A new joint agreement has been struck between Scottish and Southern Energy (SSE) and Shell UK Limited (Shell) for the development of the Carbon Capture and Storage (CCS) project at SSE's gas-fired power station in Peterhead.

The agreement will enable the project to accelerate a programme of pre-FEED (front-end engineering design) studies, with the intention that the project will be in a position to begin a full FEED study in the second half of next year, subject to progress with funding proposals submitted under the European Union's NER300 process and developments in the UK's CCS demonstration programme.

The project aims to design and develop a full chain, post-combustion CCS facility capable of capturing carbon dioxide from a 385 MegaWatt combined-cycle gas turbine unit at Peterhead. It is planned that the CO2 will then be transported to the Shell-operated Goldeneye gas field in the North Sea using, as far as possible, existing infrastructure.

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The First Minister said: "The agreement between SSE and Shell is an important step forward for the development of CCS in Scotland and underlines the strong commitment of these two energy giants to the technology. Following the recent disappointment over Longannet and the previous UK Government's abandonment of the earlier Peterhead CCS project, it is essential that Westminster clearly demonstrates its commitment to supporting the commercial development of CCS, not least when the continued commitment from industry is so clear.

"CCS technology could transform carbon-reduction efforts across the world, particularly in fast-growing economies. As such, it has the potential to become a significant export industry for these islands, and for Scotland in particular - that's why we are working with the UK CCS Liaison Group to ensure that lessons are learned from the Longannet FEED study. The case for CCS deployment at Peterhead and in Scotland is extremely strong. We have world-leading expertise and R&D capacity, a strong industry capability and some of the best carbon storage sites in Europe. That is why Scotland remains in the vanguard of what could become game-changing technology."

Scotland is estimated to have the capacity to capture safely and store emissions from industrial coal-fired plants for the next 200 years. The potential capacity is comparable with that of offshore Norway, and greater than Netherlands, Denmark and Germany combined. A CCS Roadmap for Scotland was launched in March 2010, with an update published in May this year.

(GK)