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Financial Times: Budge in deal with Shell for clean coal project

By Rebecca Bream,Utilities Correspondent
Published: April 18 2007 03:00 | Last updated: April 18 2007 03:00

Richard Budge, the mining entrepreneur once known as King Coal, has joined the race to build the UK’s first full-scale “clean coal” power station, following a technology deal with Shell, the oil and gas group.

Mr Budge is in the process of reopening the historic Hatfield colliery near Doncaster in south Yorkshire, and is due to have mining equipment installed at the coalface by September.

Once the mine is running, Mr Budge plans to build a new 900 megawatt coal-fired power station at the site. His company, Powerfuel, said yesterday that the power station would be designed around Shell’s gasification technology, which turns the coal into gas before burning, making the carbon dioxide emissions easier to capture and store.

Powerfuel is 49 per cent owned by Mr Budge, best known for buying up the bulk of the English coal industry after privatisation in 1994, and 51 per cent owned by KRU, Russia’ssecond-biggest coal company and the UK’s main coal importer.

Mr Budge said he already had planning permission for the new power station, had arranged electricity grid connections and hoped to start generating electricity in 2012. The project has a total budget of £1.2bn.

He said that the government’s current focus on cutting carbon emissions from electricity generation, while limiting the country’s reliance on imported gas,added urgency to the development of “clean coal” technology.

“For over a decade I’ve said if you are going to maintain security of supply, you have to have diverse sources of energy and that includes coal,” he said.

In last month’s Budget, Gordon Brown, the chancellor, said that companies developing carbon capture and storage projects could compete for subsidies. Large energy companies including Eon, RWE Npower and Centrica are among those hoping for government backing. Mr Budge said Powerfuel’s project had a good chance of winning funding “as ours is the lowest-cost carbon capture scheme”.

Mr Budge said that his long-cherished plan to re-open the Hatfield mine was going well. “We found that the coal seam is thicker than it was supposed to be.”

The mine employs 200 staff, to rise to 350 from August, and is due to produce 2.2m tonnes of coal a year from the end of 2007. The mine’s renaissance was popular with local people and there was no lack of ex-miners looking for work, he said. “We get about 10 applications for every job.”

Copyright The Financial Times Limited 2007

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