Industry fears carbon capture pilot delay will affect wider coal-fired power station programme

Government plans to build a fleet of eco-friendly coal-fired power plants are in doubt after it emerged that arrangements for a £1bn pilot scheme are two years behind schedule.

Industry sources now fear the delay will set back the building of a new generation of coal-fired power stations.

Last month, climate change secretary Ed Miliband pledged to make the UK a “world leader” in carbon capture and storage (CCS) technology, which captures gases produced by fossil fuels plants and stores them underground. He committed the government to up to four pilot projects.

But a competition to build the first plant, announced in 2007, has been hit by delays as the government hammers out its climate change policy. Sources say this puts the plants at risk of missing out on cash from Europe.

Energy firms RWE Npower, E.ON UK and Scottish Power are all vying to build the plant and a contract was to be in place by September this year. Now, sources say government officials are telling them contractual close is not expected until late 2011. An EU funding package entitling the UK to €180m (£157m) towards CCS projects must be claimed by the end of 2010.

The government has insisted the first plant will be up and running by its original target of 2014, but industry figures have warned the timetable could dissuade energy firms from investing in the UK.

The industry can only take so much messing about

Jeff Chapman

Energy providers are understood to be waiting for the outcome of the competition before committing to new plants.

E.ON’s scheme at Kingsnorth already has planning permission, and six contractors including Kier and Laing O’Rourke have been in talks with it.

Jeff Chapman, chief executive of the Carbon Capture and Storage Association, said: “The industry can only take so much messing about.”

Martin Grant, managing director of Atkins’ energy division, added: “The risk is we don’t get this technology quickly enough to address the power shortfall.”

The news comes in the same week EDF put pressure on the government to finance the next wave of nuclear power stations and raises further questions about the country’s ability to plug the looming energy gap.

The Department for Energy and Climate Change said: “We expect to announce the next stage of the competition shortly.”