Funding for First Gas Carbon Capture Project in U.K.

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The future of the world's first commercial gas-fired carbon capture and storage (CCS) demonstration project at Peterhead in Scotland looks brighter following the U.K. government's award of funding for the next stage of development.

The government made the award to project partner Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands), which will see the Peterhead CCS project share £100 million in funding with the U.K.'s other key carbon capture project, the White Rose project at the Drax coal-fired plant in North Yorkshire.

The Peterhead project, led by Shell and SSE plc (Perth, Scotland), is a 340-megawatt (MW) post-combustion capture retrofitted to part of an existing 1,180 MW Combined Cycle Gas Turbine power station at Peterhead, Scotland. As the world's first full-scale gas CCS project -- the goal at Peterhead will be to capture up to 10 million tons of carbon dioxide (CO2) emissions and transport it by pipeline offshore for long-term storage deep under the North Sea.

"I am pleased to inform Parliament that today, the Prime Minister and I are signing a contract with Shell to take their world leading gas carbon capture and storage (CCS) project into the next stage of development," announced Edward Davey, U.K. Climate Change and Energy Minister. "The Government has agreed a multi-million pound contract for engineering, design and financial work on the Peterhead CCS project in Aberdeenshire. The world's first planned gas CCS project, Peterhead involves installing carbon capture technology onto SSE's existing Peterhead gas power plant, and transporting the CO2 100 kilometres (km) offshore for safe, permanent storage 2km under the North Sea in the old Goldeneye gas field. If built, the project could save one million tonnes of CO2 each year and provide clean electricity to over 500,000 homes."

He added: "The project also opens a potential new future for the North Sea - turning old oil and gas fields into CO2 stores, offering the possibility of using CO2 for Enhanced Oil Recovery and giving new opportunities for the U.K.'s world leading offshore and subsea industries".

The future for the White Rose project remains less certain, however, until the government increases its funding. White Rose is listed as the only viable European CCS project in line for potential European Union (E.U.) funding worth hundreds of millions of euro but this will only happen if the U.K. government pledges to match it, something it has so far failed to do. For additional information, see January 24, 2014, article - E.U. Funding Doubts for U.K. Carbon Capture Project.

The White Rose Project is an oxyfuel capture project at a proposed new 426-megawatt (MW) co-firing plant next to the giant Drax power plant Selby, North Yorkshire. It is being led by Capture Power Limited, a consortium of Alstom S.A. (OTC:ALSMY) (Paris, France), Drax Group plc (LSE:DRX) (Selby, England), BOC and grid operator, National Grid. White Rose will constructed adjacent to the existing Drax power plant, Europe's largest coal-fired plant, which is currently undergoing a series of conversions to biomass in order to extend the life of the facility.

Last December, the U.K. government announcement that it had awarded a Front End Engineering and Design (FEED) contract for White Rose. The contract also includes the planned development of a CO2 transportation and storage solution -- the Yorkshire Humber CCS Trunkline -- to be undertaken by National Grid.

In late 2015, both CCS projects are expected to make final investment decisions, with the Government taking decisions shortly after.

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