Tax on electricity to fund carbon capture plan

Capturing carbon emitted by coal power stations and storing it underground should be paid for through a tax on electricity prices, the Government has said.

By Rowena MasonPublished: 9:19PM BST 17 Jun 2009

Ed Miliband, the energy secretary, said four new "carbon capture and storage" trials would eventually add 2pc to bills through a levy on electricity suppliers – the day after the Government announced a tax on fixed telephone lines to fund high-speed broadband.
It is too early to estimate the total cost of the project, he added, but the Government hopes it could create 60,000 jobs and boost the economy by £4bn. Analysts predicted that the scheme might cost between £750m and £6bn, with some funding potentially from the European Union.

Four energy companies, BP Alternative, E.On, Peel Power and Scottish Power, are competing for contracts to build trial plants, using £90m allocated in the Budget to fund research.
Ian Parrett, an analyst at Inenco, said capturing carbon "had to be done" and could help lead a revival of the British coal industry.
"But we have concerns that no one knows whether carbon capture is commercially viable," he said. "And the Government isn't putting any money in at all. If all emissions reduction schemes add 2pc to bills, we are talking about electricity costs being hugely higher."
The Government is also forming a contingency plan for reducing emissions from coal-powered plants, since the technology behind transporting and burying carbon is not yet proven.
Simon Hughes, the Liberal Democrat shadow energy secretary, described the plans to build more coal power stations before it is known whether the technology works as "a huge gamble".