THE failure of a major carbon capture scheme “calls into question the viability” of George Osborne’s much-vaunted “northern powerhouse,” unions said yesterday.

Energy generation company Drax had committed to catching emissions from its power station, near the Yorkshire village of the same name, and storing them permanently under the North Sea — but now it says it will go no further than conducting a feasibility study for the project.

Bosses blamed the government’s removal since the election of the exemption from carbon taxes previously enjoyed by “clean” energy companies.

TUC general secretary Frances O’Grady said the Tories’ “back-pedalling” was “costing the UK jobs and investment.”

Drax has also seen its share price fall by 28 per cent since it first committed to the project two years ago, partially due to falling electricity prices.

Unite, which represents energy workers, branded the withdrawal “a disaster.”

“Ministers need to step up to the plate with public investment to ensure that the £1 billion White Rose carbon capture project comes to fruition, otherwise the massive coal reserves that the UK is sitting on will remain untapped,” said Unite energy officer Kevin Coyne.

“The underlying message here is that the private sector has been unable to provide the necessary investment to support the carbon capture initiative — this should be a salutary lesson.

“The government’s green agenda appears to be in tatters and we have moved a long way from when David Cameron was hugging a huskie and boasted that his government would be the greenest ever.”

Drax operations director Pete Emery said that the decision was based on a drastically different financial and regulatory environment.

But he added: “We must put the interests of the business and our shareholders first.”

Labour’s shadow energy secretary Lisa Nandy said: “With the only new nuclear power station delayed, new onshore wind farms being blocked, solar support being slashed by almost 90 per cent and the government’s carbon capture and storage strategy now unravelling too, ministers must come clean on whether they are abandoning all efforts to secure investment in clean energy in this country.”

Green Party leader Natalie Bennett also condemned Drax’s policy change and used her party conference address to slam the political Establishment for failing to invest in renewables.