Energy cash burns as Ministers dither again

Yorkshire and the UK have missed hundreds of millions of pounds of EU funding because of Ministers’ failure to commit to a long-term energy policy, a Euro MP has revealed.

North-West MEP Chris Davies said the European Commission has decided the UK will not receive anything from the 1.5 billion euro fund it has set aside to support carbon capture and storage (CCS) projects, despite the UK being widely seen as one of the best places in Europe to trial the emerging technology.

News agency Reuters said that a separate EU source, speaking on condition of anonymity, had confirmed that no UK projects had qualified for the competition “because of lack of funding detail” from the UK Government.

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The decision would be a body blow for Yorkshire, which has the potential to become a world leader in CCS due to its cluster of heavy-polluting industries and its close proximity to the North Sea, where millions of tons of CO2 can be stored underground.

The Yorkshire Post has been lobbying for the Government to back CCS projects in this region, with the long-term goal of constructing a Yorkshire-wide CO2 pipeline that could be used by heavy industry from the Aire Valley to the banks of the Humber.

Planners believer such a pipeline would create thousands of jobs and secure the future of local industry for decades to come.

The Department for Energy and Climate Change (DECC) insists it remains fully committed to developing CCS in the UK, and put forward two projects, including a proposed “clean coal” power station at Drax in North Yorkshire, for EU funding last month.

But Mr Davies – who was instrumental in setting up the EU competition in 2009 – said commissioners in Brussels have decided to fund projects elsewhere, because Britain has failed to offer sufficient guarantees that it will put up any money of its own.

“It is now clear the UK has lost out on the prospect of more than 600 million euro of EU funding to support the development of CCS demonstration projects,” the Liberal Democrat MEP said.

“This deals a devastating blow to hopes of Europe becoming a world leader in CCS technology, and threatens global aspirations to reduce global warming emissions from fossil fuel power stations and industrial plants.

“Brussels officials are making no secret of the fact that the Government has failed to guarantee it will provide its own funding for the selected projects, and is giving no pledges that it will make such a commitment any time soon.

“The UK had no shortage of impressive projects in the bidding. Our failure to proceed now is a tragedy, for the UK is the best location in Europe for CCS.”

Less than a year ago there were three different CCS “clean coal” power stations being planned in Yorkshire – at Hatfield in South Yorkshire, Drax in North Yorkshire and Killingholme on the banks of the River Humber.

It was widely hoped the region could win funding for at least two.

The Killingholme project has already fallen by the wayside, however.

Earlier this month, the Government announced it was not backing the Don Valley project at Hatfield – even though EU officials had rated it the best CCS project in the whole of Europe.

Now it appears Drax will also miss EU funds of as much as £250m.

Both DECC and the Treasury have refused to comment, but adding that they have received no official response from the EU so far.

However, Mr Davies is laying the blame at the Chancellor’s door.

“The finger of blame for this state of affairs should be pointed squarely at George Osborne,” he said. “The reality is the Treasury has put one obstacle after another in the way of CCS development.

“It has made DECC officials jump through hoop after hoop while doing everything possible to avoid parting with money.

“This explains also why DECC refused to give its backing to the Don Valley CCS project. Although regarded as the most promising in Europe, it was ready to go, money could be spent, and so it had to be stopped.”

The UK has one more chance to win EU money for a CCS scheme, in a final round of funding to be launched next year.

In the meantime, the Government insists it still has £1bn of its own money set aside to support CCS projects.

Drax is one of four schemes fighting to win a share of that funding, An official announcement is expected in the new year.