Stopping carbon dioxide (CO2) from entering the atmosphere may turn out to be one of the greatest challenges facing British industry over the next decade.
CCS is the transitional mitigation technology that many have pinned their hopes on.
With its ability to capture up to 90% of the CO2 emissions from fuels used in electricity generation and industrial processes, it is considered crucial to meeting carbon reduction targets and reducing the burden of future carbon taxes.
Three years ago the UK government agreed, and pledged £1bn to a competition to establish a large-scale CCS demonstration project.
The government issued the statement: ‘The £1bn ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available’
Contracts were awarded to Capture Power’s White Rose coal-fired project in Yorkshire, and Shell and SSE’s gas-fired Peterhead project in Aberdeenshire.
But in November last year, just as the competition was drawing to a close, the government issued the following two-line statement: “The £1bn ring-fenced capital budget for the Carbon Capture and Storage Competition is no longer available.”
Luke Warren, chief executive of the Carbon Capture & Storage Association (CCSA) described this as the darkest day for CCS in UK history, as both finalists indicated their projects could no longer go ahead.
Prime Minister David Cameron, who had once described CCS as “absolutely crucial” for the UK, later defended the decision on the basis of cost.
In response to an influential Energy and Climate Change Select Committee convened in the wake of the decision, Cameron said: “The economics at the moment really aren’t working”.
The government has not as yet specified exactly how those “economics” were evaluated.
The Institution of Chemical Engineers (IChemE) points out that the government’s decision was announced “before evidence had been submitted by the competition entrants”.
“A lot of bridges have been burnt…and trust between private parties and government has broken down,” says Geoff Maitland, vice chairman of the IChemE’s Energy Centre.
Most experts agree that the technical feasibility of large-scale CCS is an unlikely reason for the government’s abrupt decision.
Judith Shapiro, policy and communications manager at the CCSA, explains that the three-part chain that makes up CCS – capture, transport and storage – have already each been proven.
A lot of bridges have been burnt…and trust between private parties and government has broken down
Geoff Maitland, vice chairman of IChemE’s Energy Centre
“For example, air separation companies already know how to separate out CO2,” she says.
And when it comes to the transportation and storage part of the equation, she says CO2 has already been used very successfully for enhanced oil recovery since the 1970s.
“Many oil companies have already built pipelines to fish out naturally occurring CO2, so that is an aspect of the technology that is ready now,” she says.
When you put this together, the technology required to develop commercial-scale CCS projects of 300MW plus is already available, she says.
What is still missing is the ability to physically link these into a unified system – in much the same way that a railway needs track and stations in order for trains to run.
This ‘CCS network’ was at the heart of the CCS competition.
“The decision to scrap the CCS Competition possibly shows a lack of joined-up thinking and a lack of understanding of what the competition wanted to do,” says Shapiro.
It has also left potential industry partners such as Shell to pursue opportunities elsewhere.
Around the globe, Shapiro says there are 15 CCS projects already in operation and another seven in the construction stage.
Canada is leading the charge with the Boundary Dam CCS project which came online in late 2014 and is the largest commercial-scale CCS project to date.
Another Canadian venture is also being developed to reduce CO2 emissions from Shell’s oil sands operations, and an industrial project in Abu Dhabi aims to capture CO2 from a local steel factory.
The decision to scrap the CCS Competition possibly shows a lack of joined-up thinking and a lack of understanding of what the competition wanted to do
Judith Shapiro, policy and communications manager, CCSA
“It is good to see projects coming online around the world, but we can’t just wait and see what other countries are doing,” says Shapiro.
“The actual building and laying of pipeline has to be done domestically and to do that you need a supply chain that knows how to build a CO2 pipeline.”
The unique geology of the UK also demands specialist skills.
“We are very fortunate in the UK that we have a huge storage capacity in the North Sea, but there is a large amount of work yet to be done to develop it,” says Shapiro.
“We already have oil and gas industry personnel in Scotland with very exportable skills so we only have a short window of opportunity, as oil and gas facilities come to the end of their lives, to reskill these workers to CCS,” she adds.
According to the IChemE, the government’s U-turn has jeopardised the economic potential of an industry that could have been worth over £30 billion by 2030.
It says several studies show that CCS is also the cheapest route to decarbonising our base load electricity system in the short term.
“In its energy policy ‘reset’ speech the government put a big focus on the switch from coal to gas as a means of reducing emissions, but that will only get it so far,” says Maitland.
CCS will still be a necessary addition to gas-fired plants, if the government is to meet the carbon reduction targets agreed at the Paris COP21 summit.
It is for this reason many industry leaders are calling on the government to rethink its CCS strategy.
However, the Energy and Climate Change Select Committee warns that the opportunity to develop CCS infrastructure in the UK in the early 2020s is now likely to have been missed.
“UK companies had been working towards this for years and were only weeks away from final proposals,” says Angus MacNeil MP in a report published by the committee.
“This is the latest in a series of snap decisions that have damaged confidence in the government’s energy policy”.
The decision has also undermined investor confidence in the reliability of public funding of energy projects, says Maitland. “We have not only lost the opportunity for some short to medium term investment and growth, but we have paid for technology that will now be used elsewhere.”
While much of the focus in the UK has been on commercialising CCS for power generation, an industrial cluster called the Teesside Collective has been working to establish the region as a European hub for future clean industrial CCS development.
We have not only lost the opportunity for some short to medium term investment and growth, but we have paid for technology that will now be used elsewhere
Its premise was that a range of industries would be able to capture their emissions, plug them into a shared pipeline network, and send them for permanent storage under the North Sea.
But without the capacity to piggyback on the infrastructure from the government’s scrapped competition, Shapiro fears that smaller ventures such as these may prove difficult to get off the ground.
“Point-to-point solutions are simply too expensive. The biggest cost potential is sharing of infrastructure between projects,” she says.
Late last month the Department of Energy & Climate Change (DECC) issued a response to the Select Committee’s report.
“The government has not closed the door on CCS. Our view remains that CCS has a potentially important role to play in the long-term decarbonisation of the UK’s industrial and power sectors,” wrote energy and climate change minister Andrea Leadsom.
“However, we know that currently CCS costs are high and must come down. This is why we are committed to working with industry to bring forward innovative ideas for reducing the costs of this potentially important technology.”
She lists a handful of CCS research projects receiving some funding from the government, but none anywhere near the scope of the scrapped CCS competition, for which a key outcome was to lay the groundwork and infrastructure for other smaller ventures.
Leadsom says the government is working on an Action Plan for decarbonisation and energy efficiency in key energy intensive industries, which is due by the end of 2016.
“One lives in hope eternal we will have a strategy rather than jumping from one opportunistic solution to another,” says Maitland.