A £1bn UK climate-change plan has been thrown into turmoil after the Drax power company said it was pulling out because government green policy reversals made it too risky to proceed. Drax’s decision to abandon five years of planning for a carbon capture and storage system next to its huge North Yorkshire power station is the most visible sign yet of how green energy subsidy cutbacks are jolting investors. Several “critical reversals” in government support for renewable energy had made “a severe impact on our profitability”, said Peter Emery, the Drax board member chairing the group developing the White Rose carbon capture project… White Rose is one of more than a dozen carbon capture projects the UK has tried in vain to get under way in the past eight years. Such systems theoretically offer a way for fossil fuel companies to keep burning coal or gas in power stations without affecting the climate. They trap greenhouse gas pollution before it can warm the atmosphere, and store it deep underground. But efforts to build them have repeatedly foundered around the world because they are so expensive.
[Update: and there’s also We’ve also got concerns about the government’s future support for the low carbon agenda and that’s left us in a position where we are no longer confident we can persuade our shareholders that this is an attractive investment, given the obvious risks,” ]
From an energy policy point of view, this is all consistent: govt directing investment in carbon reduction via subsidies and ragtag policies is a bad idea. Instead we should put a market price on carbon via a carbon tax and let people get on with it (per lots of people, for example Exxon). From the view point of business, they want a stable environment for making decisions, not one where a sudden govt change of heart makes years of planning redundant.
CCS isn’t all Drax is up to; according to the Beeb Drax is in the process of converting from coal to biomass, and by 2016 is expecting to generate half its power from wood pellets, though that seems either unlikely, or unlikely to be sensible.