Few clean technologies have more riding on their success than Carbon Capture and Storage (CCS) systems.

Although still largely untested, the technology has been hailed by many within the energy industry as perhaps the key weapon in the fight against climate change, and has emerged as a central plank of the carbon emission reduction strategies of countless political leaders, including those in the UK, the US and the EU.

The appeal of CCS technologies capable of capturing carbon emissions from fossil fuel-fired power stations and storing them safely underground is obvious: it would allow the continued use of fossil fuels, particularly coal, without further elevating atmospheric CO2 concentrations from their emissions.

Environmentalists are largely sceptical of the technology, warning there is little evidence that the systems will work and that captured CO2 will not leak out of the geological structures, while also arguing that the approach allows countries to continue to burn fossil fuels when they should be looking at genuinely clean alternatives.

Political issue

However, many political leaders are now resigned to the fact that coal-rich countries such as the US and Australia will burn their coal reserves regardless of climate change concerns, and as a result CCS represents the best chance of allowing them to do so in as sustainable a manner as possible.

Indeed, Nobuo Tanaka, the executive director of the International Energy Agency (IEA) warned in April that international action to encourage the uptake of CCS is now vital. " If we do not address regulatory and financial challenges in the very near future, the window for this important technology may close, causing the cost of climate mitigation to rise dramatically," he said.

Similarly, the UK's Stern Review found that continued investment in fossil fuel power stations in China and India made development of CCS absolutely crucial if climate change is to be controlled, warning that "failure to develop viable CCS technology, while traditional fossil fuel generation is deployed across the globe, risks locking in a high-emissions trajectory."

CCS: what is it?

But what exactly are CCS technologies, how do they work, and if they are so critical to tackling global warming why have they not been more widely adopted?

In essence the technology behind CCS is fairly simple: CO2 is captured from power plant emissions, transported by pipeline to a suitable site, then injected into the ground.

Injection technologies are already widely used in the oil and gas industry to extract greater quantities from geological fields and as such it is the capture stage that presents the biggest technical challenges.

Engineers have so far developed three approaches to tackling the problem. The first – post-combustion capture – sees gas scrubbed from power station chimneys and turned into a transportable gas. It has proved the most popular approach so far because it can be retro-fitted to existing power stations.

The second process – pre-combustion capture – involves removal of CO2 prior to combustion, a process which produces hydrogen. The CO2 is then transported away while the hydrogen is used to generate energy. Although many experts consider it a better long-term option particularly suited to natural gas, pre-combustion capture involves a new and untested model of power production and is thus treated more sceptically by the energy industry.

BP and partners Southern and Scottish Energy (SSE) dropped plans for a pre-combustion plant in Peterhead last year after the Treasury refused to provide a guaranteed subsidy to compensate for the extra investment required.

The third method, known as Oxyfuel combustion, sees oxygen separated from air, allowing the fuel to burn in pure oxygen, resulting in a near-pure stream of CO2 in the exhaust, which can then be easily removed. This process is attractive to energy firms because it can improve combustion efficiency, and also has the potential to be retro-fitted, but it is still a long way from being fully developed.

All methods offer various benefits, but the UK has only endorsed one so far: post-combustion capture for coal. A competition launched recently by the department of Business Enterprise and Regulatory Reform (BERR) will fund one 400MW coal-fired power plant with post-combustion capture, with a view to the facility being completed by 2014.

However, while the project has been widely welcomed, progress is not moving fast enough according to some experts.

"The government has dithered over whether to support CCS with explicit financial commitments, eventually deciding not to, and has pushed back the timetable with the first plant now planned for after 2014, five years later than planned," says Professor Stuart Hazeldine, a CCS expert at the University of Edinburgh.

A report by think tank Policy Exchange last month also found that confusion over UK government policy and timescales means that the number of proposed CCS projects in the UK has halved in the past year. Ten CCS projects proposed in 2006/7 would have cut UK base load power emissions by 20 per cent but five of the projects – including Peterhead – have since been abandoned.

The government has also attracted criticism from energy company E.ON as it considers whether to greenlight the UK's first new coal station for 24 years at Kingsnorth.

It is expected that the government will specify that the plant must be "capt ure ready", however with no official definition for the term the energy giant is reluctant to press ahead with the project without greater clarity on how CCS systems will have to be fitted.

Some environmentalists have also expressed fears that the lack of a definition for "capture ready" will allow the government to approve potentially carbon-intensive plants without making it clear when CCS technologies will be installed. "At the moment anyone can say a plant is capture-ready just by leaving a space next to the plant. It needs to be defined or it will become a fig leaf," warns Hazeldine.

The government has also failed to offer incentives for the construction of a new pipeline network for the transportation of CO2 – hoping that those who undertake capture operations will also take care of this. "This is where leadership is missing the most," says Hazeldine.

Progress moving forward

Despite this lack of support, energy companies are in discussions over the construction of a pipeline to transport CO2 from Humberside, an area with very large carbon dioxide emitters, to secure storage sites in the North Sea.

Moreover, regulatory progress has been made on one key issue – the changing of the Ospar treaty, which effectively banned CO2 dumping in the North Sea. And The Energy Bill before parliament contains a regulatory framework for the storing of CO2, although it lacks any guidelines on capture or transport.

However, while the energy companies urge the government to deliver regulatory clarity, others argue that there is a reason for the apparently slow rate of progress.

Murray Birt, environment policy advisor at the CBI, observes that the government does not want to push a technology the market will not adopt. "If you mandate a technology before it is commercially ready, nobody will be prepared to take on the cost – even if there are large financial incentives," he argues.

The CBI believes the government can help the technology be ready faster if it uses some of an estimated £1.6bn gained from selling carbon permits under the Emissions Trading Scheme (ETS) to fund research and development into CCS. " These revenues should be devoted to CCS – we need a good carbon price but a larger fund for development is absolutely vital," says Birt.

Others argue that renewable energy incentives, such as feed-in tariffs, whereby energy generated at CCS plants would be guaranteed an above-market price, would help stimulate adoption of the technology.

Jeff Chapman, chief executive of the Carbon Capture and Storage Association (CCSA) counsels caution when it comes to green energy incentives, warning that despite its many advantages CCS does not eliminate emissions completely, and as such renewable energy incentive mechanisms should not be applied to the technology. "[Extending renewable energy incentives] would undermine tariffs for energy from renewable power sources," he says. "You need to find a different mechanism to reward people who are removing a certain amount of CO2."

The best way to do this would be to set a benchmark for lower levels of carbon emissions and reward on a sliding scale against that, according to Chapman. While another idea is to allocate tradable carbon credits for CO2 captured and stored.

Whichever policies the European Commission eventually selects, it will need to move faster than the UK government has done to meet EU targets of 12 plants in Europe by 2015.

But despite these various obstacles, the appeal of CCS technologies remains strong and industry interest in the approach shows little sign of waning: Royal Dutch Shell, for example, has agreed to invest in the £80m Weyburn-Midale plant in Canada, and the project originally planned for Peterhead in the UK will still go ahead in Abu–Dhabi.

Only after the success of these projects might the rest of the world recognise the value of the technology and build the 50 plants worldwide that the CCSA claims are crucial to help hit 2020 climate change targets.