From the TUC

Has the Chancellor unsettled carbon capture investors?

10 Oct 2011, by in Environment

The first carbon capture plant was bound to be expensive. Perhaps the Government’s new carbon tax is behind Scottish Power’s threat to pull the plug on the £1bn carbon capture trial project at its Longannet plant (Scotland).

At 2.3 megawatts, Longannet  is the third largest coal plant in Europe. The CO2 tax is payable on any emissions that aren’t captured. But the Chancellor’s Manchester speech can’t have helped the investor climate by dampening climate change ambitions. Faced with such indecision, new carbon capture campaigns in Yorkshire, Building the pipeline together, and the TUC are calling on Government and industry to get moving, and realise the huge jobs and climate benefits from CCS.

At Longannet, the CO2 technology trial would initially only cover one-eighth of the plant’s emissions, leaving most emissions there liable to the new carbon tax, because it’s payable on the unabated carbon emissions. But such issues could and should be resolved by negotiation, for the wider benefit of the UK economy – to build the world’s first CCS plant.

CO2 Sense, the Yorkshire campaign group, will argue it its conference in Leeds (3 and 4 November) that a mass carbon capture & storage (CCS) network would reduce the costs of CCS and could transport over 300 million tonnes of CO2 by 2030. Power stations and heavy manufacturers like steel would feed into the system. Jobs and industrial plant would be secured in a lower carbon economy.

The TUC’s CCS roadmap is due next week. It views CCS as pillar of economic recovery. To achieve this target, the TUC’s action programme includes:

  • UK Demonstration 1 at Longannet: need urgent agreement on the contract.
  • UK Projects 2-4 need to be in operation by end 2018.  DECC call for proposals by end of 2011 and conclusions of selection should be aligned to meet the timeline for the NER call for proposals.
  • Clarity on how further CCS projects (beyond demos 1-4) fit within the government’s energy market reforms.
  • Ensure existing coal plant play their part in a low cost transition to a low carbon economy by ensuring that they are eligible to receive payments via the new energy “capacity mechanism”.
  • Demonstration CCS on industrial plants to be in operation by 2018.

This programme would create thousands of jobs in the new CCS industry. It would preserve a large number of high quality jobs and maintain a skills base within the existing UK mining industry and coal infrastructure chain. It would also ensure that the UK had access to an affordable, secure and flexible energy supply during the transition period to full CCS deployment and beyond.

The Chancellor argued last week that environmental regulations were

“piling costs on the energy bills of households and companies…So let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.”

Contrast the Government’s declared objectives for energy reform in the July 2011 Energy White Paper:   a New Institutional Framework would “provide clarity and certainty and be trusted by investors.” No wonder investors are unsettled.