Fallon is close to confirming funds for a front end engineering and design (Feed) study for a CCS project at SSE’s Peterhead plant in Aberdeenshire, he revealed. If it goes ahead, it could be the first gas-fired CCS plant in the world.
It follows his sealing the deal with the White Rose project at Drax in December. Both will get a share of £1 billion to develop commercial scale trials of CCS.
Fallon admitted “it looks unlikely” a final investment decision will be made in the next year on either scheme, adding: “These are huge projects and it is very important to get them right.”
However, he assured members of the Energy and Climate Change Committee “we are cracking ahead with this”.
Fallon also offered up hope for the CCS developers that did not make the shortlist for the £1 billion competition. They are set to be eligible for support through contracts for difference, he confirmed, with further details to be thrashed out soon.
There will be room in the support budget, he said. “I do not want to see it crowded out by some of the more mature forms of low carbon generation.”
The CCS market could be worth £15 to £35 billion by 2030, according to a report published by the CCS Association and Trades Union Congress on Monday.
They claim including CCS in the mix could cut wholesale electricity prices by 15 per cent compared to relying on nuclear and renewable generation alone.