U.K. Cancels Funding for Carbon Capture Projects

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Large carbon capture and storage (CCS) projects in the U.K. could be postponed or cancelled after the government pulled £1 billion ($1.5 billion) in promised funding.

In a statement to the London Stock Exchange, the government said: "Today, following the Chancellor's Autumn Statement, HM Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available. This decision means that the CCS Competition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them."

The projects, designed to capture CO2 emissions from fossil-fuel power plants, now face an uncertain future as the funding was vital in progressing existing CCS pilots to commercial scale. The sudden U-turn means that the future is in doubt for the two leading U.K. CCS projects, which are located at the massive Drax coal-fired power plant in Selby, England and the gas-fired Peterhead plant in Scotland.

"Today's announcement that the funding for CCS will be cut is devastating," commented Luke Warren, chief executive of the Carbon Capture and Storage Association (CCSA). "Only six months ago the Government's manifesto committed £1 billion of funding for CCS. Moving the goalposts just at the time when a four-year competition is about to conclude is an appalling way to do business."

He added: "This announcement is a real blow to confidence for companies investing in CCS. We call on the Government to come forward--as a matter of urgency--with their plans for CCS as this technology is critical for the U.K.'s economic, industrial and climate policies. Without concrete Government support for CCS, the U.K. will lose the opportunity for cost-effective decarbonisation".

The government's decision comes just a week after it committed to closing all coal-fired power plants within a decade. U.K. Energy and Climate Change Secretary Amber Rudd said that all unabated coal-fired plants must shut down by 2025, and will be restricted in their usage from 2023. For additional information, see November 23, 2015, article - U.K. Calls Time on Coal-Fired Power.

The projects impacted include White Rose, an oxyfuel capture project at a proposed 448-megawatt (MW) co-firing plant, next to the Drax power plant. It would be capable of capturing 2 million tonnes of CO2 per year, about 90% of all CO2 emissions produced by the plant. The Peterhead project is the world's first commercial gas-fired CCS project. Both were competing for the government's $1.5 billion of funding under the Carbon Capture and Storage Commercialization Programme.

Leigh Hackett, chief executive officer of Capture Power, which is overseeing the White Rose project, commented on the government's move: "We are surprised and very disappointed by the Government's decision to cancel the £1bn CCS Commercialisation Programme more than three years into the competition. It is too early to make any definitive decisions about the future of the White Rose CCS Project, however, it is difficult to imagine its continuation in the absence of crucial Government support."

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