Four carbon-capture power plants to be built

By Fiona Harvey in Copenhagen and Ed Crooks in London
Published: December 9 2009 17:39

Four power plants equipped with facilities to capture and store carbon will be built in the UK under government plans unveiled on Tuesday as part of the pre-Budget report.
One of the plants would be funded through a long-running competition for public funding, the winner of which is expected to be announced early next year.
The others would be funded by a levy on electricity bills, the exact nature of which has yet to be decided.
Building the four plants would probably cost up to £10bn, according to industry forecasts.
The projects could generate 30,000 jobs, the government estimated. A Downing Street official forecast that the UK could become the world leader in the fledgling technology as a result. If successful, the development would also allow the UK to carry on using coal as a cheap fuel for electricity generation, while meeting targets to cut carbon dioxide emissions drastically.
A push to make public-sector buildings more efficient would yield reductions of about 10 per cent on electricity bills for government offices, hospitals and schools, the government promised. This would save about £300m a year, officials estimated.
The chancellor also announced an extra £100m in support for low-carbon technologies, of which £50m would go to offshore wind. The UK would also pay £90m into a fund from the European Investment Bank to provide capital for energy infrastructure.
The “warm front” scheme, which gives grants to people on low incomes for improvements to insulation and heating, would also be expanded with an extra £130m in funding, and the chancellor announced a “boiler scrappage” scheme under which households could have ageing and inefficient boilers replaced with newer energy-saving models. About 125,000 people are expected to benefit.
Households with renewable energy generation equipment, such as solar panels or mini wind turbines, will no longer have to pay income tax on the money they make from selling electricity back to the grid. This will save homeowners with solar panels about £180 per year, an official estimated, on top of the money received from the new feed-in tariffs, which will guarantee people an elevated price for any electricity they sell to the grid.
But hidden in the detail of the PBR was a change to “climate change agreements”, a system used by many industries to gain taxation benefits from agreeing to reduce their emissions.
The rebate incentive in the agreements is to be cut from 80 per cent to 65 per cent. Although the government said this was to comply with a European Union directive on energy taxation, EEF, the manufacturers’ organisation, said it was not necessary and would increase costs to businesses.
Gareth Stace, head of climate and environment policy at EEF, estimated that the change would cost the steel sector alone £5.4m, with further costs for the almost 50 other sectors also covered by the agreements.