Energy major BP and three partners are planning to build a plant in Scotland which would be the first in the world to generate “carbon free” electricity from hydrogen, the companies said on Thursday.

The project would convert natural gas into hydrogen and carbon dioxide (CO2), then use the hydrogen to fuel a power station and ship the CO2 to a North Sea oil field to increase oil recovery and for storage ultimately.

The power industry is one of the top producers of CO2, the greenhouse gas widely blamed for causing global warming.

“This is an important and unique project configured at a scale that can offer significant progress in the provision of cleaner energy and the reduction of carbon dioxide emissions,” said John Browne, BP’s group chief executive in a statement.

The project would store about 1.3 million tonnes of CO2 a year and provide “carbon free” power to a quarter of a million UK homes.

This month the government announced a range of grants to help companies develop technology to capture carbon dioxide and store it in depleted North Sea oil and gas reservoirs.

The group, which includes ConocoPhillips, Shell and Scottish & Southern Energy, are carrying out detailed engineering work on the project and plan to decide next year whether to go ahead with the scheme which would come on stream in 2009.

The project, which includes a 350 megawatt power station, will cost about $600 million.

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