While Chancellor George Osborne has been busy paving the way for Chinese investment in a new nuclear power station in Essex, Britain’s largest existing power plant has backed out of a £1bn green initiative as a result of faltering government support.
Drax Group announced today that it’s to leave the White Rose project to build a carbon capture facility at its eponymous coal and wood pellet power plant in North Yorkshire, once its £3m feasibility study is completed later this year.
The firm had teamed up with industrial gas firm BOC and French energy tech business Alstrom for White Rose, which was competing for £1bn in public money for carbon capture projects to reduce emissions.
Drax chief executive Dorothy Thompson blamed the government’s recent decision to remove subsidies for renewable power, which had supported the firm’s conversion of two of its six sub-plants from coal to wood pellets, with another planned.
‘This has suddenly removed a stream of income,’ Thompson told the BBC. ‘The day it was announced our share price dropped by a third and that simply reduces the amount of cash we have available for future investments.’
The group has lost 70% of its market capitalisation since the beginning of 2014, with shares up slightly on today’s news at 243.1p this lunchtime.
Peter Emery, the company’s board member responsible for White Rose, also questioned the government’s future commitment to green energy. ‘We are no longer confident we can persuade our shareholders that this is an attractive investment, given the obvious risks,’ he told the FT. ‘The government has to make difficult decisions based on affordability and, in turn, so are we.’ Anything you can do, eh.
The Department for Energy and the Environment said it was ‘committed to developing carbon capture in the UK’ and pointed out that both White Rose and Shell – with its plan to capture the carbon from a gas burning plant in Scotland and bury it under the North Sea – were still in the running for the £1bn prize. Whether the UK can retain its leadership in developing this elusive technology now that one of its major players has backed out remains to be seen.