Official funding for coal-burning stations

By Ed Crooks
Published: February 25 2009 23:31

More than one “clean coal” power station could receive official funding, energy secretary Ed Miliband said yesterday, changing the government’s policy on backing for the new technology.
The move is good news for Powerfuel, owned by mining entrepreneur Richard Budge, which hopes to build a clean coal plant in Mr Miliband’s Yorkshire constituency that has not previously been eligible for government support.

However, other energy companies said they feared changes to the government’s plans could further delay the development of clean coal in Britain.
Until now, policy for developing coal-fired power stations that can capture and store their carbon dioxide emissions has been based on a competition, in which companies bid for funding for a demonstration project. Three consortiums have entered the competiton: one led by Eon UK and another by RWE Npower, both part of German energy groups, and a third led by ScottishPower, owned by Iberdrola of Spain. The aim was to have a commercial scale pilot plant operational by 2014.
The competition has slipped well behind schedule, however. When it was launched in 2007, the government suggested a winner could be picked by September 2009. Mr Miliband said yesterday he planned to come to a decision next year.
Speaking to MPs on the energy select committee, Mr Miliband said the policy would be changed to support more than one project. He also suggested there would also be support for “pre-combustion” plants, where the coal is gasified and carbon dioxide is removed before the gas is burned, as in the Powerfuel project.
The competition is today open only to “post-combustion” projects, where the carbon dioxide is extracted from the exhaust gases from coal burned in the usual way.
Mr Miliband told the MPs an announcement on the government’s plans for carbon capture would be made in “weeks”.
The statement could be linked to wider strategy for coal-fired power stations. The government is balancing the competing pressures of environmental campaigners and industry executives warning that new power stations will be needed to keep the lights on.
Mr Miliband said it was “important to get the policy right”, adding: “Hopefully it will be worth waiting for.”
Copyright The Financial Times Limited 2009