UK’s first carbon capture, usage and storage project unveiled, LNB News 30/11/2018 2
Under government plans announced ahead of COP24, the UK's first CCUS project could be operational from the mid-2020s. Work will begin in early 2019 to identify opportunities to transform the fossil fuel infrastructure in the UK for use in carbon capture and storage and diversifying the oil and gas sector.
Judging by recent reports, and previous government comments, what is the position of CCUS in the UK power sector?
These reports are an attempt by the UK government to regain some creditability in the CCUS space following the cancelling of £1bn of support funding for the Shell-led project which would have fit carbon capture and storage (CCS) to a part of the Peterhead gas plant in 2015. The UK is now committed to deploying CCUS at scale during the 2030s—subject to sufficient cost reductions (though they have yet to define what would constitute ‘sufficient’). In terms of the UK power sector, this means that it would be very difficult to get permission to build a large new gas-fired power plant in the UK, which is not at the very least capture-ready (ie, one that has readiness for offtake of the flue gases and a suitable site and plan to fit carbon capture technology). I believe that any such proposal would be met with calls for CCS to be fitted from the outset, similar to the request made around the proposal for a new coal-fired power plant at Kingsnorth in 2009. CCS on the power sector has the potential to be an enabler of the technology for a variety of other roles.
What are the key drivers and challenges for deployment of CCUS in the UK power sector?
The key driver is the Paris agreement and the legally binding targets of the UK to deliver 80% reduction of their 1990 levels of CO2 emissions by 2050. The UK Climate Change Committee—which advises the government on how to meet these targets through carbon budgets—is currently consulting on the possibility of the UK reaching a 100% reduction by 2050, in line with Paris (commonly termed net-zero). Simply put, without CCS, gas has a limited future in the UK mix.
The key challenge is the cost of capture, transport and storage and the current lack of a means of operators recovering this cost, as opposed to the current practice of emitting all of their emissions to atmosphere. Carbon capture can also be applied to a variety of industrial processes, such as fertiliser manufacture, cement and iron and steel production, with most of these sectors being almost impossible to decarbonise using current technology without CCS as CO2 is released as part of the process, not just from fossil fuel combustion. Cement production, for example, is responsible for a full 8% of total carbon emissions. This concern has led to the concept of clusters, where power plants looking to adopt CCS could share the cost of capture, pipelines and storage with other industrial emitters—a good example of this is the Teeside collective project.
However, it should also be noted that third party analysis by the CCS Cost Reduction Taskforce, and for the Committee on Climate Change (CCC), as well as analysis performed for this report, show full-chain CCS costs at around £85 per MWh under the right circumstances, and hence even the first UK power sector CCS project could be competitive with other low carbon electricity sources.
Do the latest publications announce any significant new or positive developments compared to what was previously known?
These announcements that the UK government, after delays of a number of years, has remembered what has been known for quite a while—that decarbonising the UK without CCS is difficult and more expensive than with it. The CCC recently reported the additional costs of inaction on CCS for UK consumers to be £1bn–£2bn per year in the 2020s, rising to £4bn–£5bn per year in the 2040s.
The movement to the cluster concept is certainly a positive step, as is the ambition that the UK ‘could have’ a functioning project by the mid-2020s—but we are yet to see how this will be delivered. The government has taken on board several of the recommendations of the Oxburgh report, which outlines a number of the concepts in the recent government reports, but they have so far failed to put in place a delivery group to make this happen. In principle, this would look similar to the body that delivered the 2012 Olympics.
What are the key expected next steps for CCUS in the UK power sector?
The next steps are getting a viable project to actually happen. As explained above this could help enable deep decarbonisation in other sectors. It is also worth mentioning that bio energy with CCS has the potential to offer negative emissions, and Drax has just launched a pilot plant to investigate precisely that.
It is currently uncertain as to how the UK enables such a project, although the example of the Hinkley nuclear plant shows that the government could guarantee a long-term price for the decarbonised electricity, or, as they have done to take coal off the system with the carbon floor price, introduce a tax on CO2. The carbon price floor was introduced in 2013 at a rate of £16 (€18.05) per tonne of carbon dioxide-equivalent (tCO2e) and was set to increase to £30 (€33.85) by 2020. However, the government more recently decided to cap the carbon price floor at £18.08 (€20.40) until 2021. Allowing this price to rise would be an obvious means to incentivise such a project in the power sector.
Interviewed by Julian Sayarer.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.