LONDON - The European Union is taking too long to get up to 12 carbon capture and storage demonstration plants operating by 2015, RWE npower's head of environmental strategy told a carbon conference on Wednesday.

Progress remains painfully slow, member states are still at each other's throats but we can't have demonstrations without a proper regulatory framework, John McElroy told delegates at the Environmental Finance conference in London.

Getting transport and storage regulation in place, as well as funding, should be a priority, McElroy added.

Carbon capture and storage (CCS) traps the main greenhouse gas carbon dioxide from a power station and stores it underground to prevent it from entering the atmosphere.

As yet unproven on a commercial scale, it is thought it will be able to cut large amount of emissions from heavy industries.

The EU's executive Commission recommended six winners of EU funding for projects demonstrating CCS to the European Parliament last Friday. The final list of winners will be published by mid-November.

Britain is ahead of the EU on getting a CCS framework in place, but is still losing ground to the United States, Canada and Australia in the race to get the first commercial-scale demonstration project running, McElroy said.

Britain said last week it was determined to speed up CCS development and may bring forward its plans to introduce an electricity levy to fund such demonstration projects.

Separately, the early auctioning of carbon permits under the EU's Emissions Trading Scheme (EU ETS) is a very high priority, McElroy said.

We would like to get auctioning by 2011 and we are pushing for a common EU platform, he said. We need access to these allowances to allow us to hedge.

The EU Commission plans to auction carbon permits from the next phase of the EU ETS (2012-2020), gradually phasing out free allocation to carbon-heavy industries.

The EU Commission, along with several member states are in favor of a common EU platform for auctioning, while Germany and Britain are opposed. Britain and Germany already auction permits in regular national auctions.

There is a strong case for looking at existing exchanges as potential platforms for auctioning, McElroy told Reuters.

The EU Commission is holding a formal stakeholder meeting next week in Brussels on this issue.

(Editing by James Jukwey)