Carbon Capture Incentive Included in New U.K. Energy Bill

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. government has introduced a bill to Parliament that includes financial incentives for energy companies to implement carbon capture and storage (CCS) solutions. The new CCS incentives will mean a levy on electricity bills for consumers, allowing the government to raise enough money to support up to four, commercial-scale CCS demonstration projects. The incentive could also raise enough funds to support scaling up those demonstration projects to full commercial capacity in the future.

According to the Department of Energy and Climate Change (DECC), the bill will "strengthen" the U.K.'s lead in the development of CCS solutions, which will result in annual revenues of between £2 billion and £4 billion ($3.3 billion-$6.6 billion) by 2030 and the creation of 30,000 to 60,000 jobs. Other aspects of the energy bill include giving energy regulator Ofgem increased powers, pushing a low-carbon mandate, and ensuring electricity price protection for vulnerable households.

"The new energy bill is an example of the government taking direct action to ensure the markets work fairly and to help more of the most vulnerable with their fuel bills," said Energy and Climate Change Secretary Ed Miliband. "It will ensure that consumers can be confident that British energy is sustainable and secure. Making the transition to a low-carbon economy will be a challenge, but this bill will allow us to put in place key powers, which will help us make the shift fairer for all.

"Carbon capture and storage is a key technology to tackle climate change, and 17 days ahead of the crucial talks in Copenhagen, this bill sets up a new CCS incentive to support the development of up to four commercial-scale CCS projects in the U.K."

Energy company ScottishPower (Glasgow, Scotland) has been the first to come out in support of the CCS incentive.

ScottishPower Chief Executive Nick Horler said: "We welcome the further commitment outlined today in the queen's speech to support the development of carbon capture and storage technology. The government has clearly shown that it has the desire for the U.K. to lead the world in this area. The framework for the development of clean coal, including the funding mechanism in the form of the CCS incentive, is a significant step toward creating a decarbonised electricity sector.

"There is also clear recognition that the massive economic and environmental potential of this revolutionary technology will only be fully realised if we prove CCS at a commercial scale as quickly as possible."

Next summer, the government will release final details for the CCS incentive mechanism, which will become operational April 2011.

There has been upheaval in the U.K.'s carbon storage market in recent weeks, with Dong Energy's (Copenhagen, Denmark) consortium backing out of the CCS competition for funding. For additional information, see related article from November 12, 2009 - Plans for U.K. CCS Projects Suffer Setback. Separately, RWE npower and Scottish and Southern Energy plc (OTC:SSEZY) (Perth, Scotland) have announced their entries into the CCS race. For additional information, see related article from November 17, 2009 - SSE Enters U.K. Carbon Capture Race.

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