Scot-Govt fury over doomed renewable energy plan as Osborne pulls plug on £1bn UK carbon capture competition: Scottish Energy Association laments Govt U-turn on Peterhead project

Peterhead carbon capture no more
Peterhead carbon capture no more

After Chancellor George Osborne completed his financial spending statement today in the Westminster parliament, the UK Government announced that that its £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available.

This immediately resulted in N. Sea oil  giant Shell and its Perth-based SSE partner jettisoning their flagship carbon capture project at Peterhead.

Condemning this decision, Scottish Energy Minister Fergus Ewing said; “The UK Government’s decision to scrap its £1 billion Carbon Capture and Storage (CCS) programme is a disgrace.

“It shows complete disregard for tackling climate change, utter indifference to developing the crucial new technologies that will cut emissions, and is another UK Government hammer blow to energy generation in Scotland.

”Just last week the Secretary of State announced an energy strategy heavily reliant on gas, yet the Chancellor has slashed support for the only credible technology which can reduce emissions from large scale gas generation.

“The UK has 30% of Europe’s CO2 storage capacity alongside an oil and gas infrastructure which can be utilised for CCS. The CCS Commercialisation Programme has already been running for 10 years. – had the competition been allowed to run its course, the world’s first commercial scale gas powered CCS plant could have been built in Peterhead creating new jobs, blazing a trail for innovation and potentially attracting significant investment to the UK.

“This should have been a huge industrial opportunity. Instead the decision to pull the plug on the CCS programme, to meet a deeply flawed austerity agenda, is breathtakingly short-sighted, even for this UK Government.”

Hector Grant, Chief Executive, Industrial and Power AssociationHector Grant, Chief Executive of the Scottish Energy Association, (pictured, left) said: “With investment of many billions needed to provide secure, affordable and low carbon solutions, investors need a stable investment framework that is aligned to these objectives.

“However recent announcements do not yet achieve this – with gaps, inconsistencies and key details yet to be provided.  For example exploiting shale gas may offer secure and affordable energy, but to achieve significant carbon savings this needs Carbon Capture and Storage (CCS).  

“Yet the funding for the UK’s CCS projects has been withdrawn, and with it the prospect for a world leading gas CCS project at Peterhead. This is the third time in 10 years that fundamental changes in Government policy have led to cancellation of major CCS projects in Scotland.”   

Professor Stuart Haszeldine, Director of the Scottish Carbon Capture and Storage project, added; “The UK Government’s reliance on nuclear power to deliver our future electricity needs depends entirely on whether projects such as Hinckley Point can actually be delivered on time.

“All of the current three versions of this power plant under construction globally are taking double the anticipated timescales at treble the anticipated price.  Small modular nuclear power, although promising, remains entirely unproven in a commercial supply setting.

“If new nuclear cannot be delivered at scale and on time, the UK runs the future risk, as of today, of becoming a distressed buyer of rapidly built gas power plant, which locks in UK carbon emissions for the next 40 years. To me, this does not look like prudent management.

“The new electricity supply landscape proposed by the Government, but a long way from being delivered, means all low-carbon electricity providers should be bidding into the supply market under equal terms.

This means that low-carbon renewable providers must provide reliable ‘ firm’ power delivery and that CCS projects should receive the multiple underwriting and favourable contract benefits gifted to Hinkley and its successors. CCS can deliver this and it would be perverse to prevent it from doing so.”

Scottish Carbon Capture & Storage (SCCS) is an independent research partnership of British Geological Survey, Heriot-Watt University, University of Aberdeen, the University of Edinburgh and the University of Strathclyde.

Its researchers are engaged in high-level CCS research as well as joint projects with industry to support the development and commercialisation of CCS as a climate mitigation technology.


Shell and SSE drop Peterhead CCS plan

A Shell spokesman said: “We are disappointed at the withdrawal of funding for the CCS Commercialisation Competition, in which our Peterhead CCS project was one of the final contenders.

“We have worked tirelessly over the last two years to progress our plans for this project.

“It has the potential to bring huge value to the UK, both in terms of immediate emissions reductions and developing knowledge for the benefit of a wider industry.

“Government funding to support this world-first demonstration project, through the competition, was important to achieving the aim of making the technology commercially viable in the shortest possible time.

“While we acknowledge that this decision has been made in the context of a difficult spending review, without that funding, we no longer see a future for the Peterhead project in the near term.”

A spokesperson for SSE said: “We are extremely disappointed by today’s announcement that the government is removing all committed public support for the demonstration of Carbon Capture and Storage in the UK.


Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed