Britain’s first carbon-capture and storage plant will be built next year — but only if costs are kept down. Gordon Brown announced the public-funded demonstration plant yesterday as an indication of how seriously the Government is taking the challenges of climate change.

As a means of reducing greenhouse gas emissions, the possibility of capturing carbon — as fossil fuels are burnt at power plants — and storing it in oilfields is being explored.

Before a decision is taken on building the demonstration plant, however, a feasibility study will establish if it is a costeffective means of reducing carbon emissions.

A Treasury official said that the aims of the study reflected the view that storing carbon will have to be financially as well as environmentally prudent.

Carbon dioxide is widely acknowledged as the prime driver of global warming, and although carbon capture and storage is a unproven technology, increasing numbers of scientists and engineers are convinced that it can be an effective means of reducing emissions.

The Treasury said in June that an agreement had been signed with Norway to pursue jointly the practicalities of the technology. Mr Brown’s announcement of the feasibility study is the first significant fruit of the agreement and he promised a decision next year.

Alistair Darling, Secretary of State for Trade and Industry, will appoint engineers to build any demonstration plant. Welcoming the project, he said: “CCS can reduce power plant emissions by up to 90 per cent.”

But Stuart Hazeldine, Professor of Sedimentary Geology at the University of Edinburgh, said that the Treasury lacked urgency in its moves towards carbon capture. “We have another cautious shuffle forwards from the Treasury,” he said. “This is by no means a free lunch for green fossil electricity; it is barely a party invitation, without a guest list, a date or a location.

“This lack of [Pre-Budget Report] action means that more gas plants will be built to span the electricity generation gap, and the UK will be even more reliant on imported gas with inevitable CO2 emissions.”

• Landfill tax is to rise by £3 to £24 per tonne from April, the Chancellor confirmed, and a further rise is being considered for 2008 to boost recycling figures and reduce waste.

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