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Autumn Statement 2011: Carbon capture cash pulled

Plans for the UK carbon capture and storage schemes (CCS) were thrown into doubt this week after chief secretary to the Treasury Danny Alexander said the £1bn allocated to support a major demonstration project will now fund new infrastructure projects.

The £1bn is able to be plundered because the government could not agree funding for Scottish Power’s Longannet’s CCS project (NCE 13 October).

“We’re launching a new competition to provide £1bn for CCS but that competition, obviously, is going to take longer, so much of the money that we’d allocated to spend in this Parliament we’ve now reallocated to different sorts of projects,” said Alexander.

The move was roundly criticised.

“It’s extraordinary,” said Friends of the Earth head of policy and campaign Craig Bennett. “These are pilot projects and need to be constructed with urgency…but there is no sense of urgency.”

WSP Future Energy managing director David Nickols said he could understand why the Treasury decided to use the money, but that he would be disappointed if it was not re-allocated to other green projects.

“These are pilot projects and need to be constructed with urgency…but there is no sense of urgency.”

Friends of the Earth head of policy and campaign Craig Bennett

“I have sympathy with the Treasury − it’s pointless keeping the money ringfenced. If it is spent on roads it is contrary to the green agenda,” said Nickols.

Alexander’s announcement comes after concerns were raised over funding for a Europe-wide competition due to the recent drop in carbon prices.

The UK submitted six CCS projects and five innovative renewable energy project as part of the competition. The funding was due to be in addition to the original £1bn demonstration scheme.

However, funding is likely to be significantly less than anticipated, with the European Union carbon price dropping to £6.52/t this week.

The fund was expected to be around £7.72bn, but that was based on a carbon price of £27.74/t.

If the price drops to £2.50/t as feared the fund could be as little as £772M. A decision on projects that will be selected for this funding is expected next year.

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