EU agrees on deal for pipelines, carbon capture

(Agencies)
Updated: 2009-03-20 12:28

BRUSSELS -- European Union leaders agreed Thursday on a two-year euro5 billion ($6.84 billion) energy package likely to include gas pipelines and plans to bury climate-damaging carbon, the European Commission president said.

"We have agreement not only on principle but on funding and concrete projects," Jose Manuel Barroso said after the first day of a two-day EU summit in Brussels.

Czech Republic Prime Minister Mirek Topolanek and European Commission President Jose Manuel Barroso (R) address a joint news conference during a two-day EU leaders summit in Brussels March 19, 2009. [Agencies]

A final list was expected to be issued at the summit's close Friday.

Barroso said it would contain "mostly energy-connection projects" linking national power and oil and gas grids.

EU leaders insist that the money allocated for energy and other projects must be spent by the end of 2010 - and warn that the money will vanish if wind farms, pipelines and clean coal plants aren't up and running by then. Germany, wary of pushing government deficits any higher, had led the push for a time limit on the aid.

According to a draft agreement seen by The AP, energy projects will get euro3.975 billion and euro2 billion of that must be spent this year. The rest of the stimulus package will pay for more broadband Internet connections to bring small towns and rural areas online.

Czech Prime Minister Mirek Topolanek said EU members had agreed on a "compromise which everybody can subscribe to" on gas, oil, energy infrastructure, broadband and rural development.

Most of the energy money will be spent on natural gas links that will create more transport routes across Europe. This is essential for eastern European nations that had no alternative supplies when a dispute between Russia and Ukraine shut off most of Europe's gas earlier this year.

Some euro200 million is earmarked for the Nabucco pipeline project, which EU officials hope could lessen Europe's dependence on Russian gas by bringing more gas from the Caspian and Central Asian regions - even though no firm supply contracts have yet been signed.

A controversial and largely unproven technology - carbon capture and storage - will get just over euro1 billion over two years.

The money will help pay for 12 coal-burning power plants to show that they can remove carbon dioxide and bury it underground in nearby aquifers or empty oil and gas fields under the North Sea.

The steel industry also won a euro50 million subsidy for its pilot project to remove carbon dioxide at ArcelorMittal's Florange steel plant in France.

The choice is a politically sensitive one. French President Nicolas Sarkozy promised steel workers to do his utmost to save jobs _ and agreeing to this project may have done that. The plant was idled this winter as steel demand slumped and workers feared closure or job cutbacks.

Another euro505 million will be spent on offshore wind farms in Germany, Britain and Belgium as well as links between North Sea and Baltic Sea wind power stations and the mainland.

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