Isra-Mart srl:DECC opens door for CCS gas plants

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Owners of gas-fired power plants have been invited to apply for a share of the government's planned £9bn carbon capture and storage (CCS) demonstration fund, after the Department of Energy and Climate Change (DECC) announced today it was removing restrictions that would have only allowed coal plants to access the funding.

Energy and Climate Change Secretary Chris Huhne said he would extend the remit of the second phase of the CCS demonstration scheme in a bid to ensure the UK cuts average emissions in the power sector by four-fifths, to about 100g/kWh by 2030, compared to around 500g/kWh today.

"Today the government is reasserting its mission to lead the world on CCS, by opening our funding process to what could be one of the first ever commercial-scale CCS projects on a gas-fired plant in the world," he said. "The UK looks set to rely on gas for years to come. We won't be able to take the carbon out of all gas plants overnight, but we hope to support the process by investment in new technology now."

The decision follows advice from Lord Adair Turner, chairman of the Climate Change Committee, who urged the government to "seriously consider" funding at least one gas CCS demonstration as part of the four CCS projects that the coalition has promised to deliver.

Turner also recommended extending the coalition's proposed Emissions Performance Standard to require any new gas plant beyond 2020 to be fitted with CCS technology. Under current proposals, the government is planning to introduce emissions standards that would effectively ban the construction of new coal-fired power plants that do not incorporate CCS, but the standards are expected to be set at a level that would allow unabated gas-fired plants to still be built.

Huhne failed to confirm today whether the government would impose more demanding emissions standards on gas power plants, but a DECC spokeswoman told BusinessGreen.com that the new funding for gas plants could pave the way for tighter restrictions in the future.

"At the moment, we're focused on coal," she said. "In the long-term we might be looking at emissions standards on gas, but not now."

Gas plants built today do however have to be fitted with "CCS ready" technology, so they can have carbon capturing systems retrofitted at a later date.

DECC has not yet finalised how the new generation of CCS demonstration plants will be funded, despite an initial study concluding that four plants will require up to £9bn of funding.

The coalition is currently looking at a number of financing options, with a decision expected in the coming months. "It may be through a CCS levy, or it could be through direct [public] taxation," said the DECC spokeswoman. "But it could be less than £9bn, it could be £8bn."

She added that the commercial terms for the initial £1bn funding " competition" will be announced in the second half of 2011. However, DECC has now restructured the competition into a "procurement round" after E.ON abandoned plans for a CCS plant at Kingsnorth last month, leaving ScottishPower as the only remaining company seeking funding through the competition.

In related news, Huhne arrived in China yesterday, as part of a three-day trip to bolster "collaboration and engagement" with the Chinese government as part of efforts to improve global energy security and accelerate the roll out of clean energy technology.

"Both sides stand to gain from increased trade, investment and technology cooperation," said DECC in a statement.