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E.U. Announces $2.3 Billion Low Carbon Stimulus

E.U. Announces $2.3 Billion Low Carbon Stimulus

The European Commission last week announced proposals for a huge investment in energy infrastructure over the next two years, including ring-fencing €1.25bn (US$1.63 billion) for investment in carbon capture and storage (CCS) and €500m (US$650.7 million) for offshore wind development.

The package, which is funded through a European Union budget surplus, will see CCS projects at four power stations in the United Kingdom at Kingsnorth in Kent, Longannet in Fife, Tilbury in Essex and Hatfield in Yorkshire, receiving €250m (US$325 million) each.

There is also €40m (US$52 million) proposed for an 0.25GW wind farm near Aberdeen, and €150m (US$195 million) set aside to develop an offshore wind grid in the North Sea that will provide wind power to Britain, Holland, Germany, Ireland and Denmark -- both projects are already under development.

Commission president José Manuel Barroso said the spending package would help lift E.U. countries out of recession.

"We need to learn the lessons of the recent gas crisis and invest heavily in energy," he said. "The Commission is committed to working together with member states, all of which will benefit from our proposed measures, in revitalizing the E.U. economy through investment in these key areas."

Jeff Chapman of the Carbon Capture and Storage Association welcomed the announcement and said he hoped it would be backed up by further government support.

"This is great news, but €250m (US$325 million) isn't enough to fund CCS on one plant. There needs to be additional funding from government and also perhaps contributions from developers," he said.

The U.K. government has already committed to funding one CCS demonstration plant in the U.K., to be operational by 2014, but has not chosen which plant yet.

Chapman said it would make sense for the government to award its competition funding to one of the projects likely to receive EU funding.

All of the plants that are lined up for E.U. funding are still in the running for the U.K. CCS competition apart from Hatfield.

While the U.K. CCS projects will focus on post-combustion capture, the E.U. will also provide €250m (US$325 million) to an oxyfuel combustion plant at Compostella in Spain.

The wider E.U. package also includes €1.75bn (US$2.28 billion) to improve gas and electricity interconnections between E.U. countries, including €100m (US$130 million) for electricity links between Ireland and Wales.

In addition, €1bn (US$1.3 billion) is being made available to improve rural broadband connections across Europe.

The measures still needs to be passed by the European Parliament before becoming law.

The package came as a statement of intention after the European Commission set out its proposals for a new global agreement to tackle climate change and how it could be financed.

The goal is to limit temperature rises to below 2 degrees Celsius, requiring a global cut of emissions to less than 50 percent of 1990 levels by 2050, with developed countries taking the lead and cutting their collective emissions by 30 percent of 1990 levels by 2020.

To reduce emissions, global net additional investment may need to rise to about €175bn (US$2.28 billion) per year in 2020, with more than half of this being needed in developing countries.

E.U. officials also called for the U.S. and other developed countries to join its emissions trading scheme.

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