Crunch time for CCS in Britain

Chris Davies

The UK risks losing out on more than €900 million of EU funding intended to support the construction of carbon capture and storage demonstration projects.

Ministers have until the end of the month to give guarantees to the European Commission that they will provide the additional financial support needed to ensure completion of qualifying projects.

Development of CCS is widely regarded as an essential tool in the fight against global warming and has the support of all political parties. It enables CO2 from coal and gas power plants, as well as industrial installations, to be pumped into rock deep underground instead of being released into the atmosphere.

The Coalition Agreement calls for construction of four CCS projects but currently only three power station projects are in the running: Don Valley (coal) at Hatfield near Doncaster, White Rose (coal) at the existing Drax power station site, and Peterhead (gas) in Scotland. In each case the CO2 removed will be piped for injection deep beneath the North Sea.

EU Prime Ministers agreed in 2007 to have up to 12 CCS demonstration plants in operation by 2015, but proposals for projects in Germany, Poland, Romania, Italy and Spain have encountered problems and European hopes now rest with the UK to take the technology forward.

Developers believe that CCS will enable CO2-free electricity to be provided at similar costs to onshore wind, and at much less expense than offshore wind or solar photovoltaic cells. However, the first full scale demonstration projects will require very considerable subsidy.

A maximum of £337 million per project could be available from the EU’s 'NER300’ fund for CCS and innovative renewable energy projects. The fund, derived from the sale of ‘surplus’ carbon allowances, was created as a result of a 2008 initiative by the European Parliament’s rapporteur on CCS, British Liberal Democrat MEP Chris Davies, with strong backing from the UK Government.

Although £1 billion has been allocated by the Government towards the capital costs of CCS projects in the UK, developers will also require subsidy towards the operating costs for at least 10 years. It is far from certain that the Treasury will approve the funding under the Contracts-for-Difference scheme before the deadline.

Chris Davies said: “This is crunch time for CCS, and Ministers need to knock heads together to make sure that Britain doesn’t miss out on a large pot of EU funds that it was responsible for putting into place.

“If we fail within the next three weeks to make the crucial decisions Britain and Europe will lose out on the chance to be global leaders in developing CCS technology, and the world’s prospects of fighting climate change will be very much reduced.”