Parliamentary report sets out plan for UK CCS

A UK government advisory group has set out its recommendations as to how the government could deliver a country-wide CCS programme to help meet climate change obligations.

Many reports have advised the government of the benefits of CCS in meeting the UK obligations under various international agreements, such as the Paris Agreement made at the UN COP21 conference late last year, while others, including from the National Audit Office, have warned of the huge costs of delaying the implementation of the technology. In the new report, Lowest Cost Decarbonisation for the UK: The Critical Role of CCS, the Parliamentary Advisory Group on CCS, chaired by Lord Oxburgh, gives six recommendations with the intention to “free the logjam” that has thus far blocked the widespread introduction of industrial-scale CCS in the UK. The Advisory Group includes representatives from the Conservative, Labour, SNP and Liberal Democrat parties, as well as industry and finance experts.

The Advisory Group agrees with the assessment of the Committee on Climate Change, an independent government advisory body, that inaction on CCS will cost UK consumers £1–2bn/y (US$1.3-2.6bn/y) more in the 2020s and £4–5bn/y more by the 2040s, due to the increased price of other forms of low-carbon energy. CCS, says the report, is the lowest-cost option, and that current technology is fit-for-purpose. The group says there is “no justification” for delay.

One of the oft-employed arguments against CCS is its cost. The report finds that using current technology would produce electricity at a cost of £85/MWh, comparable to renewable power generation and lower than the £95/MWh strike price agreed by the government for nuclear power. It is also half the cost of the energy that would have been produced from the projects in the UK government’s axed CCS competition.

The major recommendation of the Advisory Group is the introduction of a publicly-owned CCS Delivery Company to deliver ‘full-chain’ CCS (including the power stations and the transport and storage systems), similar to the Olympics Delivery Authority. This would be split into “PowerCo”, to build the power stations, and “T&SCo”, responsible for the transport and storage systems. The company would need £200–300m in funding over the coming 4–5 years but could be sold off at a later date, once successful.

The report also recommends financial and economic incentives, such as a contracts-for-difference scheme like that used for renewable energy, and a solid economic regulatory framework to ensure the best value for the consumer.

The government should introduce industrial capture contracts to remunerate companies for capturing and storing CO₂ as an incentive to do so, with a higher price offered in the early, more expensive stages of CCS.

CCS could help to decarbonise the UK’s domestic heating, which includes 20m private gas heating boilers and accounts for 25% of the country’s greenhouse gas emissions. These could be replaced with decarbonised electrical boilers, or use the gas grid to distribute hydrogen instead. This hydrogen could be produced from hydrocarbons using CCS. A “Heat Transformation Group” should be set up to study the options.

The government should also set up a CCS certification system for captured CO₂, and impose a CCS Obligation on companies from the late 2020s, to act as a further incentive for sequestration, with the certification acting as proof.

Deploying CCS will create thousands of jobs around CCS hubs, such as the one planned by the Teesside Collective, a group of heavy industrial emitters, including Lotte Chemical, BOC and Sembcorp Utilities in the Northeast of England in the UK and regenerate some of the UK’s oldest industrial centres. Once the pipeline network is up and running, it will act as an enabler, with far more companies being able to take advantage of it to store CO₂. By 2030, 15% of UK CO₂ emissions could be stored in geological formations off the coast, and as much as 40% by 2050.

“Government and energy investors should be aware that the UK’s legally-binding commitment to achieve an 80% reduction in CO₂ emissions by 2050 will be at risk unless new gas-fired power stations are CCS-equipped within their operating lifetimes. Although the Intergovernmental Panel on Climate Change has stated that the cost of dealing with climate change globally could more than double in the absence of CCS, the cost of deploying the technology has appeared prohibitively expensive in the short term,” said Lord Oxburgh. “Our studies have demonstrated the contrary. CCS is a priority for Britain if our 2050 goals are to be achieved at least expense.  Money spent now will save money later.”

He added that the private sector is not institutionally capable of delivering the necessary pipeline and storage network, and believes that there will be strong cross-party support for the recommendations.

The report has been warmly welcomed by those working in the CCS industry in the UK. Luke Warren, chief executive of the CCSA, of which Lord Oxburgh was chair until earlier this year said that the Advisory Group is right to point out the importance of CCS, and urged the government to consider the recommendations.

“CCS works and can compete on costs with other forms of low-carbon electricity; whilst the development of CCS infrastructure must be a central element of any industrial strategy that seeks a long-term future for energy-intensive industries. The report also shows how CCS infrastructure can be utilised to help meet some of the other major challenges we face, such as cost-effectively reducing CO₂ emissions from heating,” he said.

Neil Kenley, director of business investment at Tees Valley Combined Authority, which is working as part of the Teesside Collective, says that the report captures the importance of developing CCS now.

“The focus it gives to incentivising industrial CCS and the recognition of Teesside’s role as a potential CCS ‘hub’ to drive down cost and boost economic regeneration tally with Teesside Collective’s own analyses,” he adds. “The report’s assertion that CCS on energy intensive industries represents some of the cheapest available carbon abatement in the UK economy underscores the need for it to be front and centre in the government’s emerging CCS policy.”