In November 2015, the UK government axed its £1billion carbon capture and storage (CCS) competition. The move was met with dismay from industry, green groups and politicians, many of whom had been deeply involved in the project. The government’s reason for its u-turn was fears over costs. However, CCS is affordable and a necessary investment, not only to achieve decarbonisation, but also to offer life back to dying industrial regions.
A new report entitled Lowest Cost Decarbonisation for the UK: The Critical Role of CCS, argues that the UK government should drastically rethink its CCS policy, and in effect u-turn again to get back on track with CCS. A cross-party group, headed by Lord Oxburgh, leading geologist and ex-chair of Shell, was invited by previous Secretary of State for Energy and Climate Change Amber Rudd to assess the CCS options in the UK. They conclude that CCS is not only clearly achievable, with all aspects of the supply chain demonstrated, but also potentially cheaper than nuclear or renewable options. The novel nature of the technology however, combined with an insufficient carbon price, means that government, rather than industry, must be the driving force behind the technology’s development.
To this end, the group recommend that the Government set up a state-owned CCS Delivery Company that would deliver full chain CCS. The organisation would be split into two sections, one covering power stations and heavy industry and one CO2 transport and storage infrastructure. They also recommended systems for economic regulation and incentives for CCS, and a certificate and obligation system to manage long-term storage plans.
The group envisages CCS beginning in the power sector but the technology has potential to work to decarbonise all energy sectors. One of the group’s recommendations is to set up a Heat Transformation Group to assess how to decarbonize the large sector that comprises both domestic and industrial heat. DECC’s strategy for decarbonising heat relied on heat pumps and some renewable gas. A recent report from Policy Exchange suggests a more diverse approach, encompassing electricity, hydrogen and biofuels. Whichever approach is pursued, CCS could still play a key role, either producing the increased demand for low carbon electricity for heating, or producing hydrogen from the hydrocarbons that CCS decarbonises.
The same is true for transport, with options to either electrify vehicles or switch to hydrogen fuel cells where again, CCS could supply the demand for either if necessary. As such, CCS facilitates decarbonisation progress across the entire energy sector.
Delivering CCS is vitally important for global climate change, but can also have more local impacts. On the global scale, the IPCC argues that CCS is essential for combatting climate change and also makes economic sense, estimating a doubling in the cost of decarbonisation in a no-CCS scenario. The UK’s Committee on Climate Change says is very important in meeting the 2050 target, given its potential to reduce emissions across heavy industry and the power sector as well as opening up new decarbonisation pathways (e.g. based on hydrogen). Estimates by the Committee and by the ETI agree with those of the IPCC by indicating costs of reaching decarbonisation targets could almost double without CCS.
CCS could not only help reduce carbon dioxide (CO2) emissions from energy, it could also help reduce the carbon in the atmosphere through acting as a negative emissions technology. The need to back-track on emissions is a growing concern as warming accelerates and nations continue to fail to deliver policies that will keep warming at the agreed “safe” level of 2°C. One option of reversing emissions, is through burning biomass for energy, which has absorbed CO2 as it grew, and capturing the CO2 emissions, thus resulting in negative emissions. There are legitimate concerns about the sustainability of large-scale biomass, but biomass with CCS is certainly an option for negative emissions that deserves consideration.
On the more local scale, CCS could add to its climate and environmental benefits by bringing economic benefits to parts of the UK that desperately need them. Although the report recommends starting in the power industry, there is great potential for CCS to continue to decarbonise heavy industry. Cement and steel are particularly energy intensive industries with few decarbonisation options. Their high demand for energy has in part contributed to the loss of competitiveness in the UK and their high carbon emissions has cast their future into doubt. Former industrial hubs around the UK, such as Teesside, Merseyside and Grangemouth are in decline but are also extremely suited to be the sites of a future CCS industry. Many of these areas already have existing infrastructure where gas, such as from the North sea, was brought ashore that could be exploited for CCS and skilled workforces that could be taken up and forward by the new industry. Instead of their current decline, these areas could return in part to their former success. Such a revival surely suits the current government’s industrial, as well as energy, strategy.
Now the report will be submitted to the Secretary of State for Business, Energy and Industrial Strategy Greg Clark. It will be in the government’s hands to decide whether, in their great policy shake up, they should go back and correct their hasty judgment on CCS; whether they see the value in a British led industry that tackles energy demands, climate change and industrial decline.
The report estimates a CCS CfD of £85/MWh. Hinkley’s proposed price is £92.50/MWh potentially falling to £89.50/MWh. Offshore wind’s cost will start at £105/MWh and fall to £55/MWh for projects after 2026.
Both of these transport options that could utilize CCS are long-term possibilities. It is likely that biofuels will be needed in the shorter term and probably in combination with the other options.