Europe’s Carbon Capture Ambitions: A €140 Billion Taxpayer Burden? – Report

Europe’s ambitious plan for carbon capture and storage (CCS) could end up costing taxpayers €140 billion, according to new research from the Institute for Energy Economics and Financial Analysis (IEEFA). The study highlights that many of Europe’s planned CCS projects are too expensive and not ready for commercial use. This raises concerns about the effectiveness of CCS in reducing emissions and achieving net-zero targets.

The report outlines several technical, commercial, and legislative challenges that European countries face as they rely on CCS as a key climate solution. It notes that the technology is still in its early stages and that existing operational projects have faced numerous difficulties. This situation suggests that the already high costs of CCS are likely to remain elevated or even rise shortly.

IEEFA estimates that the total cost of Europe’s planned CCS initiatives will reach €520 billion. Although financial incentives, such as reduced emissions trading system payments, could cover about 75% of these costs, the remaining amount will need to be funded by governments. This could mean taxpayers will have to shoulder a bill of up to €140 billion.

Andrew Reid, an energy finance analyst at IEEFA and author of the report, emphasizes the risks of relying heavily on CCS. He states that it may force European governments to provide substantial subsidies to support a technology that has struggled to deliver results in the past. According to Reid, the limited number of operational CCS projects in Europe suggests that the technology is unlikely to perform as expected and will take longer to implement than initially anticipated.

Currently, there are nearly 200 planned CCS projects across Europe, primarily targeting emissions-intensive sectors. However, more than 90% of the emissions from these facilities are expected to come from areas where CCS technology is still in the prototype or demonstration phase. The report warns that the proposed timelines for these projects are overly optimistic. For both the European Union and the UK to meet their carbon capture targets, approximately 90 of these projects must become operational by 2030. At present, only three CCS projects are operational in the European Union, with none in the UK.

Reid cautions that focusing on unrealistic targets could lead to missed opportunities for reducing emissions through other practical measures. He urges policymakers to act swiftly and consider alternative solutions. The report also highlights the complexities of creating commercial models and standards for full-cycle CCS projects. These projects involve capturing carbon dioxide from various industrial sites and then transporting it to a port or pipeline for underground storage. Reid warns that variations in reliability across different capture sites could affect the overall carbon capture volumes, impacting the economic viability of transport and storage operations.