The UK Government has scrapped its £1bn competition for the carbon capture and storage (CCS) technology scheme.

The announcement comes days ahead of UN climate summit scheduled in Paris that would involve over 190 countries to discuss on greenhouse gas emissions reductions.

The government said in a statement: "Following the Chancellor’s Autumn Statement, HM Government confirms that the 1 billion-pound ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available.

"This decision means that the CCS Competition cannot proceed on its current basis."

After launching CCS competition in April 2012, the government selected two preferred bidders including the White Rose project at the Drax site in Yorkshire and the Peterhead project in Scotland.

Being developed by Capture Power, a consortium of Alstom, Drax Power and BOC, and National Grid, the White Rose project is designed to capture around 90% of the carbon dioxide (CO2) from a new coal-fired power station at the Drax site in North Yorkshire.

The captured CO2 will be stored offshore in a saline rock formation beneath the North Sea.

The Peterhead CCS project, which is being developed by Shell and SSE, involves capturing about 85% of the CO2 from an existing combined cycle gas turbine power station at Peterhead.

The CO2 will then be stored offshore in the Goldeneye depleted gas field 2.5km beneath the North Sea.

Commenting on the government’s decision, Capture Power CEO Leigh Hackett said: "It is too early to make any definitive decisions about the future of the White Rose CCS Project, however, it is difficult to imagine its continuation in the absence of crucial Government support."

Shell and SSE said in separate statements that the government’s decision was disappointing and represented a missed opportunity for the country.

The government said it would work closely with the two bidders on the implication of the decision to scrap financing.

Carbon Capture & Storage Association CEO Luke Warren said: "We call on the Government to come forward – as a matter of urgency – with their plans for CCS as this technology is critical for the UK’s economic, industrial and climate policies.

"Without concrete Government support for CCS the UK will lose the opportunity for cost-effective decarburization."