The decision, made by a government which was firmly committed to the CCS industry barely six months ago, came not as part of UK Chancellor George Osborne’s Autumn Statement and Spending Review, but as what analysts have called "collateral damage" to budget cuts.
"Today, following the Chancellor’s Autumn Statement, HM Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available," the Department of Energy and Climate Change announced.
“This decision means that the CCS Competition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them.”
Aberdeen & Grampian Chamber of Commerce James Bream slammed the UK government’s decision last week as a “huge blow” to confidence for the business community in the country’s north-east.
He said the move further confirmed the inability of governments to provide strategic certainty on major energy investment.
“As well as being bad news for Peterhead and its local community, this is also bad news for the UK-wide supply chain which has been engaged for several years with the project,” he said.
“Removing a ring-fenced funding stream is symptomatic of the UK’s approach to energy strategy and will further undermine investor confidence.”
World Coal Association policy advisor Liam McHugh said in October that, following Drax’s decision on White Rose – which the utility said was based “purely on a drastically different financial and regulatory environment” – the ultimate litmus test would be in the coming months when the final investment decision is made by the government.
