Without commercial carbon capture, it's 'game over', E.ON boss tells government

Chief executive Paul Golby says technology will only be developed with state funding
Mark Milner, industrial editor
guardian.co.uk, Tuesday 17 March 2009 17.41 GMT

Leading energy industry executives today called on the government to ensure the development of carbon capture and storage becomes commercially viable.
Paul Golby, chief executive of E.ON UK said the commercial development of the technology, which stops the carbon dioxide produced through burning fossil fuels being released into the atmosphere, was vital if the world was to meet the growing demand for energy and still tackle climate change.
"For me it is clear there will be worldwide coal-fuelled growth in energy supply and that CCS is the most important technology in the fight against climate change.CCS is by no means the only low-carbon technology we are investing in, but it's the most important. Without it, it really is game over."
E.ON is seeking permission to build a new coal-fired power station at Kingsnorth in Kent, a project which has attracted furious opposition from climate change campaigners.
Golby told the Adam Smith Institute's future of utilities conference in London today that a mechanism would be needed for investors to recoup the costs of developing and operating carbon capture on a commercial scale. "Without it no one will be able to build it," he said.
He said if the government did provide a "level playing field" then E.ON would expect, and accept, that it would have to fit the technology to Kingsnorth. "If they fund it, we will fit it."
The government is holding a competition to encourage the development of carbon capture on a commercial basis.
Also at the conference, Scottish Power's chief executive, Nick Horler, said the UK had a huge opportunity to carve out a leading position in the world market for carbon capture.
"We cannot afford to lose this lead. The economic benefits of getting CCS right could be huge for UK plc."
He warned that the government would have to act. "Without clear signals from government, the rates of return on new coal will remain uncertain, resulting in power generators being more likely to invest in generation plant with a more predictable cost and performance base, such as gas or nuclear.
"We are currently in the grip of a deployment catch 22. We cannot be confident in the product until we have seen it work at commercial scale but the levels of investment and technical risk required to do this are too great for a commercial organisation to bear alone – particularly given other competing priorities for increasingly scarce and expensive capital."
Responding to Golby's comments about Kingsnorth, the head of Greenpeace's climate and energy campaign, Robin Oakley, said: "E.ON has finally admitted that the plans for a new coal plant at Kingsnorth that it submitted to the government fall well short of what is needed and what is possible.
"The ball is now in Ed Miliband's court. He should use an upcoming consultation on coal policy to call E.ON's bluff by ruling out new unabated coal plants across the board from day one."