Ed Davey (Liberal Democrat)

I am pleased to inform Parliament that today, my right hon. Friend the Prime Minister and I are signing a contract with Shell to take their world leading gas carbon capture and storage (CCS) project into the next stage of development.

The Government have agreed a multi-million pound contract for engineering, design and financial work on the Peterhead CCS project in Aberdeenshire. The world’s first-planned gas CCS project, Peterhead involves installing carbon capture technology on to Scottish and Southern Energy’s (SSE’s) existing Peterhead gas power plant, and transporting the CO 2 100 km offshore for safe, permanent storage 2 km under the North sea in the old Goldeneye gas field. If built, the project could save 1 million tonnes CO 2 each year and provide clean electricity to over 500,000 homes.

Today’s announcement follows the award in December of a front end engineering design (FEED) contract to the White Rose project in Yorkshire, and marks a key milestone in the Government’s CCS competition. We are investing around £100 million from our £1 billion budget to take the Peterhead and White Rose CCS projects to the next stage of development—which together could support over 2,000 jobs during construction and provide clean electricity for over 1 million homes. In late 2015, the projects will take final investment decisions, with the Government taking decisions shortly after.

By bringing forward CCS, we could save more than £30 billion a year by 2050. Without it, achieving an affordable, low-carbon energy mix with renewable and nuclear energy alone will be much more difficult and more expensive.

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