E.ON pulls out of carbon capture contest

Energy giant E.ON has announced it was pulling out of the competition to build the UK's first power station fitted with technology to capture and permanently store carbon emissions.

E.ON's Kingsnorth plant in Kent was one of two schemes shortlisted in the government competition for funding worth potentially more than £1bn to install the technology as part of its new coal-fired power station.

But the energy company has now said the market was not conducive to building a new 1,600 megawatt power station at the site, and as a result it would not proceed to the next stage of the carbon capture and storage (CCS) competition.

The announcement comes ahead of the Comprehensive Spending Review, which is likely to reveal the extent to which efforts to develop CCS have survived government cuts.

The government had been expected to launch a second competition for another three plants, with funding raised by a levy on fossil fuels which would be passed on to consumers in energy bills.

Carbon capture and storage has not been developed at scale, but there are hopes the technology could slash emissions from power stations by up to 90 per cent - and the coalition government has said it forms part of plans to drive the UK towards a low-carbon energy system.

The previous government said no new coal-fired power stations would get the go-ahead without CCS to tackle a proportion of their emissions.

Two potential schemes had been competing for the funding, with ScottishPower's site at Longannet, Scotland, the other power station in the running.

Both had been awarded initial funding to develop their plans.

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