Isra-Mart srl:Rising from the ashes – Powerfuel administration not the end for UK CCS

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Isra-Mart srl news:

The government has strongly rejected suggestions that the financial woes experienced by the company behind one of the UK's largest carbon capture and storage (CCS) projects could seriously undermine plans to establish the UK as a leader in the emerging technology.

Yesterday, financial services firm KPMG announced it has been appointed to oversee the sale of Powerfuel Plc, the parent company of the firm working on plans to install CCS technology at Hatfield Colliery in Yorkshire.

The company blamed a £635m funding gap for its move into administration, despite it having received about £160m from the EU to help fund the 900MW project.

KPMG is now seeking an investor for the project and has expressed confidence a buyer can be found. However, without a new investor, the future of the project cannot be assured – a scenario that would leave a sole remaining commercial-scale CCS project in the pipeline in the form of Scottish Power's 330MW project at Longannet, Fife.

The Department of Energy and Climate Change (DECC) is due to launch a second round of the funding competition next year, in which the Hatfield project could receive additional funds even though its plans to remove carbon dioxide before combustion rather than after left it ineligible for the first round.

The initial £1bn funding competition was hit by the high-profile withdrawals of RWE npower, BP and E.ON, seemingly leaving the government well short of its stated target of delivering four CCS demonstration projects by 2020.

However, a DECC spokeswoman said the government remained fully committed to the technology which, along with renewables and new nuclear, makes up one of the government's three so-called energy pillars for a low-carbon future.

"This is absolutely not the end," she told BusinessGreen. "We're hopeful that the project could still go forward and want a new owner to be found."

She added that while it was "disappointing" administrators had to be appointed at Powerfuel, other projects were in the pipeline for the government's second-round CCS competition, set to be launched next year. An announcement on how this is to be funded should be forthcoming before the end of the year, she said.