NER300 funding program declines

The NER300 program in Europe was designed to support CCS and innovative renewable energy projects through the sale of 300 million allowances in the EU ETSAt the time of the program’s design, the market price in the EU ETS was in the range of €16–20/tonne and projected to rise to €25/tonne by December 2013. However, with the recession in Europe depressing energy demand, and the use of renewable energy targets and energy efficiency policies resulting in the ETS acting as a residual carbon market, prices began to decline during 2011.

When sales of the NER300 EUAs commenced in December 2011, prices had fallen to around €9/tonne. By August 2012, around 180 million allowances sold at an average price of a little over €8/tonne.

In July 2012, the European Commission announced that around 60 per cent of the funds raised from the NER300 program would be provided to CCS projects. It is estimated that total funding from the program for CCS projects will be approximately €1.2 billion (US$1.5 billion), after accounting for the costs incurred by the European Investment Bank in selling the NER300 allowances through a range of financial channels. This contrasts with the €4.5–6 billion initially thought to be available for CCS projects when the funding arrangements were announced in 2008. The change is due to both a substantial fall in ETS prices as well as reduced overall level of funding due to the subsequent decision to include innovative renewable energy projects.