Government begins renewed attempt to roll out Carbon Capture and Storage

Second time lucky: the Government today began a renewed attempt to roll out a complex, expensive and potentially vital technology for fighting global warming, Carbon Capture and Storage (CCS).

The technique, which involves capturing the carbon dioxide waste gas from power stations, liquefying it and piping it deep underground into geological formations where it can be permanently stored, is considered essential if climate change is to be checked in coming years, not least because many nations will continue burning large amounts of fossil fuels.

But although simple in principle, it has never been deployed on a proper industrial scale. Britain's first attempt to establish it, based on a £1bn competition for electricity generating companies which lasted for several years, finally collapsed last October when the flagship project at Longannet, the huge power station on the Firth of Forth, fell apart. Ministers had not been able to agree on final funding with the consortium planning to build the CCS plant, headed by ScottishPower.

Now the Government is trying again, with a renewed competition for generators – this time with a big difference.

The £1bn in capital for building costs is still on offer, but so too is a guaranteed future revenue stream for the plant operators. This will come from so-called "Contracts for Difference", which will offer a fixed price for their electricity, whatever the market price for it on any given day.

This innovation, part of the Government's electricity market reforms, puts CCS on a similar footing to renewable energy, and will be much more likely to attract investment, according to Jeff Chapman, Chief Executive of the Carbon Capture and Storage Association.

"This announcement sets out one of the most comprehensive support packages for CCS in the world, sending a positive signal to the CCS industry, who are ready and waiting to respond," Dr Chapman said. The new competition will also be open to gas-fired power stations (the first one was only open to coal stations) as well as to industrial plants as well as power stations, and the Government has published a "road map" showing he way forward for the technology, as well announcing £125 million for research and development.

At least seven schemes are in the pipeline, the biggest being the Don Valley CCS Power Project in South Yorkshire which aims to capture the CO2 from a 650MW coal plant – enough to power one million homes.