The price of carbon is too low to stimulate investment in carbon capture and storage, or CCS, and existing policy tools have so far failed to encourage the development of large-scale demonstration projects, according to the draft prepared by the European Commission, the EU’s regulatory arm in Brussels.

To stimulate the CCS projects, the 27-nation bloc could consider using its emissions-trading system to provide incentives for the technology, a certificate program or a requirement to install special equipment for new investments, the commission said in the document, which was obtained by Bloomberg News.

“In order to allow fossil fuels to remain an integral part of the energy mix and the EU and to offer a potential for a green re-industrialization of Europe’s declining industries, early deployment of CCS technology at a large scale is needed,” the commission said in the document, due to be published later this month.

The EU is set to discuss this year the future of its climate and energy policy after carbon prices in the bloc’s market plunged 76 percent in the past four years amid a recession and member states consider options for renewables and energy efficiency after 2020. The document on the CCS, to be published along with a consultation paper on a 2030 energy and climate framework, will start a public debate on those issues involving national governments, industry, non-governmental organizations, analysts and experts.

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Source: Bloomsberg.com; By Ewa Krukowska - Mar 12, 2013 4:03 PM GMT+0100