Government advocates CCS despite Drax dropout
The UK Government has reiterated its support for carbon capture and storage (CCS) technology, after energy giant Drax pulled out the UK's flagship project.
Drax was a member of a consortium - Capture Power Ltd - bidding for £1bn of Government funding to build the White Rose CCS project in Yorkshire.
However, Drax has abandoned the bid, citing a lack of cash flow after recent policy changes.
Chancellor George Osborne’s ‘Summer Budget’ removed a tax exemption for renewable power generators - an exemption that had been driving Drax’s transition to biomass power. The company’s shares fell by a third after the announcement.
A statement released today (25 September) by Drax said: “We are confident the technology we have developed has real potential, but have reluctantly taken a decision not to invest any further in the development of this project.
“The decision is based purely on a drastically different financial and regulatory environment and we must put the interests of the business and our shareholders first.”
The company said it will still complete the ongoing feasibility test in the next six to 12 months and will make the site available for the project to be built by others.
Stay the course
Despite the blow, the Department of Energy and Climate Change (DECC) was quick to reaffirm its support for CCS on this morning via Twitter.
CCS is set to play a vital role in decarbonising the electricity sector and heavy industry. 1/3— DECC (@DECCgovuk) September 25, 2015
The government remains committed to assisting the development of CCS in the UK. 2/3— DECC (@DECCgovuk) September 25, 2015
3/3 and we are committed to the CCS Competition, continuing to negotiate with the two preferred bidders.— DECC (@DECCgovuk) September 25, 2015
One preferred bidder is the remnants of Power Capture Ltd – made up of energy technology firm Alstom and industrial gas supplier BOC. The second option is a partnership between Shell and SSE, which are proposing a CCS project at Peterhead's gas fired power station in Aberdeenshire.
Cause for concern
While the Government has promised to plow ahead, energy workers’ union Prospect has warned that Drax’s decision was a “body-blow to low-carbon energy generation for the UK”.
Prospect deputy general secretary Garry Graham said: “Drax’s decision is the result of fragmented and incoherent government policy which is having a chilling effect on investors’ confidence.
“Even those close to government have expressed concern about the fact that it is making unilateral decisions, with no consultation or forewarning."
The technology also appears to have cross-party support with Labour Lords backing an amendment to the Energy Bill, which would force oil and gas companies operating in the UK to pay to develop the technology.
However, CCS is still seen by some as an obstacle to a transition to renewables.
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