Labour's power call sets up clash with Coalition

Party wants carbon-capture and storage technology installed to cut emissions – but plan would double the cost of electricity

Labour has put itself on a fresh collision course with the Government over its dash-for-gas policy, proposing that after 2020 all new gas-fired power plants be forced to install technology to reduce their carbon emissions that will double the cost of the electricity they produce.

Staking out its ground in the fierce debate over the cost, security and greenness of Britain's power supply, Labour placed carbon capture and storage (CCS) at the centre of its energy policy. In an amendment to November's Energy Bill, the party also proposed forcing all coal-fired power stations to fit CCS after 2020.

CCS involves capturing the carbon dioxide waste gas from power stations, liquefying it and piping it deep underground into geological formations where it can be permanently stored.

Most experts agree that the technology needs to be widely used on fossil-fuel burning power stations if the world is to have a chance of limiting global warming to two degrees, beyond which the consequences become increasingly devastating.

The Labour leader Ed Miliband's climate-change envoy, Barry Gardiner, said: "This is the clearest indication yet from Labour that it is backing CCS as a major strand of our future industrial and green-energy policy. It is the only way we can achieve our emissions targets and gives Britain a great opportunity to develop world-leading CCS technology which we can export."

Although the Energy Bill will require all new coal-fired power stations to be fitted with CCS after 2020, existing ones will be exempt, while no gas station would be obliged to use the technology until at least 2045.

As he unveiled the Bill, Chancellor George Osborne, championed the use of gas and pledged to build dozens of gas-fired power stations in the UK in the coming years, in part to capitalise on its potentially abundant – but unproven – reserves of shale gas.

Dr Robert Gross, director of Imperial College's centre for energy policy and technology, said: "I welcome Labour's sentiment on CCS. It's saying that if you want new gas-fired power plants, then that's fine, but you have to make it consistent with emissions targets.

"There is an inherent contradiction in the Government's mix of a dash-for-gas and ambitious carbon-reduction targets," added Dr Gross, who advised the Government about the Bill.

However, he said CCS was still a fledgling technology and that Britain might struggle to deploy it on a large scale by 2020. Furthermore, he was sceptical about Labour's claim that the UK could become a world leader in CCS technology, pointing out that its efforts to build demonstration projects had so far been unsuccessful.

The Coalition still intends to provide £1bn of funding in a competition to build a workable CCS demonstrator, although the project has been plagued by uncertainty and, despite drawing up a shortlist in October, it has yet to name a winner.

Kieron Stopforth, an analyst at Bloomberg New Energy Finance, said Labour’s proposal to fit CCS to all new gas power plants would increase the cost by at least £200m per plant.

This could as much as double the cost of the electricity those plants produce over their lifetimes. Construction costs would gradually come down over time but they will still be significantly higher than without CCS, Mr Stopforth said.