Contest for £1bn green prize ‘held under false pretences’

Doncaster Mayor Peter Davies.
Doncaster Mayor Peter Davies.
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THE Government stands accused of “stringing along” three massive green energy projects in Yorkshire after secret Whitehall documents revealed only 20 per cent of the public funds promised to the industry are actually available.

An unpublished Cabinet Office report on the Government’s £1 billion carbon capture and storage (CCS) competition reveals “only £200m is, at present, available” following a covert raid on the fund by the Treasury.

Eight projects had been bidding for a share of the supposed £1 billion fund, with the hot favourite a massive “clean coal” power station at Hatfield Colliery in South Yorkshire which would have created an estimated 4,000 new jobs.

There was widespread shock in October when the Government announced the Don Valley scheme had not even made its four-strong shortlist, despite having been rated the best in Europe by the EU and having already won £160m from Brussels.

Unlike every other proposed project in the UK, the Hatfield project claimed to be close to “shovel-ready”, and had hoped to secure the £1 billion from the Government quickly in order to be operating by 2015.

But the previously unpublished Cabinet Office study reveals most of the £1 billion fund – originally set aside by Labour in 2008 – will not now be available until the Government’s next spending review period, which runs from 2015 to 2020.

The revelation will fuel speculation that the Don Valley scheme was abandoned by Ministers because it would have required support immediately – effectively being punished for being too far advanced.

Peter Davies, the Mayor of Doncaster, said: “The truth is finally coming out on the Government’s CCS competition debacle.

“I said from the start that there must be more to their shocking decision than just a simple case of ‘winners and losers’, and I have been proved right.

“This so-called £1 billion competition was launched under false pretences, with the vast majority of funding not available for a number of years.

“It was always going to be impossible for the most advanced project to gain the support it needed as they simply didn’t have the money available.”

CCS is an emerging technology which involved capturing the carbon emissions from heavy polluters such as power stations and steelworks before they are released into the atmosphere, and then storing them safely underground.

David Cameron made clear last week that CCS is vital if the UK is going to succeed in meeting its carbon emission targets while also expanding its use of gas.

Yorkshire is widely seen as one of the most promising places in the world to trial CCS technology owing to its cluster of heavy industries and its proximity to depleted North Sea oil fields, where scientists believe large quantities of CO2 could be stored for millions of years.

Regional planners had hoped the Hatfield project could be the first step in a larger Yorkshire-wide scheme that would see a shared pipeline collect CO2 from all Yorkshire’s heavy industries, securing their future for decades to come while cutting the UK’s entire carbon output by as much as 10 per cent.

Mr Davies said: “Doncaster and Yorkshire should be leading the way across Europe in terms of this new technology, but it appears the Treasury has stepped in and blocked real progress.”

Prior to their failure to make the Government’s shortlist, project managers in Hatfield had managed to attract significant private investment to their scheme, including from Korean technology giant Samsung.

That money will now be lost to the region if 2CO Energy, the firm behind the scheme, cannot manage to raise all the funds required without Government support.

Lewis Gillies, chief executive of 2CO Energy, expressed disappointment his firm was apparently bidding for money that is not actually available.

“If that is true, it is a real shame,” he said. “Based on public statements that the money was available, we spent an awful lot of time, money and effort on Don Valley to make it the most advanced project in Europe.

“We are now looking at options to move the project forward outside the competition.”

The huge black hole in the UK’s funding competition also appears to have cost the country hundreds of millions of pounds in possible EU grants.

The EU has been running its own parallel competition to help get CCS off the ground, and had made £1.2 billion available.

Three CCS projects in Yorkshire made the eight-strong 
shortlist, with Hatfield ranked highest.

But national governments were required to pledge match-funding for each successful scheme, and the Treasury’s failure
to do so meant all the UK 
projects – including a “clean
coal” project at Drax, in North Yorkshire – missed out on the hundreds of millions of pounds

Labour’s Shadow Energy Minister, Tom Greatrex, said: “The European Commission is clear that the blame for the UK’s failure to access potentially make-or-break EU funding lies squarely with the Government.”

The Government, however, insisted the £1 billion will still be available “when projects need it”, and that EU funding could still be secured in a second competition in 2013.

Sources insisted the Hatfield scheme missed out simply because it “did not score as well 
as others against our criteria, and therefore was not shortlisted”.