Hidden cuts jeopardise CCS industry
We blogged last week that the Coalition’s Mid-term review seemed to imply “less support for investment in carbon capture & storage technology.” Cabinet papers leaked to the FT seem to confirm that suspicion. It appears that just £200m has been set aside in this Parliament for the supposed £1bn CCS competition. The cutbacks – unknown to those bidding for the £1bn pot – are bound to jeopardise the UK’s global leadership in CCS technology, putting the opportunity to create thousands of skilled jobs at risk.
“The £1bn previously agreed with Treasury has been retained although only £200m is, at present, available for the current spending review period,” the Cabinet’s project assessment review said. According to the FT, the figures are in a Cabinet Office document uncovered by Labour that explains the exact amount of funding available for a contest to find a project to capture emissions from fossil fuel plants in the UK.
Tom Greatrex, shadow energy minister, said the government had been “caught out stringing the CCS industry along” while cutting the available funding. “Ministers have serious questions to answer and must come clean about support for CCS.”
Something else now makes sense – DECC’s decision not to support 2CO’s entry in the CCS competition. 2CO’s “shovel ready” CCS project, directly linked to the Hatfield coal mine in South Yorkshire, was regarded as the EU’s foremost CCS project. The CCS industry was shocked when a shortlist of four projects announced in October 2012 did not include 2CO. Instead, two projects in Scotland and others in Teesside and North Yorkshire were selected.
The FT is reporting that “one government official said 2Co had been on a proposed shortlist of just two until just weeks before the announcement. He believed there had been a deliberate attempt by the coalition to slow down the process, perhaps at the behest of the Treasury: “It changed from a DECC project to a DECC/Treasury project almost overnight,” he said.
Last October, CO2Sense said, “the decision not to short-list the Don Valley Power Project is a shock, given that it is the top ranked project in a parallel process run by the European Commission. It suggests the Government’s intent to push any major financial commitment to CCS into the next Parliament.”
Labour announced a £1bn competition to fund CCS in 2007, and also agreed a consumer levy to finance further CCS projects in this decade. But in 2010, Coalition Ministers scrapped the proposed levy. They then had to relaunch the effort in 2011 after failing to agree a funding deal with the first winner – a Scottish project proposed by ScottishPower and Shell. 2CO looked set to win the second competition.
There are, of course, fears that the 2CO project team will break up, and also that the adjacent Hatfield colliery, rumoured to be facing an uncertain future, may now have lost its major definite customer, 2CO’s clean coal power station.
Jobs tally: what’s at stake
According to CO2 Sense, the not-for-profit green business consultancy, investing in CCS in Yorkshire and Humber will provide a major boost to the UK economy:
- £1.3bn and 4,000 skilled-jobs.
- Putting CCS funding into the region will increase the area’s economic output by 0.8% per year, attract as much as £11billion in foreign investment around the carbon capture pipeline.
- Create a further 11,000 jobs.
- Hatfield mine employs 500 workers.
- 2CO has a major research and development team.