EU gamble on carbon capture could cost €140bn in subsidies — new report

The European Union’s plans to rely on carbon capture and storage (CCS) to reach its climate targets will require staggering levels of public subsidy, according to a new report. Even if European governments can muster up the financial resources, CCS projects are rife with technical challenges, and they routinely fail to capture emissions at promised levels.

The 27 members of the European Union, along with the UK, have pledged to reach net-zero emissions by 2050, and they have positioned CCS as a crucial component of their transition.

However, moving forward with expensive investments in CCS projects across the European continent is a highly risky climate strategy, and could lead the EU to blow past its emissions targets, according to a new report from the Institute of Energy Economics and Financial Analysis (IEEFA).

“Relying on CCS as a climate solution will force European governments to introduce eye-wateringly high subsidies to prop up a technology that has a history of failure,” said Andrew Reid, an IEEFA energy finance analyst and author of the report. “As the small number of operational projects show, CCS is not likely to work as hoped and will take longer to implement than expected.”

Even if CCS could be scaled up — a questionable proposition — it could require as much as €140 billion in public subsidies, the report said. 

As it stands, the continent has made CCS a key part of its long-term climate strategy. In its Industrial Carbon Management Strategy, the EU aims to capture 450 MtCO2 annually by 2050, equivalent to about 13 percent of the bloc’s 2022 emissions. The UK is gambling even more on CCS, hoping to capture the equivalent of 24 percent of its 2022 emissions each year by 2050.

The UK recently announced plans to spend £22 billion for CCS projects over 25 years. Experts say that even if it works, it will be expensive and it will lock in fossil fuels for decades.

The track record of CCS does not inspire confidence. There are nearly 200 CCS projects across Europe, but 90 percent of the emissions that could potentially be captured from those facilities are only in the prototype or demonstration stage. Among the few projects under construction, several are facing ballooning costs, technical problems, and delays.

The threat to EU climate policy is that it will take several years before policymakers realise their trust in CCS was misplaced, at which point billions of dollars will have been wasted and it will be too late to change course and still reach their climate targets, IEEFA warned.

“CCS in its present form is not likely to work as hoped, cost more and, importantly, take much longer to implement than planned,” the IEEFA report concluded. “The proposed timelines of European projects are already baked with optimism despite the obvious challenges and recent history of failures across the smaller, less complex projects in operation and under construction.”