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Government CCS support cancellation undermines UK's low-carbon energy prospects

Author : Alan Franck, Editor, Hazardex

24 December 2015

The UK Government’s decision to scrap a major part of its planned carbon capture and storage (CCS) funding has been met with dismay across the UK engineering and energy sectors. Three weeks before the COP21 Paris climate change agreement was signed on December 14, the Government made a regulatory announcement to this effect on the London stock exchange. 

Stock image
Stock image

It read: “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 £1bn CCS Competition should have provided ongoing funding to the UK’s two major CCS R&D projects, White Rose at Drax in Yorkshire and Peterhead in Scotland.

Following the announcement, White Rose said it was difficult to imagine the project’s continuation, while Peterhead’s main backers said they now saw no future for the project.

The Institution of Chemical Engineers’ Energy Centre described the move as “extremely bad news for the UK and its ability to decarbonise its energy system”. An Institution of Mechanical Engineers spokesperson said that with the winding-down of coal-fired generation and just one nuclear reactor currently planned, the UK would likely rely on another dash for gas. Without CCS technology, the country would then miss its carbon emissions’ targets by a large margin.

As David Cameron hailed the Paris agreement as a “huge step forward in helping to secure the future of our planet”, his former Energy Secretary, the Liberal Democrat Ed Davey, was scathing about the Government’s decision to axe the pilot project. “The way they’ve cut the carbon capture storage programme – where the UK was one of the leaders in the world – is a national disgrace,” he said.

The government did recently announce new plans to support CCS on gas powered plants through subsidy support contracts, but it remains to be seen if developers feel they can trust the government after cancelling support for these two demonstration projects.

This mirrors sentiment in the renewables sector, where the UK government is increasingly seen as an unreliable partner after recent policy flip-flops and changes in development and tariff support.

Even the Confederation of Business Industry, not usually this Government’s most vocal critic, has called for more consistency in its renewables and overall energy policy.

“While the UK is making its voice heard at global talks, more needs to be done at home,” Carolyn Fairbairn, director general of the CBI industry association, said. “The Government must provide a stable environment that enables investment in cleaner, more affordable and more secure energy generation, including renewable technologies and gas plants.”

Here's hoping that in 2016 the Government will listen to these voices. The UK urgently needs consistent medium and long-term policies that enable energy sector companies, and industry generally, to plan for a low-carbon energy future.

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