U.K. Government Close to Opening 1 Billion Pound CCS Competition

The U.K. government is almost ready to open a contest for 1 billion pounds ($1.6 billion) in funds that would back carbon capture and storage technology, Energy Minister Charles Hendry said at a conference in London today.

“The U.K. government is taking forward a carbon capture and storage delivery program with 1 billion pounds of capital funding to support a portfolio of commercially focused projects,” Hendry said. He aims for the projects to be commercially deployed in the 2020s.

The government is touting the technology as key to meeting European Union clean energy goals because it sequesters emissions from fossil fuels, allowing coal- and gas-fired plants to keep providing a baseload of electricity along with intermittent sources such as wind and solar.

The International Energy Agency says 3,400 plants using CCS technology are needed by 2050 in order to meet the goal of cutting global carbon emissions in half.

The scope of the new CCS program is still being developed and will be announced in the “very near future,” Hendry said. The government is making final adjustments to criteria detailing the program in the coming weeks.

Decisions Due

Decisions on which projects to support will follow in the next six to nine months, aligning U.K. policies with funds from the European Commission, he said.

The program will be “more comprehensive and more all- embracing” than the government’s support for Iberdrola SA (IBE)’s carbon capture and storage project at Longannet in Scotland, which collapsed in October because of the costs associated with the age of the plant.

“Our vision is for a new world-leading U.K. CCS industry in the 2020s, an industry that can compete on costs with other low carbon technologies,” he said. Hendry also said the government expects to invest about 125 million pounds in CCS research and development programs by 2015.

The U.K. Department of Energy and Climate Change published details in the Official Journal of the European Union on Feb. 24 of its “carbon capture and storage commercialization program.” It outlined contracts available for a CCS project including research and development, gas storage, operation of a power plant and engineering work.

“The contract or contracts collectively shall contribute to demonstrating the viability on a commercial scale of carbon capture and storage technology,” DECC said in the notice. The document said DECC aims for projects to start demonstrating CCS by 2016 to 2020. Interested groups have to register by April 13.

The notice is not the official start of the process, a spokesman at DECC said today by phone. It notifies interested parties that the selection process will start soon.

The 1 billion pounds of funding won’t be enough to support four full-scale CCS projects the government has said it wants, though it could help more than one, Hendry said during the conference. The government is hoping to gain support from other investors and has had expressions of interest from overseas sovereign wealth funds, he said.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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