That BP Carbon Capture Plant

I agree I might have slightly the wrong end of the stick here but:

BP has abandoned plans to build a "green" power plant in a snub to
Alistair Darling on the day that the Trade and Industry Secretary
unveiled a new energy strategy aimed at reducing carbon emissions.

Just hours after Mr Darling announced his Energy White Paper yesterday,
the oil giant halted work on a £1bn-plus carbon capture and storage
facility in Scotland, blaming delays in state subsidies.

From what I remember the issue was a litle more nuanced than a demand for "state subsidies".

The basic plan was to take natural gas, strip the carbon out and then burn the hydrogen in the power plant. The CO2 is then pumped into an old oil field. OK; so far so good. However, the CO2 would then be used to pump up the last oil from that reservoir. OK, also good.

But the subsidy desired wasn’t actually "Please Sir, can we have some cash to make our sums add up?"

Rather, it was, "Please don’t tax us the full rate on that last bit of oil" because it’s that that makes the sums not add up.

If we look at it in its net effects it runs like this. With the special lower tax rate on that oil, the plan goes ahead and the new technology is tried out, there’s some electricty generated and the Treasury gets some money from those millions of barrels pumped up.

Without the special lower tax rate revenue is zero, the new technology doesn’t get tried out.

Put that way it’s something of a no brainer really. Sure, give ’em the tax break and Gordo’ has more money to spend.

Quite why they didn’t go this route I don’t know.

One response

  1. Kay Tie Avatar
    Kay Tie

    “Quite why they didn’t go this route I don’t know.”
    For the same reason MTAS is a clusterfuck. Incompetence, written into the DNA of New Labour.

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