A multi-million pound scheme to fund a carbon capture and storage project (CCS) in the UK looks likely to be built in Peterhead after a competitor pulled out of the running.
Energy firm Drax announced this morning that it would no longer be seeking any funding from the UK Government for a project in Yorkshire siting a change in the regulatory environment as a factor in the collapse.
The UK Government cut subsidies to renewable energies this summer.
The White Rose project could have captured up to 90% of carbon emissions from a new coal power station.
The firm will, however, complete the government’s feasibility study into carbon capture technology.
Pete Emery, Drax Group’s operations director, said today that he was “confident” the technology developed at the station still had potential.
“But have reluctantly taken a decision not to invest any further in the development of this project,” he added.
“The decision is based purely on a drastically different financial and regulatory environment and we must put the interests of the business and our shareholders first.
“We will focus our resources on the areas which we can deliver best value, particularly working with Government to explore the potential for converting a fourth generating unit to run on sustainable biomass.”
The move leaves only Shell’s project at Boddam, four miles south of Peterhead, as the front-runner for the £1billion pot.
In statement, the Department of Energy and Climate Change said: “CCS is set to play a vital role in decarbonising the electricity sector and heavy industry.
“The government remains committed to assisting the development of CCS in the UK and to the CCS Competition, continuing to negotiate with the two preferred bidders.”
The study into CCS is due to conclude within the next year.