Use Emissions Trading money to fund green projects says UK government

Money raised from Europe’s Emissions Trading Scheme (ETS) should be used to fund plans for carbon capture and storage (CCS) demonstration projects, the UK government will stress at an EU energy summit today.

The Environment Council meeting in Luxembourg is part of a round of meetings to thrash out the details of Brussels’ energy package. The strategy includes four new directives setting renewable energy obligations and overall emission reductions targets - at 20 per cent by 2020 in both cases - and laying out plans for both the EU ETS and for CCS technology, which stores emissions from power stations rather than releasing it into the atmosphere.

Today’s meeting will include negotiations over whether energy companies can use investments in non-European renewable or CCS schemes to count towards their domestic targets, and consideration of how the proposed rules about CCS be made to work in practice.

Ed Miliband, the newly-appointed minister for energy and climate change, will use the meeting to call for clear plans on how to fund CCS trials. The technology could cut CO2 emissions from coal-fired power stations by as much as 90 per cent, but it is expensive and largely untried. Member states pledged in 2007 to have 15 full-scale trials of CCS up and running by 2015, but so far no suggestions have been made as to how the scheme’s Eu15bn price tag be met. The UK government is keen that money raised through the ETS, and therefore largely from energy generators and heavy industry, be used to support the developments.

Mr Miliband said: “We need to push forward on carbon capture and storage to help us use the energy resources we have, increase our energy security, while working towards our goals of reducing carbon emissions - that’s why I’m arguing for a new multi-billion pound mechanism to help fund up to 12 carbon capture and storage demonstration plants.

“By using a part of the EU ETS, we can kick start this revolutionary technology that could take up to 90 per cent of harmful CO2 out of coal fired power stations as well as provide opportunities for new green jobs.”

Environmental campaigners also support the proposal, and welcome any overt support for the EU energy targets following the suggestion at a summit of EU leaders last week that green commitments could be watered down in the light of the current economic situation. But CCS is not the only answer to carbon emissions, according to Robyn Webster, a climate campaigner at Friends of the Earth. “There is a tendency to fixate on CCS - the government needs to remember the importance of staying strong on renewables targets and the ETS as well,” she said.

Mr Miliband announced plans last week to increase the UK’s emissions reduction target to an 80 per cent cut by 2050. But business groups warned that a series of major policy issues around the planning process and energy infrastructure need to be addressed for the rhetoric to become a reality.