UK role as carbon capture leader at risk

By Karolin Schaps
LONDON (Reuters) - Britain's plan to lead the global roll-out of carbon-capture and storage (CCS) is at risk as developer Iberdrola and the government disagree about how much funding the state should contribute to Britain's first project, a source said on Friday.
"The negotiations have stalled as Iberdrola need at least 600 million pounds ($923 million) from the government, but only 400 million pounds have been committed," said the source, who is close to the talks and refused to be named.
The cost of Iberdrola's Longannet CCS plant in Scotland is estimated at 1.2 billion pounds and the technology added to Britain's second-largest coal-fired power plant was expected to start operating in 2014.
CCS is still a commercially unproven technology but is widely seen as a key mechanism to fight climate change by trapping and burying greenhouse gas emissions, while maintaining stable energy supply.
The UK government had earmarked one billion pounds in funding for Britain's first CCS project, but was only willing to provide 400 million in upfront costs, the source said.
"Negotiations are ongoing. The investment sum is part of what is being negotiated," a spokesman for Britain's Department of Energy and Climate Change (DECC) said.
The UK plans to become a world leader in clean technology, among which CCS features as a central tool to reduce carbon emissions.
But tough government spending cuts to curb sovereign debt have made it difficult for the state to commit huge sums of state money to new technologies.
"I don't think the government can change its position in the current climate," the source said.
The stalled talks could result in the government launching a review into CCS technology, pushing the roll-out into the next decade, the source added.
The DECC spokesman said the government remained committed to completing the next stage of its second-round CCS competition by the end of the year. ($1 = 0.650 British Pounds)
(Reporting by Karolin Schaps; editing by Keiron Henderson)