The company said it would involve using an existing gas turbine, an existing steam turbine, an existing electricity network connection and land adjacent to the power station already owned by SSE.

According to the company, Peterhead is well-located for transportation of carbon dioxide emissions and for subsequent storage, and a number of options for this are being considered. SSE will be discussing these, and the project in general, with the UK government as part of a market-sounding exercise being launched by the Department of Energy and Climate Change (DECC).

The Energy Act 2010 provides for the creation of a financial incentive, funded by electricity suppliers, to support up to four CCS commercial-scale demonstration projects in the UK. The first project is being selected through the ongoing competition for a post-combustion capture project on a coal-fired power station.

In June 2010, the UK Committee on Climate Change (CCC), the independent body which advises the UK Government on setting carbon budgets, said that CCS equipment should be fitted to new gas-fired power stations. While its current policy, reflected in the coalition agreement, is to continue investment in CCS for four coal-fired power stations, the government is considering the CCC’s recommendations.

SSE is also planning for CCS on coal-fired power stations, and the Ferrybridge clean coal pilot project, a collaboration between SSE, Vattenfall, and Doosan Babcock in the UK, was awarded GBP6.3m by DECC, the Technology Strategy Board and Northern Way in April this year.

Ian Marchant, chief executive of SSE, said: “If long-term targets for reducing emissions are to be met, CCS technology is going to have to apply as widely as possible. This means gas-fired power stations as well as coal.”