The timing could hardly be worse. Just as the Intergovernmental Panel on Climate Change confirms that global warming is real and man-made, it has become clear that the EU's programme to develop an effective CO2 reduction strategy has all but collapsed.
Five years ago the EU looked set to become the world leader in carbon capture and storage (CCS), a process which prevents carbon dioxide being pumped into the atmosphere by storing it deep underground. European national governments had embraced the idea of having up to 12 CCS demonstration projects in operation by 2015, and it looked like there would be enough financial support to ensure they were completed.
Yet now, there is little to show for the initial enthusiasm. Thirteen significant projects applied for the first phase of funding, but most could not meet the strict and inflexible requirements. In the second phase only one project, the 'White Rose' in the UK, is in the running for €300m support, Even so the odds are against it securing the necessary government commitment within the given deadline. Of a further €1 billion of EU funding made available in 2009, most remains unspent and will not be reallocated.
The failure stems from a lack of commitment by EU member states and the absence of a business model that can promote private investment. While developers of renewable energy have received cash subsidies, CCS promotion has depended on the assumption that carbon allowances would become so expensive that investors would do everything they could to avoid emitting CO2. But in fact, carbon prices have collapsed as a result of the economic recession, and therefore so has the financial support for CCS.
CCS is nothing new. In fact, it has been around since the 1930s. CO2 transport by pipeline is commonplace all over the world, while the security of CO2 underground storage has been amply demonstrated. Norway, for example, has since 1996 been injecting 1m tonnes of CO2 a year into rock deep underneath the North Sea without any sign of unexpected movements. Commercial scale plants are now being built in Canada, Australia and the USA. The key objective now is to improve technology in order to reduce costs.
CCS technology is an essential means to curb emissions from polluting industries and to enable the ongoing use of fossil fuels for electricity generation. As a low carbon technology, it can be less expensive than solar power or offshore wind. And the truth is that, without it, the UK and other countries are unlikely to meet their CO2 reduction goals and avert catastrophic global warming. That is why I am calling for a radical new approach to help get this technology off the ground.
First, legislation is needed that would require every EU member state to publish a CO2-reduction strategy. Those governments that chose to endorse CCS would have to play an active role in providing financial support, assisting in the building of a pipeline network and helping to prepare storage sites. They would also have to work to convince a sometimes sceptical public of the technology's many benefits.
Policy makers in Brussels should make it a priority to ensure that at least some CCS projects are taken forward. These flagship schemes are needed to develop the technology and ensure it can be integrated into the mainstream. A modest target should also be set to encourage the release of those funds that are already available
Even so, additional funding will be needed. The European Commission predicts that CCS should be viable on a stand-alone basis by 2035, but before then some financial support will still be required. To meet the EU's contribution I propose in the short term the creation of a new industrial innovation fund from the sale of up to 600 million carbon allowances. To fund long term developments a certificates scheme similar to those used by Sweden to fund renewable energy is required, with the producers and importers of fossil fuels required to purchase an agreed number or make equivalent investments in CCS development. The fossil fuels release the CO2 so it's not unreasonable to ask those who profit from them to take the lead in providing the solution.
If Europe is to achieve its low carbon goals at least cost then CCS has a major role to play. Tens of thousands of jobs can be created along the way. But the hopes will not be realised unless the EU raises its sights and increases its ambitions.