Oil giant Shell yesterday became the latest and biggest weapon in the armoury of ScottishPower chief executive Nick Horler's campaign to win around £1bn from a government competition to develop coal-fired power stations that can capture and store carbon dioxide emissions.

Oil giant Shell yesterday became the latest and biggest weapon in the armoury of ScottishPower chief executive Nick Horler's campaign to win around £1bn from a government competition to develop coal-fired power stations that can capture and store carbon dioxide emissions.

ScottishPower yesterday also said that electricity network provider National Grid had also agreed to join the consortium, but that Shell had replaced Marathon Oil, which pulled out of the group earlier this year "for its own commercial reasons".

The government competition is aimed at developing coal-fired power stations that can capture and store carbon dioxide emissions as part of its green energy policy.

ScottishPower's innovative plan, one of three projects for which power companies are bidding for funding to develop a demonstration "retro-fit" project in the government competition, will be based at its existing plant at Longannet in Fife by 2014.

The aim is for machines to operate at the Fife power station to capture the carbon dioxide produced by using coal and storing it in porous rocks in the North Sea.

Horler said: "I am delighted to welcome Shell and National Grid to the team.

"Both of these companies will bring specialist knowledge, expertise and opportunities for growth in the development of this cutting edge technology. For the consortium the two new companies represent a perfect fit as it strives to reduce CO2 emissions by 90% from its power plant at Longannet".

The four-party consortium, which also includes Norwegian carbon dioxide removal specialists Aker Clean Carbon, will make use of National Grid's pipelines on land and Shell's expertise in pipelines and other operations in the North Sea.

ScottishPower's Spanish parent company Iberdrola has also said it remains committed to making the UK a centre of excellence for carbon capture and storage development if it emerges the victor.

If ScottishPower were to win the competition it would be good news for the Scottish coal industry, whose sulphurous produce is currently considered too ungreen to be used in power plants.

The Scottish Council for Development and Industry also threw their weight behind the Longannet proposal.

A spokesman for the SCDI said: "The team now behind Longannet's bid for the UK CCS competition puts Scotland in pole-position not only to deliver in five years the UK's first big CCS project, but to lead the development of a technology which will be critical around the world for decades to come.

"The full conversion of the Longannet power station alone could deliver an investment of some £4bn to Scottish-based businesses in the energy sector and the new high-skilled, low-carbon jobs the country needs.

"With coal set to remain the main source of power around the world, the potential export prize for the Scottish economy and employment is even greater."

ScottishPower's plan 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.

The other two groups in the competition are E.on, which is looking at fitting carbon capture to part of its controversial new plant at Kingsnorth in Kent, and RWE Npower, which is planning a new plant at Tilbury in Essex.

Later this year, it is understood that the competition will narrow to two consortia and that the remaining two contestants will receive some of the government funding.

The government's own estimates predict £100bn of investment is required to get carbon capture and store technology up and running - with latest forecasts from Ernst and Young valuing the generation requirement at nearer £164bn by 2025.

Horler added: "For ScottishPower, the fact that a company of the size and scope of Shell has chosen to join our carbon capture consortium is a considerable coup and a significant boost to our bid.

"The addition of Shell and National Grid to an already first class team represents an even greater chance of developing a technology that will be vital in tackling climate change.

"Shell's experience of working offshore in the North Sea is clearly critical - not only in terms of the potential for CO2 storage in depleted oil and gas reservoirs, but because transport and storage of CO2 will demand many of the same engineering and subsurface skills on which the oil and gas industry has depended for many decades."