Best laid schemes? The future of carbon capture and storage in the UK

Best laid schemes? The future of carbon capture and storage in the UK

 

butlittlemouseThe House of Commons Energy and Climate Change (ECC) Committee recently published its report on the future of carbon capture and storage (CCS) in the UK in light of the government’s withdrawal of funding for the CCS competition in 2015.
In this post, we consider the context of this report, and the ECC Committee’s findings and recommendations.

What is CCS technology?

CCS is a group of technologies that has the potential to remove (or ‘capture’) carbon dioxide (CO2) produced by burning fossil fuels, such as in emissions from electricity generation and heavy industrial processes. CCS prevents the CO2 from entering the atmosphere by transporting and storing it deep in depleted oil fields under the North Sea. It is widely seen as having a significant role to play in meeting international and national climate change targets.

Large-scale CCS is in its early stages. It requires large amounts of financial capital to build the initial infrastructure needed, known as ‘first phase projects’. Investor commitment is therefore crucial to both its short-term development and long-term success.

Context of the ECC Committee’s report—UK CCS developments

The UK government first declared support for CCS technology in 2007 with the aim of wide-scale deployment through the 2020s. It launched a commercialisation competition in 2012 to identify and support projects that could contribute to reducing the costs of CCS. This resulted in two preferred bidders:

  • the White Rose Project in Yorkshire, backed by the Capture Power Ltd consortium; and
  • the Peterhead Project in Aberdeenshire, backed by Shell and SSE.

However in November 2015, with weeks to go until the submission deadline for the final bids, the Department of Energy and Climate Change (DECC) issued an unexpected announcement that the £1bn in capital funding for competition winners was ‘no longer available’.

Straight from the horses’ mouths

The ECC Committee, whose role is to scrutinise DECC’s policies, held a one-off evidence session on 20 January 2016 to assess the implications of this decision to cancel the funding for CCS. The session heard from industry, investor and research institute representatives, including one of the affected bidders, Capture Power Ltd.

Their comments were sharp and stinging. DECC had given very little prior warning to the private sector stakeholders who had sank years of money

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