First clean coal power plant gets green light

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Richard Budge, the mining entrepreneur dubbed “King Coal” when he bought the rump of England’s coal mining industry in 1994, has come a step closer to capping a remarkable business comeback by building the UK’s first “clean coal” power station.

The European Commission has pledged €180m (£162m) towards a proposed carbon capture and storage (CCS) plant at Hatfield colliery in South Yorkshire, a site owned by Mr Budge’s Powerfuel company. A deadline for European legislators to object to the plan passed at the weekend.

Mr Budge aims to build the 900MW plant next to the colliery and pump the carbon captured into depleted gas fields under the North Sea. The £2.4bn plant will require more funding if it is to be built by 2015 and further technical research.

The plant is a centrepiece of Yorkshire’s plan to become a leader in low-carbon technology.

Its legacy as a powerhouse of the industrial revolution and heartland of coal and offshore gas production has left it with a fossil fuel-driven economy. Producing 18 per cent of the UK’s electricity but consuming just 7 per cent of it, the county hosts several coal-fired power plants, including Drax, the country’s largest.

Tom Riordan, chief executive of Yorkshire Forward, the regional development agency, said: “Securing the first project is a vital step in developing a region-wide CCS cluster. This decision catapults our region on to the global stage as a leader in demonstrating commercial-scale CCS.

“Nowhere in Europe has such a large number of industrial carbon emitters so close to safe carbon storage in depleted gas fields in the North Sea and the region has access to proven technology and engineering skills.”

He adds that the project had the potential to “create thousands of jobs”.

Yorkshire Forward is working with Powerfuel and the National Grid to build a network of CO2 pipelines linking power stations and industrial installations across Yorkshire and the Humber. Mr Riordan said the EU’s investment would unlock private money.

Hatfield would produce just 10 per cent of the emissions of a conventional coal-fired power station and could cut CO2 emissions by up to 60m tonnes – two-thirds of the region’s annual emissions – within 15 years.

Mr Budge’s Powerfuel beat rival schemes from Eon at Kingsnorth in Kent, RWE at Tilbury in Essex, and Scottish Power at Longannet in Fife, for EU money. Those sites could still win UK government funding, however.

The EU is giving some €1.05bn from its economic stimulus package to Hatfield and five sites in Germany, the Netherlands, Poland, Spain and Italy.

Mr Budge has been working on the CCS project since 2002. Known as “King Coal” when chief executive of RJB Mining, which bought much of the English coal industry after its privatisation in 1994, he was ousted as head of the company, now called UK Coal, in 2001. There remains something of the buccaneer about him.

Mr Budge bought the Hatfield colliery after it had closed and reopened it in 2006 with a £100m investment. Many sceptics thought it impossible to reactivate a deep mine successfully. Just as many doubt whether CCS technology will work, fearing leakage from the sea bed.

Yorkshire is also pioneering a carbon trading scheme before the Carbon Reduction Commitment, a mandatory cap-and-trade system for large organisations that comes into effect in April.

Some 44 companies and public sector bodies, including Yorkshire Bank, and Marshalls, the paving and landscaping product suppliers, have been measuring their emissions and trading permits in a dummy run they hope will help them avoid fines under the CRC.

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