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CCS is back on the agenda, but its viability is still in question

04 April 2012

Energy and climate change secretary Edward Davey has decided to re-launch the competition for Carbon Capture and Storage (CCS), just five months following the collapse of his department's last attempt to establish a foundation for CCS developments in the UK.

The previous CCS competition failed in October last year when the last bidder, ScottishPower's Longannet power plant, withdrew on the issue of how much government funding would be needed.

This first foray into a CCS technology competition was marred by its inflexibility, lack of cost control, long-windedness and complexity, so DECC has taken the precaution of publishing a roadmap this time around, which sets out a workable timetable and the steps the government intends to take to secure the UK’s pre-eminence in this technology.

A ‘CCS Commercialisation Programme’, will be set up to drive down costs by supporting practical experience in the design, construction and operation of commercial scale CCS. This gets a hefty £1bn in up-front capital funding, plus additional support in the longer term through fiscal devices such as low carbon ‘Contracts for Difference’ (CFD) and the promised electricity market reforms.

CFDs are trading instruments that create a contract between two parties speculating on an asset price changing over time. The parties to a CFD agree to exchange the difference in value of a particular asset between the time at which a contract is opened and the time at which it is closed. The variety of CFDs that may be brokered will ultimately reflect the range of technologies on offer and their potential for success.

An additional £125m of funding has been earmarked for Research and Development, including a new £13m UK CCS Research Centre. The Engineering and Physical Sciences Research Council (EPSRC) will establish this facility, investing £10m over a five-year period, with a direct injection of £3m from DECC. A ‘coordination’ base at the University of Edinburgh, will bring together over 100 of the UK’s world-class CCS academics to provide a national focal point for CCS research and development.

The new research facilities will allow UK scientists and engineers to work with industrial partners and SMEs to develop improved capture technologies, including such projects as the pilot scale advanced testing facilities in Yorkshire, with a one tonne CO2 per day amine capture facility; a mobile testing unit to allow a range of tests to be conducted on real power station flue gases, and advanced oxyfuel fluidised bed and chemical looping pilot facilities.

Edward Davey says the potential rewards from CCS are immense, bringing as much as £6.5bn per year to the UK economy. "What we are looking to achieve, in partnership with industry, is a new world-leading CCS industry, rather than just simply projects in isolation,” he says. “This is a really exciting time for the fledgling CCS industry. Our offer is one of the best anywhere in the world.”

The news was greeted, not surprisingly, with some enthusiasm by The National Grid and the Carbon Capture & Storage Association (CCSA). The National Grid, hoping to exploit its pipeline network building and management expertise in this venture, believes a more cost effective approach to transporting carbon dioxide for storage will be to provide single, large scale pipelines, into which several carbon emitters in a region can connect.

Such a ‘cluster’ or ‘gateway’ approach could deliver the UK Government’s aspiration of cost competitive power generation with CCS, it says, pointing to cluster style projects currently underway on Humberside, the Don Valley Power Project near Doncaster; Alstom, Drax and BOC Linde on the White Rose Project near Selby, and C.Gen Power on its North Killingholme Power Project.

Jeff Chapman, chief executive of the CCSA, said the launch of the CCS Competition together with the CCS Roadmap provides a much-needed boost in confidence to the CCS industry of the government’s commitment to the technology. "The offer of £1bn, together with the development of a suitable financing package under the UK’s Electricity Market Reform, will enable companies to make the necessary investment decisions that will bring forward the first CCS projects in the UK," he said.

Dr Chapman also welcomes the establishment of a CCS Cost Reduction Task Force, to ensure CCS can be cost-competitive with other low-carbon technologies by the 2020s. He also points to the fact that the industry is ready and poised for this investment opportunity. In the last fortnight alone, plans for a new commercial-scale CCS project were announced and another proposal also announced major inward investment from an international company bringing to seven the number of proposed large scale projects currently underway in the UK.

The CBI's Rhian Kelly was a little more equivocal, believing there are still lessons to be learned from the government's previous competition, which took too long and was eventually abandoned. "This time around the competition must be simpler and completed as quickly as possible," she says. “CCS has the potential to contribute significantly to our energy security, reduce carbon emissions, create jobs and become a major UK export for the future. If we are to gain any advantage from developing this important technology in the UK, the government cannot afford to waste this opportunity.”

The Director General of the Institute of Directors, Simon Walker was also cautious in his response to DECC's announcement. “If we want energy to stay affordable, we need to carry on burning fossil fuels, and CCS is the only way we can do that and meet longer-term emissions targets," he said. "But we still don’t know if CCS is commercially viable. The Government is right to be pressing ahead, but businesses need to see a fallback plan if CCS eventually proves unworkable.”

Les Hunt
Editor


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