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Carbon capture and storage projects need sound funding mechanisms and collaboration on networks to develop and de-risk the industry, a cost reduction taskforce has concluded.

The industry-led taskforce reiterated a claim from its interim report that gas and coal power stations equipped with CCS could produce power at £100/MWh by the early 2020s and significantly less after that.

Two CCS projects remain in the running for a £1 billion government pot to demonstrate the technology on a commercial scale. The Peterhead Project in Aberdeenshire and Yorkshire’s White Rose Project are undertaking feasibility studies and one or both could get the funds to proceed.

Business and energy minister Michael Fallon welcomed the report and promised a detailed response shortly. “We are one of the world leaders for carbon capture and storage and our £1bn competition to kick-start a cost competitive industry in the UK is making good progress,” he said. “We are committed to working with industry so that CCS can realise its potential and compete on cost with other low carbon technologies without capital support from Government.

David Clarke, CEO of the Energy Technologies Institute, said it marked “another step in the right direction” but there was still a long way to go to de-risk CCS. He said: “This report sets out some clear guidance on how CCS can evolve and become an important contributor to a low carbon economy in the UK. The emphasis now is on making the report’s recommendations a reality.”