The likely collapse of a £2bn carbon capture project at Drax in Yorkshire brings a rival scheme in Grangemouth back into competition for government support, a leading carbon capture specialist has said.

Along with Peterhead power station, the White Rose development at Drax in North Yorkshire, is one of two remaining bidders in the UK government’s flagship Carbon Capture and Storage Commercialisation Competition. Ministers are expected to announce early next year whether a £900m funding pot will be given entirely to one bidder, shared between them or not awarded at all.

But last week, after five years of planning, the Drax power company said that “critical reversals” in government support for renewable energy since May’s general election had undermined its confidence in the viability of the project and that it was pulling out.

Despite the fact that the two remaining partners in the coal-based White Rose project – French engineering group Alstom and the BOC industrial gas group – have vowed to press ahead with the project, Stuart Haszeldine, Professor of Carbon Capture and Storage at Edinburgh University, told the Sunday Herald that without the involvement of the proposed project’s power plant owner and operator it was likely that the Drax scheme “could easily become a zombie project and will collapse and wither away”.

Haszeldine said that that Drax pull-out should lead the government to allow a CCS project for a new coal gasification power plant at the Grangemouth refinery – which was put in third reserve place in the competition in 2013 when the Peterhead and White Rose developments were named as preferred bidders – to be reconsidered for funding.

The Shell-backed Peterhead carbon capture and storage scheme (CCS) – which if built would see the building of the first carbon capture system attached to a gas-fired power station – was last week buoyed by a British Geological Survey report which endorsed the Aberdeenshire project.

Project manager for the Peterhead scheme Bill Spence said that the scientists’ report is seen as strengthening the case for the crucial government funding, without which the scheme will not go ahead.

Although commissioned by Shell, Spence said that the report’s authors had been tasked to provide a rigorously independent assessment of the technical viability of the carbon capture and storage (CCS) scheme. “We asked them to stand back to give their own assessment of the project which we hope will build public confidence in the project,” he said.

“This new report should give the government the confidence that our project is deliverable. I think this should help make the funding decision go in our favour.”

The BGS report – which analysed a number of possible risks such as the potential for seabed leakage of CO2 – concluded that there was room in the depleted Goldeneye gas reservoir, 100km north-east of Peterhead, for up to 20 million tonnes of CO2 to be securely stored.

The BGS’s backing comes after the project received full planning permission from Aberdeenshire Council in June.

The White Rose and Peterhead projects are required to make their “final investment decision” ahead of the government decision early next year with Shell expected to make its decision in December.

If the Peterhead project is built it would see up to one million tonnes of carbon dioxide a year captured from the one of the three 385MW gas turbines at SSE’s Peterhead power station and pumped offshore through new and existing subsea pipelines for long-term storage in the Goldeneye gas field (which ceased production in 2011) where the CO2 would be injected from the Goldeneye platform into sandstone rock 2.5km under the North Sea.

The project would help generate clean electricity to over half a million homes, cut carbon dioxide emissions from the Peterhead power station by almost a third, contribute towards the decarbonisation of the UK’s power sector and help to mitigate global climate change.

The business case for the project is that that the greener electricity produced by the power station once a carbon capture and storage system has been fitted can be sold at a higher tariff.

Shell estimates that 400 jobs will be created during the construction phase, peaking at 600. During the operational phase 20 to 30 permanent jobs will be created.

Since 2001 governments around the world have committed £16bn to CCS projects and companies have ploughed in a further £6bn but there are currently only 22 large-scale CCS plants operating or under construction around the world, of which just one – the Boundary Dam coal plant in Canada – is so far in commercial operation at a power station, while two others in the US are due to start next year.

Of the dozen proposed carbon capture projects in the UK over the last eight years none have so far been built. The UK government first announced a £1bn competition to commercialise CCS technology in 2007 but, after spending £40m on designs, withdrew it in 2010 after concluding that the technology was unaffordable.

In 2007 BP scrapped plans for a revolutionary new £500m hydrogen plant and carbon capture scheme at Peterhead because of lack of government support.

• A separate industry-backed report published earlier this month concluded that the simultaneous injection of CO2 into geological formations from more than one point could help to unlock the North Sea’s “vast” CO2 storage potential.

The conclusion was based on a study of the Moray Firth Captain Sandstone formation, north of the Goldeneye reservoir, which could hold 23 years of the Scottish energy sector’s entire CO2 emissions in just one sixth of its area if the new technique was used.