£4bn black hole sinks hopes of ‘clean coal’ in region

Chris Davies MEP
Chris Davies MEP
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PLANS to construct a wave of “clean coal” power stations across Yorkshire and the UK that would create thousands of green jobs while slashing carbon emissions have been thrown into doubt after a £4bn black hole emerged in crucial European funding plans.

Only weeks before the EU concludes its lengthy competition to provide billions of euros for ground-breaking carbon capture and storage (CCS) projects, including up to three in this region, the scheme’s chief architect has told the Yorkshire Post the amount of money available is likely to be less than a third what was envisaged.

Yorkshire had expected to attract hundreds of millions of pounds towards proposals for “clean coal” power stations at Hatfield, near Doncaster; Drax, near Selby; and Killingholme, on the Humber.

Regional planners want those projects to be the first part of a wider shared CCS pipeline scheme that would create tens of thousands of new jobs and slash total UK emissions by 10 per cent.

But Liberal Democrat MEP Chris Davies has revealed there is likely to be far less money available than expected, and that he believes only two or three CCS schemes across the whole of Europe are now likely to receive initial funds – rather than at least eight as planned.

Such an outcome would be a sizeable blow for Yorkshire and for the UK as a whole, seen as the leading locations in Europe to move forward with CCS schemes and hoping to win funding for up to three different projects.

“Originally I would have expected us to get maybe three of the eight projects here in the UK,” Mr Davies said. “The UK is better placed than anywhere else in the continent for CCS – and there’s no question in my mind Yorkshire is the single best place in the UK.

“But now it’s looking more like there will be just two or three projects (funded) in this first tranche across the whole of Europe. Clearly, no-one would look favourably on the UK getting more than one of those.”

CCS is an emerging technology whereby harmful carbon emissions are captured from power stations and other major polluters before they are released, and then sent down pipelines to be buried deep underground.

Yorkshire is seen as the best place in Europe to develop the first CCS schemes due to its cluster of heavily-polluting industries, and its proximity to depleted oil and gas fields off the North Sea coast where scientists believe millions of tons of CO2 could be buried.

CCS is widely viewed as a vital part of the global drive to cut carbon emissions, but because the technology its yet to be trialled on a commercial scale it will require huge public subsidies to get initial projects off the ground. Each scheme is expected to cost at least £1bn in capital funds.

With this in mind, in 2008 Mr Davies helped push through an agreement in Brussels that the proceeds from the sales of 300m carbon permits on the EU’s new carbon trading scheme would be diverted towards supporting CCS schemes across Europe.

Experts believed the sale of the permits would raise 6bn euro, sufficient to part-fund at least eight different CCS projects and so ensuring the various types of technology available can be trialled.

But over the past four years the price of carbon has steadily fallen, meaning the amount likely to be raised by selling off the permits has plummeted.

In 2010 the EU said it hoped the scheme would still raise 4.5bn euro. But with carbon prices recently hitting a record low, Mr Davies said the final amount raised is likely to be smaller still.

“The carbon price has effectively collapsed,” he said. “The funding is likely to be down to considerably less than 2bn euro at the moment. The UK is not going to receive what we had hoped.”