Comment & Analysis
Snuck out among a welter of announcements that formed part of the Chancellor’s Autumn Statement was a surprise decision from the government to withdraw funding for a pioneering £1 billion carbon capture scheme. Insiders told PE that the decision was “purely political and made at the eleventh hour”, allowing the government to avoid cutbacks in other more populist areas, such as policing budgets.
So what’s the context to the decision? The government launched the Carbon Capture and Storage (CCS) Competition three years ago in the hope of stimulating industrial interest in a technology that could see carbon emissions from power plants captured and piped out to be stored in disused North Sea gas fields. This would enable coal and gas-fired plants to keep generating while also slashing greenhouse gas emissions.
Two consortia were battling to win the funding. Firstly, the Peterhead project in Aberdeenshire saw Shell and SSE combine to put forward a plan to fit carbon capture technology to an existing gas power station. Meanwhile, the White Rose project in Yorkshire saw Capture Power proposing a new coal plant built with CCS to be located next to the Drax power station.
But despite the rival groups spending millions of pounds to progress their bids, the government pulled the plug in a surprising move that seemed to catch everyone off guard.
“We were surprised and very disappointed by the decision to cancel the programme more than three years into the competition,” said Leigh Hackett, chief executive of Capture Power. “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 government support.”
Hackett was probably biting his tongue. But there was no such restraint at the Carbon Capture and Storage Association. “It’s devastating,” said Dr Luke Warren, the association’s chief executive. “Only six months ago the government’s manifesto committed £1 billion of funding for CCS. Moving the goalposts just when the competition is about to conclude is an appalling way to do business.”
Warren said the announcement was a massive blow to confidence for companies investing in CCS. “We call on the government to come forward with their plans for CCS as this technology is critical for the UK’s economic, industrial and climate policies. Without government support for CCS the UK will lose the opportunity for cost-effective decarbonisation.”
Anger at the decision was felt far and wide. Environmental campaign group Greenpeace, which rarely sides with the giants of the energy industry, also derided the cut in funding. “The Treasury has scrapped the centrepiece of David Cameron’s decarbonisation strategy,” said Doug Parr, head of policy at Greenpeace. “This is another example of the government’s incoherent energy policy. We need it to commit to clean, renewable energy – it’s competitive and creates jobs.”