The project would have been the world’s first industrial-scale hydrogen power plant, generating ‘carbon-free’ electricity with carbon dioxide capture and storage. It could have been up and running by the end of 2009. The system would have used reforming technology to convert natural gas into hydrogen and CO2, using the hydrogen to fuel a power plant of between 330 and 475 MW.

BP had reputedly spent $50 million on the Peterhead project in the last 18 months and had planned to use the Miller oil field in the North Sea to store the CO2. The energy company said the decision was a major disappointment but blamed a lack of government support. A spokesman for the company said that the decision to cancel the project “is based on timing.”

Trade Secretary Alistair Darling confirmed a commitment in the March UK budget to hold a competition to build a commercial-scale carbon capture and storage plant due to begin in November. However, BP’s David Nicholas said the date was “an extension too far for this project.”

Opposition trade and industry shadow secretary Alan Duncan said: “BP’s withdrawal from their carbon capture project in Peterhead is a disaster,” adding, “This catastrophic course of events has been caused entirely by the government’s dithering and delay.”

Despite the setback BP and mining giant Tinto are to commence feasibility studies and work on plans for the development of a A$2 billion ($1.5 billion) 500 MW coal-gasification based power generation project, at Kwinana in Western Australia 45 km south of Perth, that would be fully integrated with carbon capture and storage. Subject to regulatory approval, this would be the first project for Hydrogen Energy, the new company launched by BP and Rio Tinto to develop “decarbonised energy projects around the world.”

The planned facility would be an industrial-scale coal-fired power and carbon capture and storage plant with hydrogen for the plant generated by gasifying locally-produced coal from the Collie region and the carbon dioxide produced by the same process captured and stored in a deep underground geological formation.

Subject to the successful outcome of detailed engineering and commercial studies, and providing government policy is in place to make the project commercially viable, a final investment decision to develop the project could be made in 2011, with the project coming into operation after a three year construction period.

Speaking from Perth, Lewis Gillies, chief executive of Hydrogen Energy, said: “This has enormous potential to affect the way that coal will be used for power generation across the world. Clean coal technology such as this will be essential to reducing greenhouse gas emissions, both in Australia and globally.”

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