The UK power industry has told the Government that the development of “clean coal” power stations will not take place without heavy subsidy and higher electricity prices.

The first “clean coal” power plants, which could dramatically cut carbon emissions, will need grants of up to £300 million.

Centrica, the UK’s largest energy supplier, said that Britain and other European countries must penalise polluters by doubling the cost of carbon permits under the European Emission Trading Scheme (ETS), which would raise the cost of electricity.

The warning over the price of green energy came as the Government delayed publication of its Energy White Paper by a week, to June 23. RWE npower will today ask the Government for clarity over plans to support clean coal technology as it reveals a blueprint to build Britain’s biggest coal-fired power station for more than 30 years.

The £2 billion coal project at Blyth, Northumberland, would generate up to 2,400 megawatts of electricity — enough to supply 3.5 million homes.

According to RWE, the Blyth plant would produce 22 per cent less CO2 than a conventional power station by using a “supercritical” burning process.

It will also be “carbon-capture ready”, capable of transporting and storing CO2 in spent North Sea gasfields, when the technology is proven.

Centrica, which is promoting a £1 billion “clean coal” scheme on Teesside, using technology that extracts synthetic gas from coal, eliminating most of the CO2, said such projects would not be viable without a big increase in financial incentives.

Jake Ulrich, the managing director of Centrica Energy, said that the price of ETS carbon permits would need to double for power generators to justify switching from conventional coal or natural gas-fired plant.

“To make these projects economical you need a carbon price of at least ¤40 per tonne,” he said. ETS carbon trading was intended to create an incentive for polluters to reduce emissions by enabling “cleaner” generators to sell permits to “dirty” generators. The scheme has failed because permits were allocated free and too many were issued. Currently, the ETS carbon price is just ¤Kevin Akehurst, head of generation at RWE npower, said the industry needed to see the detail of the Government’s support, adding: “It’s difficult to make big investment decisions on cleaner coal plant without clarity over the long-term future of European regulation.”

More than a dozen new power stations are at the planning stage, but the industry expects that financial support will go to only two or three carbon capture projects, which would need grants of some £300 million each to get off the ground.

The facts

–– There is no physical difference between clean or ‘dirty’ coal
–– “Clean coal” refers to technologies designed to cut emissions
–– Coal can be “cleaned” of unwanted minerals and impurities
–– Technologies include capturing CO2 from the burning coal or extracting synthetic gas from coal
–– The CO2 can then be stored in spent North Sea oil and gas fields
–– Carbon capture could reduce CO2 emissions by 90 per cent per plant
–– There is no carbon capture plant in operation in the UK

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