Miliband has said that the government will provide funding for up to four demonstration plants, but this is now likely to be revised downwards. Energy companies believe two new plants could now get public support.
It will also take years for those plants which are promised funding to be built. Ministers will use a “gradualist” approach, staggering the tenders to build the new plants, which will also have the effect of deferring public spending commitments. The current tender, which began in 2007, may not be concluded until 2011.
On Monday the energy minister Lord Hunt met industry body the Coal Forum. His claim that the UK was in the lead in promoting the technology was challenged by frustrated executives who believe other countries have now moved ahead.
In April Miliband announced a radical policy to ban the construction of coal plants which do not fit expensive new CCS technology to store their carbon emissions underground. He said that the government would fund the additional new demonstration projects mainly via levies on consumers’ electricity bills. But the Treasury still needs to approve any levies because they amount to a tax, and the proceeds are treated as public spending. Officials fear that the need to slash public spending to cut the estimated £805bn of public sector debt could have an impact on such green energy subsidies.
Matthew Lockwood, from thinktank the Institute for Public Policy Research, said: “Back in April Ed Miliband made a bold decision to expand the UK’s ambitions on developing CCS, but unless the government follows through with clarity on the financing of new power stations and infrastructure, and an accelerated timetable, that ambition will fall at the first hurdle.”
A spokeswoman for the energy department insisted that it was still a target to fund four projects and that there was no change in its plans. “The UK has set out bold proposals for coal and CCS – they are a world first – and our ambitions remain firm. We’re determined to drive the development of CCS as part of the transition to a low carbon economy.”