Scientists working for the Spanish-owned energy group, which is vying to build the UK’s first large-scale carbon capture demonstration plant at Longannet site in Fife by 2014, are understood to have found a way to give an unprecedented boost to the efficiency levels of the process.

Previous estimates were based on an assumption of 30% and 40% of output being required to power the technology, but they are now looking at a lower figure.

Carbon capture and storage (CCS) involves removing the carbon from burning coal while making electricity before it pollutes the atmosphere, prior to transporting the discharge to a site, most likely offshore, for storage.

Hailed as “significant” by one industry specialist, the firm’s discovery could make CCS far more economically attractive than previously thought. It is also likely to lift the spirits of delegates at this week’s Carbon Sequestration Leadership Forum summit on the technology in London, who are still digesting the news that competition rival E.ON has postponed by three years its plans to build a new coal-fired power station at Kingsnorth in Kent.

Dr Jon Gibbins of London’s Imperial College, who sits on the Department of Energy and Climate Change (DECC)’s advisory committee for carbon abatement technology, said: “This news is quite significant. If Longannet can get substantially below 30% efficiency, that will be as good as anywhere.

“It’s also important it’s happening at Longannet because that would mean it could be retrofitted at existing plants [unlike the other entrants, who are focused on new plants]. It means you don’t have to build a new plant to fit the technology, so what’s stopping you?”

The development will be seen as a fillip for ScottishPower, which last month learned that it had probably not been chosen for a £165m grant from the European Union to develop its carbon capture technology. Instead that money looks likely to go to the Powerfuel plant in Hatfield, Yorkshire, fronted by mining entrepreneur Richard Budge, which is not part of the government competition.

ScottishPower insiders rejected speculation that this might diminish their chances of winning, insisting that Powerfuel was always more likely to win the grant because it is developing the pre-combustion techniques for capturing carbon that are favoured by the EU but not part of the UK competition.

The competition comprises ScottishPower/Longannet, E.ON/Kingsnorth and a proposed new plant by RWE at Tilbury in Essex. With each power company backed by numerous other participating companies, they are currently designing prototypes that are expected to be judged by the Department for Business, Innovation and Skills by the end of this year. Two of the consortia are then expected to receive between £60m and £90m to design detailed blueprints during 2010, before one is chosen to build a full demonstration facility that will be capable of capturing carbon from 300MW to 400MW of output by 2014. In the case of Longannet, that amounts to about a sixth of total capacity.

Dr Gibbins added: “If you compare carbon capture to offshore wind, the economics already stack up. Anything that improves that can only bring the costs down.”

A spokesman for ScottishPower would not comment on exactly what had been discovered by its scientists, but said: “The prototype at Longannet has been successfully operating since May. We have made significant progress in our scientific studies and are looking to make a positive announcement soon.”

Last week’s announcement about Kingsnorth initially threw the competition into confusion until it was confirmed by the government that the postponement would not rule E.ON out of the competition.

A DECC spokesman said: “The timetable is not a deal breaker. There are a number of criteria that the projects have to meet.”

E.ON was said to have reached the decision on the basis that future demand for UK power would be insufficient to make the economics work.

This week’s carbon capture summit will see 22 high-level envoys from 22 countries gather in London between tomorrow and Wednesday to discuss the technology together with industry stakeholders.

The aim is to produce a communique that will effectively underline the importance of carbon capture as a key component of any agreement at the UN Climate Change Conference in Copenhagen in December.