The deadline for the government competition, aimed at developing coal-fired power plants that can capture and store carbon dioxide emissions as part of its green energy policy and help fill the country’s looming energy gap, was set at 2014.

However, German giant E.ON yesterday announced it was delaying the construction of a new controversial plant at Kingsnorth, 60 miles south-east of London, for at least three years and that the new plant would not be needed until 2016. It claimed the recession has depressed energy demand.

Nonetheless, Kingsnorth, which had become emblematic of the environmentalist campaign against coal-fired power stations, is also the site of E.on’s competition entry and proposed carbon capture project.

A spokeswoman for E.on, declared: “We are still taking part in the competition. We haven’t withdrawn.”

When asked about E.on’s position regarding the government’s deadline, she said: “There is quite a lot of conversation that needs to happen now. We are going to the Department of Energy and Climate Change (DECC) team about the competition.”

The DECC yesterday said “timescale” was not a “deal breaker” and that there were “a number” of criteria that the projects had to meet.

However, Nick Horler, ScottishPower’s chief executive, said: “We are seeking clarification from DECC on what E.ON’s announcement means for the UK CCS competition. ScottishPower remains fully committed to it.

“If other bids fall away from the competition, our consortium, which includes Shell, National Grid and Aker, is happy to sit down with the UK government and agree the way to deliver their requirements of commercial scale CCS to their original timescale of 2014.”

If E.on were to eventually pull out of the running, only the ScottishPower consortium, which is focused on a “retrofit” clean coal project at Longannet in Fife, and RWE Npower, which is planning a new plant at Tilbury in Essex, would remain in the competition.

If ScottishPower were to emerge as the victor in the competition, a significant chunk of the estimated 30,000-60,000 jobs that would have to be created in engineering, manufacturing and procurement to support the clean coal industry would be based in Scotland.

A spokesman for ScottishPower told The Herald: “Of course, we can’t say that all these jobs would be based in Scotland, but a very large number of them certainly would be based here.

“If we win, we remain committed to basing a centre of excellence for carbon capture and storage development in Scotland. Also, many of the largest storage areas are in the central North Sea, which logically feed into central Scotland, so that too would create jobs here.”

A ScottishPower victory in the competition would also be good news for the Scottish coal industry, whose sulphurous produce is currently considered too ungreen to be used in power plants.

ScottishPower, which is now the UK unit of Spanish energy giant Iberdrola, envisages using the same pipeline network that brings energy into the UK for sending the extracted carbon dioxide the other way -- from central Scotland down to Teesside out to the North Sea.

Humberside and the Forth Valley are also being considered as key “emitting hubs” for the carbon dioxide.

Meanwhile, Jim Mather, the Scottish Government’s energy minister, yesterday said: “We are fully behind Scottish Power’s bid for Longannet to become one of the UK demonstration projects and support the competition’s current timescale for the project to commence by 2014.

“We would not support any further unnecessary delay to the competition.”

Willie Rennie, MP for Dunfermline and Fife West, went a step further.

He told The Herald: “I think E.ON should absolutely be disqualified from the competition, but the government is determined to get a new coal-fired plant built at Kingsnorth and they will delay this competition for as long as they can.”