The allowances will come from the new entrants’ reserve (NER) created under the revised Emissions Trading Directive. The positive vote was given by the EU Climate Change Committee, comprising representatives of the 27 member states, on February 2. The draft ‘NER 300’ Decision now goes to the European Parliament and the Council for scrutiny, after which it will be adopted by the commission.

The committee’s decision backs the four key elements of the commission’s proposal. These are: a European approach to project selection with involvement of the European Investment Bank (EIB), to ensure a comprehensive technology portfolio; a European approach to monetisation of the allowances, which will be sold by the EIB and distributed to the Member States for project support; a strong role for member states in determining which projects are eligible and are suitable for support; a good balance between CCS and renewables demonstration, determined by demonstration needs.

The call for proposals for the first round of projects will be issued shortly afterwards. Member states will then submit projects to the EIB by the end of 2010, and the EIB’s due diligence and assessment will take place in 2011 so as to allow the final commission award decisions to be made by end 2011. This timetable should ensure that CCS demonstration projects can be up and running by the end of 2015, as requested by the European Council.

Chris Davies, North West Liberal Democrat Euro-MP, who introduced the idea of securing funding for the work from the sale of surplus CO2 allowances, has welcomed the decision, but criticised delays already incurred and called for the programme to be accelerated.

He said: “It took just 3 months for Prime Ministers to accept the principle of the funding mechanism I proposed, but it has taken 13 months to gain approval for the details. Europe says it wants to lead the world in the development of ‘green’ technology but we will only do that if we speed up our decision-taking process.”

According to him, the plan is to have 12 large scale demonstration plants in operation by 2015, out of which three are likely to be built in Britain. He claimed that Britain was ideally placed for CCS development, with huge coal reserves and CO2 storage sites beneath the North Sea.