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Energy giant confirm they're out of the running for building a new coal-fired power station at Kingsnorth
Energy giant E.ON today announced it was pulling out of the competition to build the UK's first power station fitted with technology to capture and permanently store carbon emissions.
E.ON's Kingsnorth plant in Kent was one of two schemes shortlisted in the Government competition for funding worth potentially more than £1 billion to install the technology as part of its new coal-fired power station.
But the energy company today said the market was not conducive to building a new 1,600 megawatt power station at the site, and as a result it would not proceed to the next stage of the carbon capture and storage (CCS) competition.
The announcement comes ahead of today's Comprehensive Spending Review which is likely to reveal the extent to which efforts to develop CCS have survived swingeing Government cuts.
The Government had been expected to launch a second competition for another three plants, with funding raised by a levy on fossil fuels which would be passed on to consumers in energy bills.
Carbon capture and storage has not been developed at scale, but there are hopes the technology could slash emissions from power stations by up to 90% - and the coalition Government has said it forms part of plans to drive the UK towards a low-carbon energy system.
The previous Government said no new coal-fired power stations would get the go-ahead without CCS to tackle a proportion of their emissions.
Two potential schemes had been competing for the funding, with ScottishPower's site at Longannet, Scotland, the other power station in the running.
Both had been awarded initial funding to develop their plans.
Paul Golby, chief executive of E.ON UK, said: ``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.
``We therefore took the decision to withdraw from the Government's competition because we cannot proceed within the competition timescales.''
He said the company believed that carbon capture and storage was a vital technology in the fight against climate change and would be concentrating its efforts on a project in Holland, from which lessons could be brought to the UK for future CCS schemes.
Kingsnorth's existing power station, which powers around 1.5 million homes, is due to close in 2015.
A spokesman for the Department of Energy and Climate Change said the decision by E.ON was based on the company's own investment plans and was no reflection of its commitment to CCS.
``CCS has significant potential for demonstration and deployment in the UK - we have some of the best CO2 storage sites in the world, as well as the unparalleled engineering expertise needed to make this technology work at commercial scale.
``As we have seen from the results of our recent market sounding exercise, there is strong interest from industry in CCS, and in taking part in the Government's forthcoming process for selecting additional CCS projects for support.
``The Government is naturally disappointed that E.ON has decided not proceed. Scottish Power remains in the procurement process,'' he added.
Steve Dawe from the Kent Green Party said:
"This is an important first step towards getting the carbon out of the UK's energy future. Reducing energy demand through efficiency, and investing in microgeneration for homes, offices, schools and hospitals must be coupled with larger scale renewable energy projects like the London Array Wind Farm. We can meet our energy needs by being a lot more efficient in our use of energy, and making use of a variety of renewable energy technologies."