Will carbon dioxide give Miliband the slip?

For once, Miliband the younger grabbed the headlines. Brother and cabinet colleague David had for weeks dominated the news pages over speculation that he would snaffl e the position of the European Union's first foreign secretary. But last week it was the turn of Ed Miliband, the Climate Change Secretary, who took centre stage after drafting one of the most comprehensive energy statements by this or any modern government.

The son of Campaign for Nuclear Disarmament co-founder and Marxist intellectual Ralph Miliband told the Commons on Monday he was fast-tracking the construction of 10 nuclear power stations to produce 16GW of power. "We need nuclear power, which is a proven, reliable source of low-carbon energy," he gushed.

That emotive word "nuclear" got everyone chattering, but Miliband's strategy was far from one-planked. He also detailed plans to raise up to £9.5bn through a levy on electricity bills to develop four carbon capture and storage (CCS) demonstration projects by 2020.

Capturing carbon dioxide and then burying it could end up cutting coal plant emissions by 90 per cent. "Our aim is clear," said Miliband, "for carbon capture and storage to be ready to be deployed 100 per cent on all new coal-fired power stations by 2020."

However, there is a growing consensus that British business cannot meet Miliband's target, that its cost may be too high and, say some, that the technology may not even be safe.

CCS is a massive undertaking, potentially expanding the size of a coal station by a half. The process has two stages: pre- and post-combustion. Technology for the former is far more advanced. As a result, demonstration projects for post-combustion are not expected to be completed until 2025.

E.ON and Scottish Power are the last two companies left in the competition to produce the first CCS demonstration project. The winner will not be selected until late next year. "The Government should be bringing this process forward," argues Charles Hendry, the Conservative Party's shadow energy minister. The whole point was to get this scheme up and running so that [UK] businesses could then sell their expertise to the likes of the Chinese – but the Chinese have already got their own pilot schemes ready."

Ignoring the missed business opportunity, the selection process has moved at a snail's pace, says Jeff Chapman, the chief executive at the Carbon Capture & Storage Association.

He points to Canada, which took just 11 months to choose three pilot projects in Alberta. "We've already spent two years getting to this point on only one demonstration project. Unless we start building CCS much quicker, the [second] target for electricity to be decarbonised by 2030 will be a tall order."

A leading procurement expert says that the Government caused itself a problem by putting the pilots out to competitive tender. Had it just chosen a private sector partner straight away, it would not have had to follow the EU's onerous procurement rules.

Industry sources also suggest that the cost of adding CCS kit to coal stations will inevitably be expensive. One estimates that while nuclear energy costs about £50 per megawatt hour, CCS could be closer to £90-£95.

"In the long run – 10 to 20 years – CCS will come down to about £70, but the cost of nuclear will have also reduced, probably to about £40."

Alistair Rennie, a CCS project director at FTSE-100 energy giant Amec, disputes these figures, arguing that the cost could eventually come down as low as £30-£50 per MW hour as technology improves. He adds: "It's certainly comparable to the cost of onshore wind power and cheaper than offshore wind. The more CCS we do, the more economies of scale we will gain."

For example, the test projects will typically capture about one-quarter of the carbon dioxide emitted. If the pilots are successful, CCS will be upgraded to cover the entire plant so that tons of carbon dioxide can be pumped out in a single, thick, inexpensive pipe.

Another cost will be the monitoring and maintenance of the emissions, which would be stored in geological formations such as former oil and gas fields. CO2 is potentially highly dangerous, as demonstrated by the Lake Nyos disaster of 1986 in Cameroon. A mixture of CO2 and rain droplets rose suddenly from the lake and killed nearly 2,000 people, as well as animals and plants.

While acknowledging the potential risk of CO2 leakage, Michael Osborne, Arup's associate director for CCS, says that sceptics have taken the argument too far. "We walk around with quite dangerous gases beneath our feet all the time and we think it is quite natural that gas goes into our home," he says. "That's potentially very dangerous, yet we're comfortable with our families being around it."

Criticism of CCS typically comes from those who would like to see nuclear dominate the energy landscape, believing it to be the cheapest and most efficient clean energy. They feel that this is the only way to meet the biggest target of all: to have greenhouse emissions down 80 per cent on 1990's level.

However, Osborne argues that building a wave of nuclear plants could produce far greater initial emissions than would be the case through CCS. "There is an abundance of coal around so there is an attraction to using CCS, while there is a significant carbon footprint with nuclear: extracting materials, processing it and constructing the plant."

A key problem with carbon storage is that it does not provide any financial reward for the energy sector. Many industry experts are looking at ways of reprocessing the captured CO2. For example, it could be fed to algae to accelerate photosynthesis, which in turn can be a biofuel with any residual matter used for fertiliser.

Graham Hillier, the new energy director at the Centre for Process Information, a business technology adviser, says: "Using CCS for algae is not terribly efficient but at least it does something with the CO2. We have got to get serious about the cost and the engineering challenge. Each reasonably sized installation could cost hundreds of millions of pounds."

Miliband the younger, then, is staking an awful lot on a relatively unproven technology which might cost much more than it delivers.