EU OPENS INQUIRY INTO SARDINIAN CCS PROJECT, NEARBY COAL MINE

Tamar Hallerman
GHG Monitor
11/30/12

The executive arm of the European Union said last week that it is opening two in-depth inquiries examining Italian aid to a planned coal plant in Sardinia with a carbon capture and storage demonstration component, as well as state funding given to the operator of a nearby coal mine. The European Commission, which acts as the EU’s antitrust authority, said Nov. 20 that it will be examining Italian public support measures in the Sardinian energy sector see if they comply with EU state aid rules. The EC said it aims to verify whether state subsidies Italy intends to give the so-called Sulcis project, which would build a new coal-fired power plant with a CCS demonstration component, complies with the EU’s rules for state aid, which stipulate that companies cannot receive public aid from member states that “unduly distort” economic competition on the EU market.

Italy has contended that the Sulcis project would help increase the security of Sardinia’s energy supply while also fostering development in an area of the country that is severely economically depressed. “While the Commission acknowledges the importance of developing carbon capture technology, it will investigate whether the planned coal-fired power plant is best suited to address the alleged objective of security of supply in Sardinia at the lowest cost for the State and whether the envisaged aid is kept to the minimum necessary to achieve this objective,” the EC said. “Moreover, the Commission will check whether the project may indirectly subsidize the operation of the local coal mine, which is in principle prohibited under current EU rules.”

EC Also to Examine State Aid to Mining Company

The EC said it would also investigate the hundreds of millions of euros of public support measures the Italian government has given Carbosulcis SpA, the company controlling the Nuraxi Figus coal mine in Sardinia that would provide the feedstock coal for the Sulcis project. Over the course of 12 years, the Italian government has allegedly given the company at least €405 million ($522 million) in investment and operating aid, as well as support for training, R&D and environmental purposes. While EU public aid laws allow money to go toward some R&D, innovation, training and environmental protection programs, they must meet certain criteria. The EC said much of the aid was granted without notifying the body prior, a violation of EU rules, and that it would now aim to determine whether all of the money falls in line with approved EU categories of aid. “The Commission invites Italy to quickly submit the necessary information to allow it to carry out such an assessment,” the EC said in a statement. Carbosulcis did not respond to a request for comment.

Sardinian Mine, CCS Project Regain European Spotlight

The twin investigations mark the second time this year the region’s coal industry has gained the European spotlight. In August, workers at the Carbosulcis mine, the last remaining coal mine in Italy, barricaded themselves inside with explosives, demanding that the government move forward with the Sulcis CCS project as a way to help extend the lifetime of the facility. Earlier this year, the government indicated that it was thinking of closing the mine at the end of the year. The miners ended the strike in early September after the Italian government agreed to pursue a path forward for the mine that could include a joint mining-CO2 storage arrangement, although few specifics were made public. Despite all of the noise surrounding Sulcis, the €200 million ($258 million) per year project is in its very early phases, and its development has remained largely stagnated in recent years.

The EC said it opened an in-depth investigation into the project in 2008 due to concerns that a guaranteed off-take price for the electricity produced at the plant by the Italian government would provide the project with an unfair competitive advantage. Italy retooled the project shortly thereafter.