September 25, 2015 / 6:20 AM / 4 years ago

Drax to pull out of UK White Rose CCS project when ends

LONDON (Reuters) - British power producer Drax said on Friday it would not invest further in the White Rose carbon capture and storage (CCS) project when it is completed and will then withdraw as a partner in the developer Capture Power Ltd.

A general view of Drax power station in Drax, northern England, February 16, 2011. REUTERS/Nigel Roddis

The project, aimed at proving CCS technology on a commercial scale, is due to end in six to 12 months. It is exploring the feasibility of capturing 90 percent of carbon emissions from a new coal-fired power station next to Drax’s existing power plant in Yorkshire and storing them under the North Sea.

When the project has ended, Drax will not invest further but will make the site, which it owns, and the power plant infrastructure available for the project to be built.

“This is for us a sad decision but ultimately investment is about choices and we are in a very different financial situation today than we were two years ago when we decided to invest in the project,” Drax Chief Executive Dorothy Thompson told the BBC radio.

“There have been changes to the government’s renewable policy but there have also been dramatic movements in the commodity markets and that has greatly reduced our profitability,” Thompson said.

Other partners in Capture Power are energy technology firm Alstom and industrial gas supplier BOC, which is part of the Linde Group.

Capture Power said it was still committed to delivering the CCS project and a final investment decision will depend on the outcome of an engineering and design study.

Britain, along with many other countries, will need CCS to help meet its emissions reduction targets if it is still running fossil fuel power generation plants.

The British government has committed 1 billion pounds ($1.5 billion) for two CCS projects - one at a coal plant and one at a gas plant which is being developed by Shell and SSE and which could be operational by the end of the decade.

In general, CCS technology has so far failed to live up to early hopes of wide adoption. After many years of research, Saskatchewan Power opened the world’s first coal-fired power plant retrofitted with CCS last year, but European utilities have struggled.

Reporting by Nina Chestney; additional reporting by James Davey; editing by David Clarke

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