  of  the  North-East  Atlantic 
("OSPAR Convention") was for instance reached in June 2007 enabling CCS to be considered under the 
Convention. 

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To provide the necessary legal certainty to operators and gain public confidence in the safety 
of CCS, it will be crucial that the Commission proposals be quickly adopted and transposed 
and  that  the  changes  in  international  regimes  be  ratified  speedily  by  the  Member  States 
concerned. Demonstration, continued research and information transparency will also provide 
reassurance  to  the  public  on  the  overall  safety  of  the  process.  Open  and  coordinated 
information activities will be necessary. 

Economic  hurdles for CCS will  take more time to overcome. Even with the cost reductions 
expected from research and demonstration, the deployment of CCS will mean increased fixed 
as well as variable costs compared to power generation without CCS. However, industry and 
independent expert opinions concur11 that at CO2 prices around or even below 35€/tCO2, and 
assuming full recognition of CCS in ETS, power plants using CCS after 2020 will not be at a 
competitive  disadvantage  vis-à-vis  standard  power  plants12  because  the  costs  of  CO2 
avoidance through CCS will be at least equal if not lower than the cost of acquiring emission 
rights.  

To  provide  long-term  clarity  on  the  future  of  ETS,  the  Commission  is  further  making  a 
legislative  proposal  for  the  post-2012  ETS.  This  proposal  includes  recognition  of  CCS  as  a 
legitimate emission-reduction technology, establishing a sound basis for long-term economics 
of CCS in the EU.  

4. 

AN  EU  STRUCTURE  TO  STIMULATE  THE  DEMONSTRATION  OF  CCS  IN  POWER 
PLANTS  

Pursuant  to  the  European  Council  Conclusions  of  March  2007,  the  SET-Plan  creates  a 
framework within which CCS development can be brought forward. It identifies CCS as one 
of the strategic energy technologies and sets the time horizon of 2020 for making its use in 
power  generation  a  realistic  option,  recognizing  that  Europe  needs  to  proceed  with  the 
demonstration  of  these  technologies  in  large-scale  power  generation  while  improving  them 
through continuous R&D. CCS demonstration can thus be a new case of a European initiative 
under the SET-Plan, demonstrating the merits of concerted European effort.  

CCS  technologies  are  already  used  in  industry  but  will  need  to  be  adapted  for  use  in  large-
scale  power  plants  and  improved  through  advanced  R&D.  European  industry  is  clearly 
involved13  and  strategic  research  needs  are  well  defined14.  Over  20  potential  demonstration 
projects have been signalled by European industry in the past 12-18 months15.  

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ETP-ZEP, IEA, the Stern Review, and others (IAES). 
In  the  period  until  2020  or  so,  the  incremental  costs  incurred  by  early  CCS  demonstration  projects 
would correspond to significantly higher CO2 prices (up to 70 €/tCO2). 
European energy companies, equipment suppliers and oil/gas businesses as well as NGOs are actively 
involved in the ETP-ZEP.  
Priorities  for  European  R&D  on  CCS  have  been  identified  on  the  basis  of  EU-supported  R&D  and 
knowledge and experience in the ETP-ZEP (IAES). 
IAES. 

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Bringing  a  sufficient  number  of  them  to  realization  in  the  required  time  necessitates  a 
concerted action by European industry, Member States and the European Community. Several 
European  countries  have  announced  initiatives  to  support  demonstration  projects  on  their 
territories16.  

A  coherent  and  coordinated  EU-level  action  can  add  value  and  enhance  the  overall  impact, 
whilst  respecting  the  autonomy  of  national  initiatives.  As  outlined  in  the  SET-Plan  and  to 
stimulate  at  EU  level  the  effective  demonstration  of  sustainable  fossil  fuel  technologies  in 
commercial power generation, the Commission proposes to launch a European Industrial 
Initiative on CO2 capture, transport and storage starting in 2008. While stimulating large-
scale  demonstration,  this  Initiative  will  also  aim  at  addressing  in  an  integrated  manner  the 
need for continuous research and for increasing public awareness and acceptance. 

To  secure  an  instant  effect  of  the  Initiative,  the  Commission  will  set  up  in  2008  a  Support 
Action  under  FP7  to  create  and  animate  a  network  of  CCS  demonstration  projects.  The 
Commission will invite projects fulfilling minimum qualification criteria17 to henceforth come 
forward to benefit from European action. 

In this way, the Commission will provide first movers a means of coordination, exchange of 
information and experience and identification of best practices. Information gathered will help 
focus  policies  establishing  a  long-term  value  chain  for  CO2  and  will  guide  coherent  and 
effective interaction of participating projects with related R&D undertaken across the EU. 

The  Commission  will  ensure  that  verification  and  acceptance  of  projects  into  the  network 
happens  in  close  consultation  with  Member  States,  experts  from  European  industry  and 
representatives of civic society. 

In  exchange  for  sharing  of  information  on  progress  and  experience,  projects  entering  the 
project network will gain visibility and a marketable identity ("a European logo") as parts of 
an  EU-driven  initiative.  Recognition  of  contribution  to  a  common  European  cause  can 
facilitate projects' access to financial support at national, Community and international levels. 
Public  awareness  actions  and  interaction  with  partners  in  third  countries  undertaken 
collectively  in  a  coordinated  manner  will  be  more  cost-efficient  and  have  higher  impact, 
providing clear benefits for all projects. 

The Governance instruments outlined in the SET-Plan will be applied to steer the actions and 
further  development  of  the  European  Industrial  Initiative  on  CCS18.  In  particular,  the 
European Community Steering Group on Strategic Energy Technologies, in close cooperation 
with the stakeholders' initiatives such as ETP-ZEP, will be crucial for assessing the possibility 
of extending the scope of the European Industrial Initiative beyond a project network and in 
determining financing options for such extension of scope. 

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UK, Netherlands, and Norway; in preparation in Poland, Germany and Spain. 
See IAES for a preliminary opinion on the criteria to be used. 
In  particular,  the  European  Community  Steering  Group  on  Strategic  Energy  Technologies  and  the 
Energy Technology Information System. Furthermore, the Research Alliance might align existing R&D 
activities in Europe in the relevant fields. 

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Given  the  importance  of  CCS  on  the  global  scale,  it  will  be  important  to  include  an 
international dimension, by developing and accelerating the ongoing European collaboration 
with  China  on  CCS  demonstration  and  expanding  to  other  key  emerging  economies19.  Of 
equal importance will be a systematic cooperation with other advanced economies developing 
CCS technologies for use in power generation. 

5. 

CATALYZING THE FINANCE FOR CCS  

Early  demonstration  will  need  to  cover  substantial  additional  capital  requirements  and 
increased operating costs20. 

The European energy businesses involved in power generation from fossil fuels will gain in 
CCS an important instrument enabling them to remain important players in European energy 
landscape  and  providing  also  new  business  opportunities.  They  can  be  therefore  rightly 
expected  to  make  significant  commitments  of  their  own  resources  in  the  interest  of  early 
demonstration. Public funds may be also needed for some projects, albeit for a limited time of 
the demonstration period and at levels depending on the future development of ETS prices.  

As the financial requirements of CCS demonstration represent a major hurdle, the availability 
of  such  resources  may  condition  the  number  of  CCS  projects  undertaken  in  Europe  and 
ultimately determine the success of CCS in Europe. While the Commission has significantly 
increased  resources  available  for  Clean  Coal  and  CCS21,  it  can  under  current  budgetary 
circumstances  provide  only  a  minimum  part  of  the  support  necessary  to  ensure  that 
sustainable power generation from fossil fuels is brought to the market. 

5.1. 

Mobilizing decisive industry commitment will be crucial 

The energy industry has demonstrated through the ETP-ZEP a vital initiative on CCS and has 
been  devoting  resources  to  R&D  and  pilot  projects  for  several  years.  However,  clear 
commitments of substantial resources to large-scale demonstration have been scarcer.  

ETP-ZEP published in October 2007 its vision of a Flagship Programme, aiming in particular 
at the coordinated construction and operation of a set of CCS demonstration projects by 2015. 
The  programme  specifications  identified  the  need  for  financial  support  but  most  industry 
players  have  yet  to  define  the  size  and  timing  of  own  financial  commitments  to  individual 
projects. 

19 

20 

21 

In  addition  to  its  continued  engagement  with  China  (namely  through  the  "Near-Zero  Emission  Coal 
project - NZEC" following on the heals of the 2005 EU-China partnership on Climate change and the 
subsequent 2006 Memorandum of Understanding), the Commission also laid the groundwork in 2007 
for CCS collaboration with India and South Africa. 
Equipping  a  new  power  plant  with  elements  needed  for  early  demonstration  of  the  full  CO2  capture, 
transport  and  storage  chain  would  entail  incremental  costs  requiring  (for  a  300MW  plant)  either  an 
additional upfront capital allocation of roughly €300-500m or ongoing additional revenue of €45-125m 
per year over the life of the project. 
While there was no "Clean Coal" action in FP6, the "CCS" action disposed of allocations of €15-20m 
on annualized basis. The combined allocations for "Clean Coal" and "CCS' actions in FP7 will use more 
than double. In addition, part of the annual sum of ca € 9m dedicated to coal-related research from the 
Research Fund for Coal and Steel will continue to go to complementary R&D. 

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If fossil fuels are to continue playing their valuable role in the energy mix, it is crucial that 
European  industry  associated  with  them  makes  clear,  early  and  decisive  commitments.  In 
addition to the power sector, energy intensive industries may want to come forward with their 
own ideas for the development of CCS in their sectors. The inevitability of action on climate 
change  offers  power  generators  and  other  businesses  prepared  to  move  early  into  the  CCS 
market the possibility of a real commercial benefit. 

The dedication of substantial resources by companies is a precondition for the stimulation of 
sustainable  fossil  fuel  technologies  in  commercial  power  generation.  Without  bold  funding 
decisions by the companies at the earliest opportunity, complementary public funding may not 
be triggered. 

The longer the power industry takes to start embracing the CCS technology, the more policy-
makers will be obliged to look at the option of compulsory application of CCS technology as 
the only way forward. 

5.2. 

Paving the way for strong Member States' involvement 

As fossil fuels represent a dominant part of the energy mix in a number of Member States and 
are  expected  to  play  a  long-term  role  in  their  security  of  supply  and  competitiveness,  a 
number of EU countries have every interest in ensuring the development of CCS. It is up to 
each  Member  State  to  decide  how  it  will  support  CCS  demonstration  in  addition  to  R&D, 
addressing the higher up-front and operational costs.  

Some Member States have already identified possible approaches (including feed-in tariffs or 
up-front  investment  grants).  However,  the  suitability  of  concrete  measures  can  only  be 
assessed  on  a  case-by-case  basis,  and  it  is  also  up  to  each  Member  State  to  decide  how  its 
support  scheme  can  be  financed.  Use  of  some  revenues  coming  from  auctioning  under  the 
ETS  could  be  appropriate.  EU  Structural  and  Cohesion  Funds  can  be  a  partial  source  of 
funding in some Member States22.  

Some national support measures to assist demonstration projects, which represent by far the 
highest  cost  of  enabling  CCS  technologies,  are  likely  to  entail  state  aid.  The  Commission 
expects  this  support  to  be  a  temporary  assistance23  until  such  technology  becomes 
competitive.  The  Commission  is  indicating  in  the  revision  of  the  Community  guidelines  on 
state aid for environmental protection24 the legal grounds for declaring compatible state aid to 
CCS demonstration power plants25. 

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25 

Although no Member State has created specific provisions in their operating plans for the period 2007-
2013,  some  assistance  to  CCS  demonstration  power  plants  could  fall  within  planned  research  and 
innovation  activities.  Opportunity  for  amendments  to  explicitly  cover  such  plants  can  arise  following 
strategic reviews of programmes. 
After  the  demonstration  period,  CCS  will  be  expected  to  compete  on  a  commercial  basis,  within  the 
future ETS. 
SEC(2008) 64 adopted concurrently. 
The guidelines state that the use of CCS in power generation, practically non-existent to date, is likely 
to be limited in the next decade mainly to demonstration projects. Insofar as projects are not subject to 
other  state  aid  guidelines,  the  Commission  believes  that  a  declaration  of  compatibility  of  the  limited 
number of state aid cases arising in connection with such projects could be best granted directly under 
the provisions of the primary European legislation: Articles 87(3)(b) or (c) and 88(3) of ECT. 

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In view of the importance of early demonstration of CCS in power generation and given that a 
number of those projects may require some public funding, the Commission is ready, without 
prejudice to due procedure and individual merit of each project, to view favourably the use of 
state aid for covering the additional costs related to CCS demonstration in power generation 
projects. 

5.3. 

Identifying sources of financing at EU level 

The  SET-Plan  proposes  to  examine  avenues  for  raising  additional  funds  for  the  priorities 
identified  in  the  Plan.  The  Commission  will  address  the  issue  of  resources  for  CCS 
development in the Communication on financing low carbon technologies planned under the 
SET-Plan  for  2008.  Identifying  additional  resources  will  be  crucial  particularly  if  the 
European  CCS  Initiative  is  to  mature  into  a  common  action  going  beyond  the  coordinating 
structure of a project network. 

Using  European  financial  institutions  will  also  be  instrumental.  The  European  Investment 
Bank  (EIB)  is  currently  analyzing  the  possibility  of  developing  new  products  for  financing 
CCS in addition to already existing means under the Risk Sharing Finance Facility (RSFF)26. 
Recognition of a project's European identity may facilitate access to such financing, similarly 
to the current practice with Trans-European Energy Networks (TEN) projects. For projects in 
third countries, specific instruments such as the EIB's Climate Change Financing Facility can 
be used27. 

Whilst  the  Commission  cannot  aspire  to  financing  significant  investment  costs  from  FP7,  a 
limited financing of preparatory stages may be provided to a few most deserving projects, e.g. 
the  most  innovative  or  promising  early  risers.  In  the  first  call  for  proposals  under  FP7,  the 
Commission opened the possibility of supporting feasibility and engineering studies for large-
scale CCS demonstration projects. In the 2008 call for proposals, a similar topic will be open. 

6. 

PREPARING EARLY FOR WIDE-SCALE DEPLOYMENT 

New  infrastructures  will  need  to  be  built  up  in  Europe  to  facilitate  a  successful  transition 
towards  a  low  carbon  energy  system.  In  the  particular  case  of  power  generation  with  CCS, 
this implies an early need for infrastructure for transport and storage of CO2 and the linking in 
of  emission  sources,  with  non-discriminatory  access  rules  comparable  to  those  currently  in 
place for existing electricity and gas infrastructure.  

It  will  be  important  to  develop  the  European  dimension  in  these  networks.  Some  focused, 
additional  financial  support  may  be  necessary  (e.g.  for  networks  definition  and  detailed 
feasibility  studies  of  individual  infrastructure  projects  in  the  network).  To  this  end,  the 
Commission  will  propose  a  revision  of  the  TEN-E  guidelines  to  include  CO2  infrastructure 
(pipelines and storage sites). 

26 

27 

RSFF  is  a  joint  initiative  of  the  EIB  and  the  Commission  aimed  at  providing  risk  financing  for  new 
technologies and R&D implementation projects. 
In a related development, the EIB signed a China Climate Change Framework Loan in the margins of 
the  10th  EU-China  Summit  on  28  November  2007  and,  subject  to  the  proposals  from  Chinese 
authorities, is considering its use to support CCS demonstration in China. 

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7. 

CONCLUSIONS 

The opportunities and challenges presented by CCS make it a priority of strategic importance 
in the development of new energy technologies for Europe. Early effective demonstration of 
technological viability of CCS in power generation, both in Europe and internationally, is a 
milestone  on  the  road  to  its  widespread  use.  With  timely  and  bold  industry  and  public 
initiatives and strong market-based stimuli to avoid CO2 emissions, CCS can be commercially 
viable in 2020 or soon after. 

To stimulate development of CCS in Europe, the Commission proposes in parallel with this 
Communication  an  enabling  regulatory  framework  and  the  inclusion  of  CCS  in  ETS.  The 
revised  Community  guidelines  on  state  aid  for  environmental  protection  take  a  favourable 
view on CCS and indicate the legal grounds on which CCS demonstration projects can benefit 
from  state  aid.  The  Commission  will  in  2008  propose  a  revision  of  TEN-E  guidelines  to 
encompass CO2 infrastructure.  

In the framework of the SET Plan, the Commission proposes to launch a European Industrial 
Initiative on CCS as a base for the coordination, transparency and visibility of demonstration 
projects.  This  way,  EU  will  take  lead  in  large-scale  demonstration  world-wide  and  will 
maximize the benefits of early demonstration. In 2008, the Commission will establish, in this 
context,  a  project  network  allowing  early-movers  to  exchange  information  and  experience, 
maximize  impact  on  further  R&D  and  policy  making,  optimize  costs  through  shared 
collective actions (e.g. vis-à-vis the public or third countries), and obtain recognition as parts 
of a crucial EU-wide initiative ("a European logo").  

Early demonstration will not be feasible without major financial commitments. For the private 
sector,  the  inevitability  of  action  on  climate  change  offers  power  generators  and  other 
businesses prepared to move early into the CCS market the possibility of a real commercial 
benefit.  The  later  such  moves  begin,  the  more  policy  makers  will  be  obliged  to  look  at  the 
option of compulsory application of CCS technology as the only way forward.  

Clear  and  decisive  commitments  from  European  industry  will  be  essential  for  triggering 
consideration  of  a  complementary  contribution  from  public  funds.  In  particular,  those 
Member States intending to rely on coal in their future energy mix should implement support 
measures  for  early  demonstration  of  CCS.  Information  obtained  through  the  European 
Industrial Initiative will facilitate the analysis of the compatibility of such measures with EU's 
state  aid  rules.  Mobilising  additional  resources  may  be  necessary  and  will  be  further 
considered  in  the  context  of  the  SET-Plan,  in  view  of  extending  the  European  Industrial 
Initiative on CCS beyond the scope of a project network. 

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