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E.ON keeps pressure up for CCS subsidies

23 March 2009 00:00  [Source: ICB]

Tomas Marzec-Manser/London

E.ON renewed its pressure on the UK government last week to offer more financial incentives for carbon capture and storage (CCS) technology, as it awaits a firm decision on plans to expand its coal-fired Kingsnorth plant and fit it with CCS. The German energy company said that current fossil fuel policy acted as a financial disincentive for generators planning CCS-enabled plants.

Paul Golby, E.ON UK's CEO, said: "Let us complete the technical development of CCS while [the government] funds the difference between abated and unabated fossil."

An E.ON spokeswoman said CCS increased generating costs by about 25%, and the government had to provide financial support to make the investment worthwhile.

She added that if incentives to build and run CCS plants were not put in place, the first generator using CCS would effectively be penalized for doing so.

The spokeswoman likened the development of CCS to the unrolling of flue-gas desulfurization (FGD) equipment, the high price of which fell heavily as soon as more generators applied the technology. She pointed out that incentives and financial support were introduced for FGD, and called for similar support for CCS.

A Department of Energy and Climate Change spokeswoman said that a new consultation was already being planned to assess the high running costs of CCS. But she added that the department had launched its CCS competition - for which the Kingsnorth project has been shortlisted - to help the first commercial developer of carbon capture meet the high costs of development and operation.

E.ON added that it had begun assessing pipeline routes from the Kent coast to transfer the captured carbon from Kingsnorth to North Sea gas fields for storage. The company is also planning to ship the carbon in storage tanks to the fields.

Earlier this year E.ON said the cost of its Kingsnorth 1.6GW expansion had risen by 50% because of planning consent delays.

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