The government has formally designated a Scottish power station as one of two sites in a race to develop the first commercial plant to strip carbon dioxide from emissions.
The decision on Longannet Power Station in Fife could herald the development of a new industry in the north-east collecting and storing global-warming carbon gases beneath the North Sea.
It has potential to create thousands of jobs both onshore and off as the oil and gas industry winds down.
Yesterday’s announcement by Energy and Climate Change Secretary Ed Miliband starts a 12-month design and development study of the project, which is led by Scottish Power.
Its competitor is generating company E.ON, which has tabled proposals for a new clean-coal power station at Kingsnorth in Kent.
A decision on the winner will be taken in a year.
“Delighted” Scottish Power chief executive Nick Horton said government funding – believed to be tens of millions of pounds – would enable the consortium behind the venture to plan the world’s first commercial-scale scheme of its type at a coal-fired power plant. The consortium includes National Grid and Shell, alongside contracting partners Aker Clean Carbon and Accenture.
Mr Horton said the news had put the UK back in the lead in developing a new and essential technology.
Carbon produced by a 300-megawatt unit in the second-biggest coal-fired power station in Britain would be transported along existing pipelines and stored in porous rock formations thousands of feet below the North Sea.
John Gallagher, Shell Upstream Europe’s technical vice-president, based in Aberdeen, said: “The technical and economic challenges of CCS (carbon capture and storage) and this project remain significant, but we will be making every effort to ensure a successful project plan is delivered.”
Dan Barlow, policy chief at Green campaign group WWF, said: “Longannet is the right place to make this technology work as it will directly help to reduce our emissions and build expertise in how carbon-capture technology can be applied to existing coal-fired power stations.”
SNP energy spokesman Mike Weir, MP for Angus, said “There is huge potential in this for the Scottish economy.”