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How industry won EU subsidies for CCS

Big carbon polluters succeeded in persuading a British MEP to ensure they benefited from billions of euro in public subsidies, according to a new report published today by Corporate Europe Observatory and UK-group Spinwatch[1].

The report, EU billions to keep burning fossil fuels, reveals how Shell, BP, Vattenfall and other big polluters worked with Liberal Democrat MEP Chris Davies to obtain EU subsidies to develop carbon capture and storage (CCS) projects. Emails voluntarily released following freedom of information requests show that the an amendment introduced by Chris Davies to secure a crucial subsidy worth billions of euros was put forward by industry.

And as negotiations on the EU’s climate package reached the final stages, Davies threatened to block the entire legislative package – unless the subsidies for CCS were agreed [2] .

Industry will receive the value of 300 million carbon allowance (between 4 - 7 billion Euros depending on the carbon price) under the deal agreed as part of the Climate and Energy Package in December 2008, with most of the money earmarked for eight pilot CCS plants.

Carbon capture and storage technology has been heavily promoted by industry as a way of tackling climate emissions, despite objections from members of the public and concerns about its safety and effectiveness.

Yiorgos Vassalos, a researcher with Corporate Europe Observatory, said:

"This is a shocking example of carbon polluters benefiting from policies supposedly intended to tackle climate change. It also clearly shows how industry has infiltrated the heart of the decision making process in Brussels. Industry lobbyists provide MEPs and Commission officials with background briefings, expert advice, and draft amendments, while continuously warning of the damage that will be caused to Europe's economy if their advice is ignored. Their influence has become so embedded in the way in which business is done, that even well-meaning MEPs can struggle to see the wood for the trees.”

Industry successfully lobbied to water down recommendations that all new power stations should be fitted with mandatory CCS – allowing polluting coal-fired power stations to continue to be built.

Andy Rowell a writer working with Spinwatch said:

“Many people would be shocked to find out that the very companies that stood to gain financially from CCS were the same ones advising Chris Davies. They would also be shocked to find out that companies such as BP and Shell were even drafting his amendments. Yet Davies apparently sees nothing wrong in this."

Pilot carbon capture and storage plants have received EU recovery funding and may also receive ETS funding in Jaenschwalde (Vattenfall), Belchatow (PGE), Compostilla (ENDESA) and Porte Tolle (ENEL). A proposed Arcelor Mittal project in Florange failed to meet the technical requirements, while an E.ON project near Rotterdam was cancelled following public objections. Now the future of a project at Hatfield in the UK is in doubt after the company behind the project, Powerfuel Power, went into administration last week.

Nevertheless, fossil fuel lobby group ‘Zero Emissions Platform’ insists that CCS can work and is now appealing to the European Commission to provide support to help develop the infrastructure for CCS – a network of carbon dioxide pipelines across Europe1. Their wish is the Commission’s command – as a draft of the Commission’s Energy infrastructure priorities for 2020 and 2030 blueprint reveals.

The estimated level of windfall profits in the power sector in five countries (UK, Germany, Spain, Italy and Poland) during the second phase of ETS (2008 – 2012) is between 23 and 71 billion euros [3].

Yiorgos Vassalos, Corporate Europe Observatory
+32 2 893 0930

[1] EU Billions to keep burning fossil fuels, Corporate Europe Observatory / Spinwatch / December 2010

[2] Links to emails: 20081024DaviesGraffCOM, http://www.corporateeurope.org/sites/default/files/sites/default/files/f...
see also 20081024DaviesMaskayFR
http://www.corporateeurope.org/sites/default/files/sites/default/files/f... and

[3] PointCarbon: EU ETS Phase II – The potential and scale of windfall profits in the power sector

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