Energy giant says government policies have slashed income and made carbon capture project too costly

The owner of the UK’s largest power station, Drax, has pulled out of plans to build a carbon capture and storage (CCS) power plant in the country, saying that changes to government policy have left it unable to pay for the project.

The company planned to build a new coal-burning power station near to its existing plant in Yorkshire, from which 90% of the carbon dioxide generated would be captured and piped underground for storage under the North Sea.

But Drax now says it cannot support the project financially, citing the UK government’s recent decision to scrap renewable energy tax subsidies as the main reason. Chief executive Dorothy Thompson said this had ‘suddenly removed a stream of income’, causing the company’s share price to drop and leaving it without the funds to invest in CCS.

‘Drax’s decision is the result of fragmented and incoherent government policy which is having a chilling effect on investors’ confidence,’ said Garry Graham, deputy general secretary to the energy workers’ union Prospect. ‘We need a coherent strategy and a clear map of how we transition to low-carbon generation.’

Meanwhile, Drax’s partners in the project – Alstom and BOC – insist the CCS scheme will still go ahead. And another CCS project, to be based at a gas-fired power station in Peterhead, Scotland, is still being backed by South Southern Electric.