A decision by the UK government to back only the post-combustion version
of clean coal technology is set to be challenged, Platts has learnt.

A number of clean coal plant developers and backers, including Centrica
and Climate Change Capital, are lobbying UK industry and government to build
support for their plans, which are based on the other, pre-combustion, version
of clean coal technology.

The companies are understood to be looking at mounting an industry-wide
challenge to the government's decision early next week. Over the next few
days,discussions will be taking place between companies that are unhappy with
that decision.

The government is planning to hold two industry days Tuesday and
Wednesday next week to outline the thinking behind its decision.

The government's announcement Tuesday (October 9) will leave four planned
clean coal projects high and dry without the prospect of government support,
while five others are still in the running for the competition to obtain
government funding.

According to Platts Power UK's Project Progress Factors
the two most advanced projects by a clear margin are Centrica/Progessive
Energy's proposed plant at Teesside (which is a pre-combustion loser) and
E.ON's Kingsnorth project (a post-combustion winner).

It is estimated that post-combustion carbon capture technology is more
expensive (around twice as expensive on a unit cost basis) than
pre-combustion carbon capture technology.

Jake Ulrich, managing director of Centrica Energy, said Friday:
"Supporting just one carbon capture technology risks losing a golden
opportunity to realize the Prime Minister's vision of the UK as a global
pioneer of carbon capture.

"Excluding pre-combustion capture technology in favor of post-combustion
capture technology means bypassing a cheaper method of capturing carbon that
will have more international application in favor of a technology largely used
to retrofit existing coal plant.

"The UK needs substantial investment in new power stations which should
be built with pre-combustion technology, committing to carbon capture from the
outset.

"This seems to be wasting an opportunity for the future and instead
focuses on fixing existing coal plants, many of which will soon be retired,"
Ulrich said.

Ian Temperton, a managing director at specialist investment banking group
Climate Change Capital, agreed that the government's decision to back only a
post-combustion power plants with taxpayers money was wrong.

He told Platts :"This may be a fix for cleaning up existing power stations
in the future but we are about to build a new generation of plant," he said.

"The government is basically telling power companies that they can keep
building conventional high emitting coal plant and that the taxpayer will
bail them out. It is folly to abandon other technologies," Temperton said.