Carbon Capture – is it Worth it?

Aniqah Majid talks to industry experts about the state of CCUS in the UK and finds out why economics need to be considered when it comes to effective deployment

PRODUCING around 2,650 t/d of cement clinker from a singular kiln, the 75-year-old Padeswood cement works has been chosen as a core site for one of the UK’s biggest and most ambitious CCUS projects.

Based in Mold, a small Welsh town which enjoyed a mining boom in iron, lead, and coal during the industrial revolution, Padeswood was initially operated by the Tunnel Portland Cement Company. It became part of the German HeidelbergCement Group in 1986 and is now an arm of Heidelberg Materials.

Part of the UK’s industrial CCUS cluster, HyNet North East, Heidelberg’s plan is to install the UK’s first carbon capture-enabled cement works at Padeswood. Earmarked for commissioning in 2028, the facility will transfer CO2 via HyNet’s underground pipeline to the Liverpool Bay CO2 store, 32 km offshore. Heidelberg expects it to capture around 800,000 t/y of CO2, the equivalent of taking 320,000 cars off the road.

HyNet is part of Track-1 of the government’s CCUS plan, which hopes to create a sustainable CCUS market, one which will see up to 30m t/y of CO2 captured and stored by 2030, and 50,000 jobs created to support the carbon clusters.

The clusters are expected to tackle the high emissions produced by UK’s “hard-to-abate” industries including steel, cement, and chemicals with £20bn (US$25bn) of taxpayer funding set aside for the CCUS plan in the March 2023 budget.

The problem with hard-to-abate industries

While some organisations including the Climate Change Committee (CCC) have heralded the plans as a “major step forward” for net zero, others have questioned the economic viability of using the technology.

Financial think tank Carbon Tracker argues that the CCUS plan is over-promising in its ambitious emission goals.

In their report, Curb your Enthusiasm,¹ they stress the costliness of the project and the risk that CCUS could “lock consumers into a high-cost and fossil-based future”.

Lorenzo Sani, author of the report and an analyst in the energy sector for seven years, says the main issue with CCUS is that it has not yet been built to scale. “When most CCUS projects go from pilot scale to commercial scale there have always been issues, including, only being able to capture a percentage of what was planned, replacing a solvent that is not working and thus adding more costs. The track record has been quite bad so that is why the delivery risk is always there.”

Energy analyst Andrew Boswell recently called for a judicial review of the UK government’s decision to grant development to a new gas-fired power station in Teesside. BP and Equinor said they will use carbon capture and storage technology to capture 95% of the emissions produced by the new plant, but Boswell’s research into the project found that the plant would emit 20m t of CO2 in its lifetime.

Sani recommends the UK focuses its CCUS efforts on the cement industry. He says: “For the cement sector, there is no alternative, other than replacing fuel like coal with biomass, but even then, you would not be removing CO2 from the production process.”

CCUS for cement, not steel

Cement production accounts for 7% of global CO2 emissions and is labelled as hard to abate because of the chemical process and the high temperature needed to form cement clinker.

Producers like Heidelberg and fellow multinational CEMEX have been developing CCUS projects to reduce emissions in the production of clinker – converting limestone (CaCO3) into lime (CaO) to form clinker accounts for 60% of the CO2 in the production process.

However, British Steel and Tata Steel have recently moved away from CCUS schemes in favour of electrified steelmaking and the development of electric arc furnaces (EAF).

Unlike CCUS, EAF have been used at scale. Liberty Steel has manufactured products from scrap steel using EAF at its plant in Rotherham since 2016, and announced plans to expand its green steel production to 2m t/y.

Arjan Geveke, director of the Energy Intensive Users Group, says that due to the varied manufacturing processes involved, decarbonisation technology that works for one industry might not necessarily work for another.

“For cement, electrifying that process or using hydrogen for that process does not really help because there is still the issue of the direct emissions from the chemical process,” he says.

“In steel, the remaining blast furnaces in Port Talbot and Scunthorpe owned by Tata Steel are going into electrified steelmaking by installing EAF, which is not new by the way, as there are small steelmakers like Sheffield Forgemasters who already use it. That technology has been there for decades and is a replacement of assets from gas-intensive steelmaking to electrified steelmaking.”

Electrification also comes with its own economic problems. As less employees are needed to operate a EAF compared to a blast furnace, steelworkers and operators have taken a massive hit from the low-carbon transition. Tata’s Port Talbot steelworks will see 2,800 jobs slashed after replacing two blast furnaces with an EAF.

The government’s CCUS revision has a broad objective of developing a self-sustaining market from 2035 onwards...we need a high carbon price that would ensure that these CCUS projects are profitable on a merchant basis

The economic bottom line

Carbon capture and storage technology has existed for decades, with initial projects dating back to the US in 1970, where it was deployed in enhanced oil recovery.

The issue in scaling the technology comes down to economics, with the price of carbon not high enough to incentivise companies. After carbon allowances early last year saturated the market, the UK suffered a fall in carbon pricing, from £83 in 2023 to £65 at the beginning of 2024. The UK has since tightened its Emissions Trading Scheme (ETS) and expects carbon allowances to fall to 44m by 2027, a 45% reduction on 2023.

The EU’s introduction of a Carbon Border Adjustment Mechanism (CBAM) could pose further issues for the struggling market, putting a carbon tax on renewable energy imports like solar.   

Both the Carbon Tracker report and Energy UK advocate the UK linking its ETS market to the EU’s to avoid the CBAM tax, keeping the carbon market competitive.  

Sani believes there is still some way to go for investment in the CCUS technology to prove worthwhile, however, with a figure of £100 per tonne mentioned.  

He says: “The earlier the UK can fix the carbon market, the earlier the industry can invest in the cost of the CCUS solutions and rely less on subsidies.

He added: “The government’s CCUS revision has a broad objective of developing a self-sustaining market from 2035 onwards, which is quite blurred in what it means. What would be needed in practice is quite straightforward. We need a high carbon price that would ensure that these CCUS projects are profitable on a merchant basis.”

Reference

1. https://carbontracker.org/reports/curb-your-enthusiasm/