Norway says wins EU green light for carbon capture

OSLO (Reuters) - Norway's government said on Wednesday it has received the go ahead from the European Union to pump more state funds into an experimental project to capture carbon dioxide emissions from a gas-fired power plant.

Norway, which is not in the EU but abides by the bloc's economic rules, has argued that its project should circumvent EU public aid rules because it aimed to develop technology needed to tackle global warming stoked by rising carbon emissions.

Prime Minister Jens Stoltenberg's centre-left government has even likened Norway's push for Carbon Capture and Storage (CCS) technology to the Apollo program that put U.S. astronauts on the moon in 1969.

"This is a significant step for the 'moon landing' and the development and testing of new technology to handle carbon dioxide," Stoltenberg said in a statement on Wednesday.

Norway said the EU's surveillance authority ESA had allowed the project at the Mongstad power plant to receive 80 percent public aid, above the normal 50 percent threshold. Mongstad is one of a number of CCS test projects in the EU.

According to a 2006 agreement, Norwegian oil and gas producer StatoilHydro will take a 20 percent equity stake in the project, due to develop full-scale carbon capture facilities from about the middle of the next decade.

Last year, Swedish utility Vattenfall, Denmark's Dong Energy, Royal Dutch Shell and Norsk Hydro also began cooperating in the Mongstad project. The government said that final Mongstad investment decisions were due in late 2008.

(Reporting by Wojciech Moskwa, editing by Anthony Barker)