Two carbon capture and storage projects which had been vying for a £1bn grant are likely to be shelved after the government ended support for the technology.
Representatives of the White Rose CCS in Yorkshire and Shell’s Peterhead CCS plant in Aberdeenshire both cast serious doubt on the viability of their schemes following the chancellor’s decision to withdraw the funding.
The two projects had been competing to secure the grant as part of the government’s commercialisation programme, with a winner expected to be announced next year.
On Wednesday, the government told the London Stock Exchange that the “ringfenced capital budget for the CCS competition was no longer available”.
A Shell spokesman said the company’s Scottish project was now “dead” and that he could no longer see a future for the Peterhead plant.
He said the company was committed to CCS technology but would now explore opportunities outside of the UK.
Leigh Hackett, chief executive of Capture Power, which is behind plans for the White Rose White Rose CCS, said “it was difficult to imagine the project’s continuation following the cuts”.
Mr Hackett said he was “surprised and very disappointed” by the government’s decision to cancel the commercialisation programme three years into the competition.
The decision marks a u-turn from the government, coming just a week after energy secretary Amber Rudd spoke of her support for CCS technology and the projects.
Speaking about the UK’s future energy mix at the Institution of Civil Engineers last week, Ms Rudd said: “Our intervention has to be limited to where we can really make a difference – where the technology has the potential to scale up and to compete in a global market without subsidy.
“These and many more examples, such as CCS, point to the creation of new industries and new jobs in the UK.”
An estimated 1,000 workers would be needed to construct the White Rose CCS, with 600 required for the Peterhead project.
Experts have accused the government of “moving the goalposts” over its CCS policy.
Carbon Capture Storage Association chief executive Luke Warren said: “Today’s announcement that the funding for CCS will be cut is devastating.
“Only six months ago the government’s manifesto committed £1bn of funding for CCS.
“Moving the goalposts just at the time when a four-year competition is about to conclude is an appalling way to do business.
“This announcement is a real blow to confidence for companies investing in CCS.
“We call on the government to come forward – as a matter of urgency – with their plans for CCS as this technology is critical for the UK’s economic, industrial and climate policies.
“Without concrete government support for CCS, the UK will lose the opportunity for cost-effective decarbonisation”.