Labour: Government ambiguity is putting CCS at risk

The development of Carbon Capture and Storage (CCS) technology is an important step in the UK's transition to a low-carbon economy. The potential is well known but, as yet, the technology has not been developed on a commercial basis. The recent failure to develop CCS at Longannet in Fife, on a coal fired station, highlighted the complexity inherent in moving from a demonstrator to a commercial scale project.

As well as the prize of reducing our own emissions and ensuring the longevity of a broad mix of energy sources for the future, the benefits of making CCS work have a wider commercial opportunity for the UK. The competitive advantage and considerable academic expertise that we already have, much of it in Scotland, means we are on the verge of a hugely valuable exportable technology.

The possibility of demonstrating CCS at the gas-fired plant at Peterhead is now one of the frontrunners in Europe. Following the disappointment of Ibedrola's decision not to proceed at Longannet, the announcement by Perth-based SSE and Shell to press ahead with a CCS demonstrator in the north east was welcome news.

As SSE Chief Executive Ian Marchant made clear at the time, substantive progress at Peterhead is dependent on the UK government's £1bn of promised funding being available for the large scale financial and technical studies still to be undertaken ahead of their timescale for commercial demonstration by 2014.

When I questioned Chris Huhne in the House of Commons on his department's commitment to CCS post-Longannet, he could not have been clearer - insisting there would be no Treasury backsliding, and the £1bn would be available to support demonstrating CCS projects on a commercial basis.

However, less than ten days later, on the eve of the Chancellor's Autumn Statement Danny Alexander, Huhne's LibDem colleague in the Cabinet, let slip in a radio interview that the £1bn had been commandeered by the Treasury and subsumed into a £5bn fund for other infrastructure projects between now and 2015.

He did not say how much of the £1bn would be available for CCS, and in the fortnight in Parliament since then I have asked George Osborne, Alexander and Huhne for that information. They have all passed up the chance to give a clear answer to a clear question - what is now on the table for CCS in the next three years, and how will it impact on current projects.

I tabled a series of very specific written questions to the government asking for clarity, but once again they have failed to provide straight answers.

These crucial unanswered questions are deterring progress on CCS. It is a challenging technology in any case, and capital intensive to seek to demonstrate on a commercial scale. While the outcomes could be significant for investors, not knowing the government's approach adversely effects the attractiveness of that potential investment.

Unfortunately, in the 18 months or so they have been in office, the government has developed an unenvied reputation for such ambiguity where stability and a defined course are needed. Following so soon after the changes to the tax regime on the continental shelf, and the sudden and drastic cuts to feed in tariffs for solar energy coming into effect this week, the government needs to make its position on CCS clear.

Continual about turns do nothing to help confidence, and where such significant investment is still needed that confidence is crucial. What is worse, the Treasury announcement was without any consultation (again, as north sea operators will know, becoming a familiar theme) and with scant detail. It is little wonder that exasperation with Chris Huhne is spreading across so many parts of the energy industry.

From being on the cusp of leading the world in CCS development, we could be about to be left behind - not because the technical and academic expertise isn't there, but because the confidence in the government's approach is so fragile.

To keep the UK in the game for CCS, then it is vital that the government answer some key questions, and answer them quickly:

How much of the £1bn previously set aside will now be used to pay for other projects?

What is the total sum of money available for CCS projects between now and 2015?

And what impact will this have on the timescale for the development of CCS on a commercial scale?

With a number of projects at a crucial stage, those answers need to come soon before a significant opportunity is missed. Vague promises and evasive statements are not good enough - for the sake of our energy future, it is time for the government to come clean on where it stands on CCS.

Tom Greatrex is MP Rutherglen & Hamilton West and Labour's shadow energy minister