Judith is the Policy and Communications Manager of the CCSA
Time to Break the Chain
Since the Spending Review decision to cancel the CCS Competition, the UK Government and industry have been working hard behind the scenes to think about a new approach for CCS. Then Brexit happened. Whatever else one might surmise about the impact of this result, one thing is certain – there is likely to be a long period of upheaval and uncertainty as the UK attempts to unhinge itself from Brussels.
In some ways, this actually presents an opportunity to reinforce and reposition climate change arguments and the importance of CCS. There are positive signs that the UK is not backing down on its commitments – only last week (30th June), the Government announced that the UK will legislate for a 57% emissions reductions target for the fifth carbon budget (covering the period 2028-2032) in line with the advice of the Committee on Climate Change.
Political turmoil or not, the UK remains a signatory to the Paris Agreement and the goal of limiting the global temperature increase to well below 2°C. Meeting this goal will require serious action from all countries around the world and the UK must play its part. On the 29th June, the CCSA held an important joint workshop with the Carbon Sequestration Leadership Forum (CSLF) on “CCS Post-Paris: Realising Global Ambitions”. At this workshop, one presenter pointed to the importance of CCS in enabling countries to have “options” available by which the aim of the Paris Agreement can be met. The point was made that because CCS is essential to decarbonising industrial sectors (such as steel, cement, refining etc) as well as power, has a role to play in decarbonising heat and is the best option for producing zero-carbon hydrogen as a fuel – countries will find it exceedingly difficult to meet the Paris Agreement if CCS is not available. Furthermore, the contribution that bioenergy with CCS (bioCCS or BECCS) could make is enormous as it actually enables emissions to be removed from the atmosphere. Imagine the massive benefit this could have, particularly in terms of offsetting hard-to-decarbonise sectors such as aviation.
The big question we are now faced with in the UK (aside from the Brexit fallout of course!) is: how to get CCS on track?
Whatever path we choose, we must ensure that important lessons are learned so that future UK CCS programmes are designed in a way that is attractive to industry and Government. There is value in the significant amount of work carried out by both the Peterhead and White Rose projects – the lessons learned for future CCS projects. The CCSA published a new report on the 29th June entitled “Lessons Learned - Lessons and Evidence Derived from UK CCS Programmes, 2008 – 2015” setting out 36 key lessons for industry and policy makers, based on interviews with the developers of the Peterhead and White Rose projects as well as interviews with a number of other developers interested in building CCS projects.
There are a number of interesting conclusions that can be drawn from this report; firstly, the report shows unequivocally that there were no technical barriers to delivering the Competition projects. However several commercial challenges emerged – in particular the lack of a business model for CO2 storage and the inability of companies to take on the risk of cross-chain failure.
The potential for very early and very significant cost reduction also comes out clearly in the report – interviews with potential Phase 2 projects (those which would have been developed after the Competition projects using their transport and storage infrastructure) confirmed that these projects would have sought Contract for Difference (CfD) strike prices significantly below those of the Competition projects.
The companies interviewed for the report all agreed that the UK Government must now move away from further CCS competitions, however there is appetite to find other ways to develop large-scale CCS projects – encompassing aspects such as industrial CCS, hydrogen and heat. It is clear that industry is still committed to CCS and wants to find a collaborative way forward with Government.
Finally, one of the most important issues that emerged from the Lessons Learned report, as well as our joint workshop with the CSLF and the recent Committee on Climate Change report “Meeting Carbon Budgets – 2016 Progress Report to Parliament”, is the massive economic opportunity for the UK from investing in CCS transport and storage infrastructure. However we need a realistic and workable solution to finance this infrastructure investment. At our joint workshop with the CSLF, one phrase had a certain ring to it – We Need to Break the Chain.
We have to stop considering the three parts of CCS (capture, transport and storage) as one project when in fact it is more akin to a train using the railway network. You wouldn’t develop the same incentives or business models for a train and for the railway network, would you? Same with CCS. The Committee on Climate Change have further emphasised the importance of CCS in a letter to Amber Rudd, the Secretary of State, where they recommend that the Government must urgently come forward with a strategic approach to developing CCS and that this approach must provide separate support for capture and for transport and storage infrastructure.
Once you “break the CCS chain” it also becomes glaringly obvious that the UK can’t just sit back and wait for other countries to develop CCS – the wider transport and storage infrastructure has to be developed in the UK. Using the railway analogy again, you can buy in the trains perhaps but without the railway network developed at home – those trains simply wouldn’t be able to travel anywhere.
So whilst we wait for the dust to settle on Brexit, let’s take this opportunity to show the world that the UK can still be a leader in developing the crucial low-carbon infrastructure that is CCS.