Bloomberg News

2Co, Progressive Energy Say Carbon-Capture Plants Pass EIB Test

March 02, 2012

2Co Energy Ltd. and Progressive Energy Ltd. are among companies developing U.K. carbon-capture and storage projects that cleared a financial hurdle toward securing European funds.

2Co Energy is developing the Don Valley Power Project in Yorkshire to trap and bury emissions. The initiative passed financial and technical due diligence carried out by the European Investment Bank, Jane Paxman, a company spokeswoman, said today by phone.

Peter Whitton, managing director at Gloucestershire-based Progressive Energy, said the company’s CCS project in Teesside, northern England, was also approved. Both companies said they were notified by the U.K. Department of Energy and Climate Change by e-mail this week.

The European Union decided in 2008 to use proceeds from the sale of 300 million carbon permits to encourage carbon-capture and renewable energy projects. It ordered the EIB, the lending arm of the European Union, to monetize the allowances. The Luxembourg-based bank is also appraising projects submitted by member states.

The value of allowances sold from the special reserve was 267.05 million euros ($352.7 million) at the end of January, according to an EIB report.

C.Gen, a company based in Antwerp, Belgium, confirmed by e- mail that its Killingholme carbon-capture and storage project in Yorkshire also passed.

Seven Applications

The U.K. government initially received seven applications from CCS projects which it submitted to the EIB for appraisal in May. One of those projects planned by Iberdrola SA’s Scottish Power unit was cancelled last year.

The first tranche of 200 million permits from the special reserve has to be sold by Oct. 2, 2012 with expected proceeds on sales funding at least eight CCS projects and 34 renewable- energy systems covering as much as half the construction and operating costs.

Whitton said he was concerned the falling carbon price may depress what’s raised. “The amount that is there is not a large amount. The main support in reality will come from the U.K. government,” he said.

U.K. Energy Minister Charles Hendry said on Feb. 27 that the government was seeking to align its own 1 billion pound funding contest for CCS projects with the special reserve.

“It’s another step along the way,” Paxman said. “The formal award decisions are still apparently on track for the year end.”

The EIB referred comments to the European Commission Directorate-General for Climate Action, which didn’t immediately respond to an e-mail today.

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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