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Daily Telegraph: Energy majors blast Darling’s green reforms

By Russell Hotten, Industry Editor
Last Updated: 1:39am BST 12/10/2007

Companies protest that Chancellor’s Pre-Budget Report will scrap carbon-capturing technology which has already cost them millions.

Some of the biggest players in the UK energy industry are considering a formal protest over Chancellor Alistair Darling’s “green” reforms in what is more evidence of a growing business back-lash to his Pre-Budget Report.

Scottish & Southern Energy, British Gas-owner Centrica, and Royal Dutch Shell are among companies unhappy at Mr Darling’s decision to scrap a type of carbon capture technology in millions of pounds has already been invested.

Critics say the Government has acted without consultation and reneged on a pledge to promote the technology. “We are deeply concerned that we have been led down the garden path,” said one of the firms.

Conoco-Phillips, Marathon Oil, and Powerfuel are expected to join the protest, as is Climate Change Capital, an investment bank which specialises in low carbon projects. Representatives from the firms were due to discuss the issue today and over the weekend ahead of a possible complaint to the Department for Business, Enterprise and Regulatory Reform next week.

The Government is keen to encourage carbon capture technology as part of its desire to take the lead in a global campaign to tackle global warning. Ministers had encouraged development of both pre-combustion and post-combustion technology.

The first method removes carbon dioxide from coal before it is burnt and emissions stored underground. The second method captures emissions after burning. On Tuesday, Mr Darling surprised the industry by saying the Government would promote only post-combustion.

Claimed a source at one of the companies: “This is using taxpayers’ money to fund something which is not the cheapest or most effective form of technology. The Government has effectively ejected a range of companies out of the competition before it even starts.

“We were led to believe that the Government would support both technologies. Want is of particular concern is that Alistair Darling made the decision without any consultation with industry whatsoever,” he said.

Centrica is understood to feel particularly aggrieved, and may abandon plans to build a “green” coal-fired power station. On Tuesday, Jake Ulrich, managing director of Centrica Energy, said Mr Darling had got it wrong and risked “losing a golden opportunity” to cut emissions.

Four months ago, oil giant BP scrapped plans for a £1bn gas-fired power plant blaming delays in state subsidies. To underline its unhappiness, BP announced its withdrawal on the same day that Mr Darling, then Trade and Industry Secretary, unveiled his Energy White Paper.

A spokeswoman for the Department for Business said that the technology chosen was the “most relevant and applicable to the UK and across the world.” She said that other countries were working on pre-combustion methods, so it made sense not to duplicate the technology.

Redundant oil fields under the North Sea are likely to used to store carbon emissions. Many pre-combustion plants were destined to be built in north England, making it easier to pipe carbon to its final destination. Germany’s RWE and EON are the main proponents of post-combustion, but their plants are likely to be in southern England and Wales.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/12/cngreen112.xml

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