The project by ScottishPower, Shell and the National Grid to build a carbon capture and storage (CCS) demonstrator at Longannet power station in Fife was tipped as the country's best chance to develop a world-leading technology that could curb the majority of emissions from coal and gas-fired plants around the world.

It had become the last entrant standing in the competition to win a £1 billion investment from the government to build the scheme after rivals E.ON, BP and Peel Power dropped out.

But after the ScottishPower consortium failed to bring down costs below a best-case-scenario £1.2bn, the Government decided to end negotiations.

A source very close to the project revealed last week that one of the main problems in the negotiations was the carbon price floor tax that became government policy after the Coalition came to power in May 2010.

Despite the importance of CCS to the worldwide drive to reduce carbon emissions, it had become apparent to ScottishPower that, when the carbon price floor came into effect on April 1 of this year, it would make it liable to pay around £250m for the right to keep creating high levels of emissions in order to keep the Longannet plant open for the sake of the CCS project. It asked the Government for a waiver in the event that the scheme went ahead, but was told that this would not be possible.

Although the scheme might have collapsed regardless of the carbon price floor, it is understood to have been a major obstacle nonetheless.

Source: by Steven Vass, HeraldScottland, Sunday 20 January 2013

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