Europe must embrace CO2 hubs, straddling borders -industry group

* Some utilities have given up on CCS because of cost

* Poland, Britain have shown support

* Some environmental groups opposed, some support

By Barbara Lewis

LUXEMBOURG, Sept 23 (Reuters) - Creating European hubs to capture and store carbon dioxide would be the cheapest route to low-carbon energy and the only way for some industries to cut their emissions, industry and government officials say.

Carbon capture and storage (CCS) technology has failed so far in Europe to draw enough investment.

To overcome that, the Zero Emissions Platform (ZEP), an industry group that advises the European Commission, has presented an action plan that includes CCS hubs, straddling industries and even national borders, to allow economies of scale.

"Without CCS, the cost of decarbonising the power sector could be 2 to 4 trillion euros ($2.3-$4.5 trillion) higher and some energy-intensive industries would not be able to decarbonise at all," ZEP said in the plan published on Wednesday.

"CCS lends itself to being developed across clusters of emitters and using clusters of stores."

ZEP's modelling found CCS could reduce the cost of European power by 20 to 50 percent by 2050 by allowing existing gas and coal plants to function longer, while investing in renewable alternatives is still costly and too intermittent to provide reliable baseload.

ZEP brings together companies such as Shell (LSE: RDSB.L - news) , Total (Swiss: FP.SW - news) , BP and Statoil (Xetra: 675213 - news) .

But four utilities, including Germany's RWE (Xetra: 703712 - news) and Sweden's Vattenfall quit the platform, saying CCS was too costly.

Among governments, Britain, which is pursuing shale gas and has storage options in its mature North Sea oil and gas territory, has backed CCS.

Poland, whose economy depends on coal, has also lent support.

Its climate policy chief, Marcin Korolec, pushed at a Brussels meeting on Friday for a commitment to long-term "climate neutrality", rather than decarbonisation to be inserted into the EU negotiating position for U.N. climate talks.

He told reporters this could include CCS and CCU -- carbon capture and use -- for instance in the chemical industry.

Outside Europe, leading OPEC member Saudi Arabia's state-owned Saudi Aramco has launched its first CCS project and is using CO2, rather than precious desert supplies of water, to enhance oil recovery.

Many environmental groups oppose CCS, which they say only prolongs fossil fuel use and wastes energy, but Norwegian environmental group Bellona supports it.

The European Commission has spent years trying to spur CCS and said it was preparing a report for the end of the year.

Its previous efforts to fund CCS with revenue from the Emissions Trading System (ETS) failed because candidate schemes did not meet criteria, while steelmaker ArcelorMittal (Other OTC: AMSYF - news) withdrew its application for a French project.

As part of its latest EU carbon market reforms, the Commission has proposed an innovation fund, which could cover CCS and other low carbon technology. ($1 = 0.8843 euros) (Additional reporting by Reem Shamseddine in Khobar; Editing by Susan Fenton)