By Barbara Lewis and Henning Gloystein

BRUSSELS/LONDON (Reuters) - The British government will not get any European Union funding under the first round of a subsidy scheme for carbon capture and storage (CCS) projects because it has failed to provide the required financing guarantees, EU sources said on Sunday.

CCS technology captures carbon emissions from power plants before they enter the atmosphere and then stores them in long-term storage sites.

The British government has included CCS technology in its plans to meet its emissions reduction targets and says it has earmarked 1 billion pounds ($1.59 billion) to fund a commercial scale pilot CCS program.

One EU source speaking on condition of anonymity confirmed that no British projects had qualified for the so-called NER300 competition "because of lack of funding detail."

Britain's Department of Energy and Climate Change (DECC) said it had not yet been informed of the decision or what the arrangements might be for the second round.

"We are not going to comment on speculation or rumors," a DECC spokesperson said.

The European Commission, together with the European Investment Bank and EU member states, jointly operate the NER300 financing competition in which governments can shortlist renewable and CCS projects for European subsidies.

EU member states can apply for NER300 funding to finance half of a renewable or CCS project if the national government guarantees funds to cover the remaining 50 percent of the costs.

A second round of projects will be launched early next year and British projects will be able to participate again, the EU source said.

Chris Davies, a British Liberal Democrat politician who led discussion of the funding in the European Parliament, said the failure was "a devastating blow" to hopes of Britain and Europe becoming a world leader in the development of CCS technology.

"The government has no excuse. The EU funding mechanism was only introduced as a result of British pressure and for us not to take advantage of it is simply woeful," he said. Continued...