Plans to base the UK’s first carbon capture and storage centre in the north-east are in jeopardy amid doubts over a £1billion funding pot.
Peterhead Power Station was tipped to win a major slice of the UK Government investment – but MPs claimed last night the scheme had been “kicked into the long grass”.
The fears were raised after Chief Treasury Secretary Danny Alexander suggested that much of the £1billion could be spent on other projects because it would not be needed to develop the pioneering green energy technology in this parliament.
In the wake of his comments, the Department of Energy and Climate Change (DECC) tried to reassure the industry that the funding remained on the table and it expected to commit some of the investment during the current spending review.
The SNP and Labour claimed the Tory and Lib Dem coalition at Westminster had “pulled the rug” from the Peterhead project and killed any chance of progressing it in the next few years.
Mike Weir, SNP energy spokesman, said: “Danny Alexander’s comments have blindsided the industry and we need immediate clarity from the Treasury over the UK Government’s commitment to invest in carbon capture and storage.
“Any prospect of investing in the carbon capture project at Peterhead has been kicked into the long grass, beyond the term of this Westminster parliament – in which case Danny Alexander has a great deal of explaining to do.”
Labour’s shadow energy minister, Tom Greatrex, said: “With no consultation with the industry, Danny Alexander has at a stroke ruled out any meaningful progress on the CCS project at Peterhead in this parliament.”
The gas-fired power station on Peterhead’s outskirts was considered to be in pole position for a slice of the £1billion investment to develop the technology after the collapse of a similar coal-fired project at Longannet in Fife.
Scottish and Southern Energy and Shell announced this month they had reached an agreement which could lead to initial work starting on the CCS centre at Peterhead within a year, but added it would be dependent on UK Government and EU help.
The DECC last night said:
“Nothing has changed – £1billion remains available to support CCS projects.
“As Energy Secretary Chris Huhne has made clear, there are a number of promising CCS projects in the UK and Peterhead is one of them.”
The Aberdeenshire town was previously put forward as a CCS base – but a scheme by offshore giant BP was abandoned in 2007.
Mr Alexander reportedly said “much of the money that we’d allocated to spend in this parliament we’ve now reallocated to different sorts of projects”.
Chancellor George Osborne will deliver his autumn statement today and is expected to announce £30billion of investment in infrastructure schemes to try to help grow the economy.
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