Government funds blow for clean coal power plant

AN EMBATTLED project to build the world's biggest "clean coal" power station at a colliery in Yorkshire has suffered another major blow after the Government said it would not prioritise the scheme for EU funding worth hundreds of millions of pounds.

New guidance released by the Department for Energy and Climate Change states that smaller carbon capture and storage (CCS) schemes less than half the size of the power station planned at Hatfield, near Doncaster, will be prioritised for EU funding next year.

The announcement comes just days after the entire Hatfield project was thrown into doubt when Powerfuel, the firm behind the scheme co-owned by coal entrepreneur Richard Budge, collapsed after failing to find the large-scale investment required.

Administrators confirmed last night, however, that they are now in talks with "a number of interested parties" considering a takeover.

The project remains enticing to investors, being the most advanced CCS project in England and having already secured more than 150m in EU funding.

The proposed 900MW plant would generate enough electricity to power almost a million homes, potentially creating thousands of jobs along the supply chain.

Former BP executive Lewis Gillies is heading up one of the consortia looking to buy out Powerfuel, and said his firm 2CO Energy is backed by private US capital.

But he slammed the Government's decision to give 300-400MW projects priority in a new EU funding competition which gets under way in February.

"The Government has announced this potential 400MW cap and it was a complete surprise. We were very clear on the value of Hatfield 10 days ago – now we're having to revalue everything because the economics become much more challenging."

A DECC spokeswoman denied a "cap" had been set but said more value could be derived by funding several smaller projects. "As there is not a significant amount of additional learning from a 900MW project compared to a 450MW project, it would not be appropriate to support the significant additional costs. We have always been clear about this."

CCS will capture harmful CO2 emissions before they are released into the air and bury them safely underground. Yorkshire is seen as the perfect location to trial large-scale CCS schemes due to its proximity to North Sea oil fields where the CO2 could be buried.