The UK and Scottish governments plan to invest more than €5 million in engineering and feasibility studies for a Carbon Capture and Storage (CCS)-equipped coal gasification power plant in Grangemouth, Scotland.

What makes the Caledonia Clean Energy Project project somewhat unique, its backers say, is that the governments do not intend to directly subsidize the facility being built by Summit Power, based at Seattle, Washington, in the US.

Recent reforms in the UK electricity market reform, combining an Emissions Performance Standard (EPS) and the Contract for Difference (CfD), are said to make such low carbon investments increasingly attractive.

Jonas Helseth, director of Bellona Europa, a Brussels-based nonprofit organization that supports environmental improvement projects throughout the EU, said the Grangemouth CCS project "is evidence that the UK government's steps to promote CCS are working."

Helseth said the UK "has given a crystal clear signal to industry that unabated fossil fuels will be stranded assets through the introduction of an EPS, and they have given a sense of security to CCS investors through Contracts for Difference. This is something we could all learn from."

Summit will spend 18 months undertaking detailed research and feasibility studies with the ultimate objective of designing, siting, financing and building the new 570 megawatt coal-gasification power plant Scottish power plant. Fitted with CCS technology, it will attempt to capture up to 90% of its CO₂ emissions, which will be transported via pipeline and permanently stored under depleted North Sea gas fields.

The UK has previously backed other CCS projects that are currently in advanced stages of development, including the 426 megawatt White Rose facility at Drax in North Yorkshire, England, and the Peterhead CCS project of Shell, Scottish and Southern Energy in Aberdeenshire, Scotland.