Drax has announced that it will no longer be investing in the White Rose carbon capture and storage project once the development has been completed and is to withdraw from the Capture Power partnership.
The company will continue to make the facility available for the CCS project but its chief executive Dorothy Thompson says it no longer had the financial ability to mainitain its committment.
"This is for us a sad decision but ultimately investment is about choices and we are in a very different financial situation today than we were two years ago when we decided to invest in the project," Thompson told the BBC radio, adding, "There have been changes to the government's renewable policy but there have also been dramatic movements in the commodity markets and that has greatly reduced our profitability."
The project, which aims at commercialising CCS technology, is due to end in six to 12 months. It is exploring the feasibility of capturing 90 per cent of carbon emissions from a new coal-fired power plant next to Drax's existing station in Yorkshire and storing them under the North Sea. Drax had already spent around £3m for a feasibility study on the venture, whose other partners are Alstom and BOC.
The company has been under pressure in recent times as the UK government strategy is to phase out coal-fired power plants. Drax had responded by converting two of six sub-plants to run on wood pellets, with a third to follow. However the Treasury then announced rolling back green taxes and then reversed its decision to underpin the costs of all three sub-plants. In the July Budget, the chancellor trimmed subsidies to pellet-powered generators.