UK government carbon capture £1bn grant dropped Published duration 25 November 2015

image copyright Iain Smith image caption Peterhead power station was a bidder

The UK government has announced it is axing a £1bn grant for developing new carbon capture and storage (CCS) technology.

Peterhead power station and the White Rose scheme in North Yorkshire were the bidders in the competition.

Shell and SSE are behind the Aberdeenshire plans.

The energy company Drax had announced in September it was abandoning plans to introduce CCS technology in North Yorkshire.

'Engage on implications'

In a stock exchange announcement, the government said: "Today, following the Chancellor's Autumn Statement, HM Government confirms that the £1bn ring-fenced capital budget for the Carbon Capture and Storage 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."

A Shell spokesman said: "Shell is disappointed at the withdrawal of funding for the CCS Commercialisation Competition, in which our Peterhead CCS project was one of the final contenders.

"We have worked tirelessly over the last two years to progress our plans for this project.

"It has the potential to bring huge value to the UK, both in terms of immediate emissions reductions and developing knowledge for the benefit of a wider industry.

"Government funding to support this world-first demonstration project, through the competition, was important to achieving the aim of making the technology commercially viable in the shortest possible time.

"While we acknowledge that this decision has been made in the context of a difficult spending review, without that funding, we no longer see a future for the Peterhead project in the near term.

"Shell remains committed to CCS - as our involvement in demonstration projects in other parts of the world shows - and view it as an important part of a low-carbon energy future."

'Missed opportunity'

A spokesperson for SSE said: "Whilst SSE appreciates that being in government involves taking difficult decisions, it is extremely disappointed by today's announcement that the government is removing all committed public support for the demonstration of Carbon Capture and Storage in the UK.

"SSE believes this decision represents a significant missed opportunity for the UK."

Scottish energy minister Fergus Ewing said it was a "disgrace".

He said: "It shows complete disregard for tackling climate change, utter indifference to developing the crucial new technologies that will cut emissions and is another UK government hammer blow to energy generation in Scotland."

Jonathan Church, climate and energy lawyer at ClientEarth, said: "This an extremely damaging move by the UK government.

"Development of CCS has been delayed for years and by successive governments, and by axing the £1bn grant to fund these projects, the UK government is essentially closing off one of the key avenues in the UK's transition to a low-carbon economy."

Banff and Buchan SNP MP Eilidh Whiteford told BBC Scotland: "I think the whole point of the Peterhead project was it was a great chance to develop that technology.

"I will be seeking clarification from the government."

Drax was part of a scheme to store carbon dioxide next to its plant, which is the biggest coal-fired power station in the UK.