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E.ON Shifts Carbon Focus From U.K. to the Netherlands (Update1)
2010-10-20 15:05:53.631 GMT
(Adds U.K. funding in first paragraph.)
By Catherine Airlie and Sally Bakewell
Oct. 20 (Bloomberg) -- E.ON AG, Germany's biggest utility,
shifted its carbon capture and storage developments from the
U.K. to the Netherlands as Britain committed 1 billion pounds
($1.6 billion) to fund the technology.
E.ON today scrapped plans to compete for a subsidy to
demonstrate the capture and storage of carbon dioxide from a
power station at its Kingsnorth site in Kent, southeast England,
leaving Iberdrola SA's ScottishPower Ltd. as the only company in
the running for the money.
"We cannot proceed with the competition," Paul Golby,
chief executive officer E.ON U.K., said in an e-mail. "Having
postponed Kingsnorth last year, it has become clear that the
economic conditions are still not right for us to progress the
project and so, simply put, we have no power station on which to
build a CCS demonstration."
Britain is seeking to cut government spending while
securing energy supplies and reduce carbon-dioxide emissions.
Energy Minister Charles Hendry said yesterday the nation could
host four CCS projects by 2020. "The government is naturally
disappointed that E.ON has decided not proceed," the Department
of Energy and Climate Change said in a statement.
No Approval
E.ON wanted to demonstrate the technology on a 1,600-
megawatt coal-fired plant to be built next to an existing
facility at Kingsnorth. E.ON sought permission to build the
plant in 2006 and has so far not gained approval, Jonathan
Smith, a Coventry-based spokesman for the company, said by
phone. The U.K environmental group Camp for Climate Action
staged a week-long protest near the Kingsnorth plant in 2008.
"Carbon capture and storage is a vital technology in the
fight against climate change," E.ON's Golby said. The company
will concentrate on the Maasvlakte project in the Netherlands,
he said. "The lessons from that project can be brought back to
the U.K. for future generation CCS projects," he said.
E.ON and Electrabel SA are working to fit CCS technology at
a coal power station at its Maasvlakte site. The Dutch
government promised a subsidy of as much as 150 million euros in
May and the project was awarded 180 million euros of European
Union funding as part of a recovery package for the 27-nation
bloc, Edwin Kotylak, a spokesman for E.ON Benelux, said.
A final investment decision will be made on the Maasvlakte
project in December, he said.
Spending Plan
Britain's Conservative-Liberal Democrat government has
adopted a former Labour plan to fund the first demonstration of
capturing carbon and piping it underground for storage in
depleted North Sea gas fields at a commercial scale. It also
promised subsidies to three more CCS projects via a levy on
electricity bills.
The U.K. will give as much as 1 billion pounds to fund the
first CCS project at a power station, the government said today
in its national spending plan. The government will decide next
spring whether the other projects will be funded via a levy or
from the public purse, according to the plan. This will be after
a review of current climate change levies on industry, which is
to be consulted on in November, the review said.
"We welcome that 1 billion has been set aside given the
stringent times," Jeff Chapman, chief executive of the Carbon
Capture & Storage Association, an industry group, said by phone.
"It's enough for one project, but it's not enough for four."
"We've had plenty of delays with this technology and we
don't want more delays," he said.
Committed
Powerfuel Plc, based in Doncaster, England, won 180 million
euros of EU funding for its 900-megawatt Hatfield project in
Yorkshire. This would gasify coal and capture the carbon dioxide
before the fuel is burnt for burial in depleted gas fields. This
type of technology doesn't qualify for the U.K. competition.
"The ScottishPower consortium remains committed to the
carbon capture and storage project at Longannet, and we are on
schedule with our front end engineering and design work," the
company said in a statement. The company is working with Royal
Dutch Shell Plc and National Grid Plc to add CCS technology at
its 2,300-megawatt Longannet coal plant.
E.ON's existing 2,000-megawatt Kingsnorth plant is due to
close by the end of 2015 under European environmental rules.
For Related News and Information:
Top Power Stories: PTOP <GO>
U.K. Power Prices: ELEU <GO>
--With assistance from Alex Morales in London. Editors: Jonas
Bergman, Randall Hackley
To contact the reporter on this story:
Catherine Airlie at +44-20-7073-3308 or
cairlie@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
