Isra-Mart srl: NER300 sale to proceed, despite plunging carbon prices

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The EU has insisted that falling carbon prices will not affect the planned sale of 300 million emission allowances set aside to fund renewable energy and carbon capture and storage (CCS) projects across Europe.

Between €4bn and €5bn was expected to be raised for the NER300 fund when the sale was announced in February last year. But since then the fluctuating price of carbon has dipped significantly, hitting record lows in August, before again falling during the autumn on the back of the Eurozone debt crisis.

EU allowances are currently sitting at about €9.50, which would mean the sale of the reserved allowances would only raise about €2.85bn if sold at today's market prices.

Some commentators had suggested postponing the sale until prices recovered to maximise the funds available, while last month the European Investment Bank (EIB) said that while sales of the credits may start this year they could run beyond the end of the original 2012 deadline for completing the sell-off.

But speaking to reporters in Brussels today, Jos Delbeke, director general for climate at the European Commission, ruled out any delay.

"Can we linger out? I'm afraid we can't," he said. "We have to spend the money by 2015. If we lingered out we'd miss the opportunity to move ahead with clean technologies."

He added that the EIB had been instructed that the commission "won't tolerate any slippage in the timetable".

"It's better to be on time than take six or 12 months and not be sure if the price is going to improve," he said.

The NER300 is intended to cover half the construction costs of eight CCS projects with over 250MW capacity and 34 renewables projects, including wind energy, marine energy and technologies to convert plant waste into biofuels, biogas or electricity.

The UK put forward 12 projects for consideration in May, including ScottishPower's Longannet CCS project, which has since dropped out of the UK government's funding competition, and Clipper Wind's high-profile Britannia project to build a 10MW offshore turbine, which was shelved in August.

The NER300 fund will provide a major boost to a large number of cutting-edge low-carbon projects, but concerns remain that if the Eurozone crisis worsens the price of carbon could fall, further limiting the available funds for new projects.