BP and RWE shock UK carbon capture competition
London, 6 November: The UK’s competition to build a demonstration carbon capture and storage (CCS) plant is under pressure, after oil and gas giant BP pulled its bid and RWE npower announced it is seeking a High Court appeal of the government’s decision to exclude it from the shortlist.

Announced in November 2007, the winner of the competition will receive financial support from the government to develop a coal-fired power plant with ‘post combustion’ CCS technology – meaning that carbon is stripped from the emissions after fossil fuels are burnt. In July 2008, a shortlist of ‘pre-qualified’ companies was announced: BP Alternative Energy, E.ON UK, Peel Power and Scottish Power Generation.

But Environmental Finance has learned that BP Alternative Energy no longer intends to enter a bid to win the competition.  “We now do not believe that we can put together a winning consortium within the time-frame [of the competition],” BP spokesman David Nicholas said.

A spokesman for the Department of Energy and Climate Change (DECC) said: “We continue to have three strong bidders who are committed to the project and to CCS. BP’s decision does not compromise the integrity of the competition, nor will it have a material impact on the robustness of the procurement process.“

Meanwhile, RWE npower is asking the UK’s High Court to review the government’s decision to leave it off the shortlist.

The company issued a statement saying: “We've been in discussion with the parties who have pre-qualified in the CCS competition with a view to identifying appropriate opportunities to participate in the next phase. We're optimistic we will be involved in the next stage of its development. However we do believe we should have been short-listed and, as a prudent measure to preserve our position, we submitted an application to seek a Judicial Review of the process."

Asked about the grounds for the review, a spokesman at the German utility’s UK business said: “We didn’t believe that the process was fair in the way that we were judged and given opportunities to respond to any perceived shortcomings.”

DECC's spokesman said: "Work on the UK’s carbon capture and storage demo project – one of the world’s first commercial-scale projects – is continuing as planned with the pre-qualified bidders. Given that legal proceedings have now been commenced, it would be inappropriate to comment further but we are robustly defending this challenge."

A CCS expert at Imperial College, London, Jon Gibbins, said that if western countries such as the UK fail to provide leadership by developing CCS, they will not be able to persuade China to adopt the technology in its rush to build coal-fired power stations. The UK government should be supporting CCS development on the scale it is backing renewable technologies such as wind power, he argued.