Energy company Drax abandons £1-bn CCS technology project

UK power utility Drax plans to walk away from a £1-billion project for introduction of carbon capture technology to cut emissions.

Drax is part of a carbon storage scheme and operates the biggest coal-fired power station in the UK in North Yorkshire.

The company is ending further investment due to the government's decision to cut subsidies for renewable energy.

According to the company, due to lack of profits, it had to put the business and shareholders first.

Drax chief executive Dorothy Thompson said was a very sad decision as the project, called White Rose, still had a lot of potential.

Speaking to the BBC, she said, "The most recent effect has been the government has removed a tax exemption for renewable power that is sold to industrial companies and we're the largest generator of renewable power in the UK and this has suddenly removed a stream of income.

"The day it was announced, our share price dropped by a third and that simply reduces the amount of cash we have available for future investments."

Drax had received European funding for the White Rose project last July. It would have seen a new plant built next to Drax's existing power station that would have generated enough energy to power 630,000 homes, with the majority of CO2 transported by pipelines for storage under the North Sea.

In a statement, Drax said it ''remained committed'' to fulfilling its current work on a Carbon Capture and Storage (CCS) feasibility and technology development project (FEED). However, when the work was complete, it would not need to invest further and would withdraw as a partner of Capture Power Ltd, the developer of the White Rose CCS project.

The two-year project was progressing under the Capture Power partnership comprising Drax, french energy equipment maker Alstom and industrial gases and equipment maker BOC [formerly British Oxygen Company]. The project was due for conclusion during the next 6-12 months.

Drax Group operations director, and capture power board director, Pete Emery said, ''We remain fully committed to completing what we've signed up to – the completion of a study into the feasibility and development of world leading technology that could result in dramatic reductions in carbon emissions produced by power stations and heavy industry.

''We are confident the technology we have developed has real potential, but have reluctantly taken a decision not to invest any further in the development of this project. The decision is based purely on a drastically different financial and regulatory environment and we must put the interests of the business and our shareholders first.''