Isra-Mart srl: MPs demand clarity on carbon capture funding

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The head of an influential committee of MPs has expressed his shock at the decision to reallocate funds away from developing carbon capture and storage (CCS) technology and demanded to know when the government envisages the technology being up and running.

Tim Yeo, chair of the energy and climate change committee, today issued an open letter to Chris Huhne after last week's Autumn Statement siphoned off the £1bn earmarked for the UK's first CCS demonstration programme to finance a new set of infrastructure projects.

The move took the industry by surprise and was criticised by the government's own independent advisors after it threw into doubt the agreed timeline for having the first demonstration project completed by 2016 and three more operational by 2020.

CCS is one of the main pillars of the government's energy policy and is expected to become a £10bn industry in the UK employing up to 27,000 people by 2025.

But to date, only one small pilot project has come online with many observers blaming the lack of progress on the lengthy time taken to award funding to the first demonstration project, which saw all applicants withdraw from the process, culminating in Scottish Power's Longannet project in Fife dropping out of the competition in October.

The technology is thought to be well suited to the UK as it has access to geological formations in the North Sea capable of storing carbon emitted from factories and power plants on the east coast, as well as transferable skills from the oil and gas industry.

In his letter to the Energy and Climate Change Secretary, Yeo warns that CCS is a vital technology for the low-carbon transition and without it the UK's emissions targets may come under threat.

He calls on Huhne to urgently clarify exactly how much of the promised £1bn of CCS funding will be moved to the infrastructure budget, when he expects a commercial-scale project to be underway, and how the decision affects the next round of plants.

"There would be serious international and economic implications if we were not able to make this technology available," Yeo writes. "Without it, we may face an impossible trade-off between our environmental objectives and energy security.

"We are extremely concerned that the Treasury's short-term fixes will endanger our long-term economic and environmental prospects and these issues are not being given the weight they deserve in Whitehall."

A Department of Energy and Climate Change (DECC) spokesman insisted the government remained "fully committed" to cost-competitive deployment of CCS in the 2020s.

"We are clear that £1bn remains available to support future projects ... and expect CCS projects to come forward in this spending review period," he said in a statement. "The detailed profile of spend will be determined by the projects selected and when they require funding."

Yeo's letter comes after shadow energy minister Tom Greatrex quizzed Danny Alexander, the chief secretary to the Treasury, on the matter in Parliament yesterday.

Alexander said "£1bn is available for the carbon capture and storage project" and that the funds would be allocated "as soon as the competition is completed".

Speaking afterwards Greatrex said the answer "failed to clear up the uncertainty" that is afflicting the industry over how much funding will be made available during this parliament.

"The government refuses to say how much money there will be before 2015, and won't outline a revised timetable for CCS development on a commercial scale," he added. "If businesses are to invest in the long term development of this vital low-carbon technology, they need clarity from the government not dither and delay.

"It is time Danny Alexander and Chris Huhne came clean, rather than persistently undermining the UK's current commercial advantage on CCS technology."