EU leaders are pushing for rapid investment of the money allocated through the European Economic Recovery Plan -- about half this year and the rest in 2010. More than $1.9 billion will go to strengthening gas interconnections, including $270 million for the Nabucco pipeline to connect Caspian supplies to southern Europe and almost $420 million for central and southeast Europe, following Russian gas cuts earlier this year. About $270 million will be spent on gas pipelines from Africa to France via Spain. Both countries will also get more than $300 million for electricity interconnections, the bulk of the $1.2 billion allocated for such projects. And some $760 million will be spent on offshore wind power projects.

But the big winner, following intense negotiation pitting EU leaders and their executive branch in the EU Commission against Parliament and some environmental groups, were 13 CCS projects which will split more than $1.4 billion. Detractors are worried CCS is just a pipe dream. The EU Parliament originally opposed the allocation because it is worried that even if viable, the new technology is so raw that major investments are unlikely before 2010.

A final compromise and agreement was reached after CCS projects saw the planned allocations slightly cut and after the EU Commission agreed to include provisions to make sure all the money will be spent on time. That will also apply to the Nabucco pipeline.

The EU’s push for CCS shows that it is far ahead of the US in its discussion of capturing and sequestering carbon. Congress is now considering “The American Clean Energy and Security Act," more commonly known as the Waxman-Markey bill, which declares that the US Environmental Protection Agency must establish a “unified and comprehensive strategy to address the key legal, regulatory and other barriers to the commercial-scale deployment of carbon capture and sequestration.”

European leaders consider CCS, which remains untested at an industrial level, as a sort of silver bullet to meet its binding target of cutting carbon dioxide emission 20 percent from their 1990 levels by 2020. Europe wants at least 10 large demonstration plants by 2015. G-8 countries want at least 20 industrial-scale plants committed to by 2010 to make CCS commercially viable to deploy globally by 2020. Officials want to apply the concept to power plants, which produce a big part of global and European greenhouse gas emissions. Official estimates claim that up to 15 percent of the block’s emissions could be cut by 2030 and up to 50 percent by 2050 if CCS becomes viable.

Coal burning generates more than a quarter of global greenhouse emissions, according to Emerging Energy Research. It also generates 30 percent of the EU’s electricity. That explains why most of the CCS money was split between the biggest coal consumers. Germany, the Netherlands, the UK, Spain, and Poland will each get almost $245 million, although the first three will divvy up the money between several projects: two in Germany, three in the Netherlands, and four in the UK. Italy will get $135 million and a French smelter more than $67 million for CO2 transport infrastructure.

The idea behind CCS is, at least in theory, very simple: greenhouse gases that are created when burning fossil fuels will be cooled into liquid form and then be pumped underground into naturally-occurring storage for centuries. CO2 is already being reinjected in wells to enhance oil recovery, instead of natural gas.

The technology could eventually be used in everything from utilities and oil rigs, to steal smelters and even cars. With energy demand expected to increase 50 percent by 2030, there is growing consensus that CCS is indispensible to fend off a climate meltdown.

Significant public backing though is required for the demonstration plants because testing CCS could double the costs of building a conventional power plant. That means additional public funding could range between $675 million and $1.35 billion per plant, depending on the size of the facility. The private sector is increasingly excited about public support for CCS. Some of Europe’s leading utilities are vying to build the demonstration plants are expected to get public financing for the CCS overhead.

For European industries, CCS is also the best way to avoid paying huge penalties for emitting greenhouse gases as of 2013 under the European Trading Scheme. Credits, equivalent to one ton of greenhouse gas emitted into the atmosphere, will be auctioned starting in that year. In fact, most of the EU’s future funding for CCS is expected to come from the auctioning of 300 million carbon credits, which, depending on their value, could cover all CCS-related costs. Companies are also eager to take the lead in developing the technology many believe will become lucrative. Last year, Finland’s Vattenfall became the world’s first company to operate a fully integrated CCS pilot plant in Germany. It is proposing three demonstration plants in Europe.

The UK, hard-pressed to replace aging nuclear and coal power generators, opened a competition to bid for the construction of one CCS demonstration plant that could be operational by 2014. The government will pay for all of the CCS-related costs. Scottish Power, owned by Spain’s biggest utility Iberdrola, as well as German companies RWE and E.On have been pre-selected. Enel is planning to build at least one demonstration plant in Italy by 2015. It will finish its first CCS pilot plant this summer. It will also merge its CCS research with Spain’s Endesa, which it now fully controls.

Still, the stakes are high. Carbon credits could trade at prices far lower than what is projected, and thus contribute less to CCS subsidies; the regulatory framework required to assure private investment could be delayed, or the technology could simply not work as expected. Nevertheless, tender submissions are expected by mid-July.