National Grid graphic demonstrating the Carbon Capture and Storage process
Timely call on carbon capture
The TUC is to be congratulated in having the foresight and commitment to join with industry over several years now to drive forward carbon capture & storage technology (CCS) for power and industry in this country. Not all the task group members will agree on all other energy policy issues. But we are absolutely together on the urgent need for the great benefits of CCS with coal in this country.
So we were glad to see the TUC’s latest report published, indicating the likely economic benefits of CCS, and we are very pleased that it is based on independent and respected Energy Technologies Institute modeling. Judging by the attendance at the launch of the report at the House of Commons on 4 February 2014, there is considerable interest in this work.
The report’s launch debate showed that CCS is essential for reducing global carbon emissions. Most global scenarios show the use of fossil fuels, including coal, growing. Jobs are saved and created, with 1000 – 2500 jobs in the construction phase of CCS projects, and 250 – 400 employees per project in operation. Such a boost to employment is available in the near term. At the launch, Luke Warren of the CCSA spoke of potentially 30,000 skilled jobs.
And CCS saves costs. It is clear that deployment of CCS offers the lowest cost route to decarbonisation. Indeed the ETI model suggests that in 2050 the cost would increase by 1% of GDP (or £30bn-£40bn every year!) if CCS were not included. Household bills could be £82 lower per year by 2030 too with the ambitious development of CCS.
We did not fully appreciate when the work was initiated just how politically sensitive the price of electricity would become, and so it is worth repeating the ETI model concludes that household electricity bills could be £82 a year lower by 2030 with use of CCS.
So, what should we actually do now?
The Economic benefits of CCS declares that the UK has reached a defining moment concerning the future of CCS. Decisions taken now and actions taken over the next 7 – 10 years will determine whether the great potential for CCS in this country will be delivered.
Having started working myself on the Don Valley Power Project in 2002 (and others had been working on that project even earlier), it would be easy for me to point to the many disappointments and delays and slippages in government plans over the years, and to draw a contrast with the persistence of many private sector interests to fund their projects, notwithstanding the unpredictability of government planning for CCS.
Indeed, even currently it’s not clear how the government will allocate contracts for CCS projects through the new Contracts for Difference in the Energy Act. Even the powers of the Secretary of State to grant bilaterally negotiated contracts for CCS seem unclear. CCS investors just cannot be expected to fund tens of millions of pounds of preparatory work without having a robust, predictable route to market.
There is also a lack of clarity on government funding for low carbon energy under the so-called Levy Control Framework for carbon capture schemes. Just two are currently supported by the carbon capture competition fund.
But I am determined to be positive. Two recent developments are very welcome:
- The very positive government response to the CCS Cost Reduction Task Force report, including the commitment to set up of a new CCS Development Forum, co-chaired by the Minister and industry. The objective of the Forum will be to accelerate the deployment of CCS in the UK.
- The commitment within the Drax White Rose CCS project to engineer a CO2 trunk line on Humberside with capacity to bolt on several other CCS projects. This could be enormously important. When the decision to build it is taken it should facilitate investment by others in the region, including the industrial emitters such as steel, as well as power stations, including Don Valley, for which the whole end to end investment would not be required. Thus a cluster of projects could be assisted, and on a similar timescale.
But I also believe the following government actions are required:
We need to press on with speed to deliver the first two CCS competition projects at Peterhead and Drax.
We have to ensure that contracts for CCS projects are investable and bankable for a further wave of CCS schemes. The government must be clear that CCS contracts are predictably available to more than the current two schemes underway in the competition. The CCS allocation processes needs to include the best potential CCS investors outside the competition.
And we must have confidence that there is funding space for more CCS projects in the Levy Control Framework, and more transparency of how that mechanism is going to work for carbon capture projects.