Without financial incentive, the public good created by the Carbon Capture will not be recognised in private profit, meaning the technology will never get off the ground says Tara Singh as she discusses UK and carbon capture based on a recent report.
Climate change is the biggest threat facing mankind. With this in mind, no responsible Government could commit to new coal or gas plants – despite the urgent need to encourage secure, reliable and affordable base-load generation.
Or could they? In the past year, the Government has approved 3 gas plants and looks set to approve 7 coal plants on the basis that they will use “Carbon Capture and Storage”.
Carbon Capture and Storage (CCS) is a term for a set of technologies which captures up to 95% of the carbon dioxide released by coal and gas fired power stations. Carbon dioxide is captured before, during or after combustion; purified and compressed to form a liquid; transported by ship or pipeline for tens to hundreds of kilometres before, finally, being stored underground in depleted oil and gas fields, coal seams or deep saline aquifers. By fitting such equipment, global power emissions could be slashed by 28% by 2050.
The Government claims that the UK will have a working CCS industry by 2014. It also claims that any coal or gas plants built before 2014 will be built ready to retrofit this technology as soon as it is ready to go. As John Hutton argued in March, "there's a belief that coal-fired power stations undermine the UK's leadership position on climate change. In fact, the opposite is true”.
Unfortunately, work by Policy Exchange reveals that neither claim looks likely.
As a result of the logistics of integrating three very different processes, the lack of agreed regulatory standards over transport and storage, and the high capital and running costs, there are currently no integrated demonstrations of CCS in the UK. Creating a fully fledged industry by 2014 will be a real challenge. The Government’s response remains unconvincing.
Despite first floating CCS in 2002, it was only last year the Government finally announced a competition for a small integrated project.
The most concerning feature of this competition is that only one technology is supported: just coal, and just post-combustion, and with just one plant. This rules out dozens of exciting and relevant UK projects. These omissions include CCS fitted to a gas plant, such as the proposed BP and Scottish and Southern Energy project at Peterhead.
In fact, our report found that the number of proposed CCS projects in the UK has actually halved since the competition was announced. The loss of Peterhead was particularly concerning, given that it could have been up and running by 2009; would have been the largest CCS plant in the world; and could have generated large tax revenues, as the carbon captured would have been used to pump out oil from depleted North Sea reserves.
If we are serious about creating a CCS industry in the UK, we need a programme of stations – not a competition plumping for just one project, of one type of technology. Simply put, if the UK relies on this small-scale competition alone, CCS will not be developed to the scale, or to the timetable, required.
So a homegrown CCS looks unlikely by 2014. However, CCS could well be developed abroad. Building any new stations ready to retrofit this technology, the Government’s second claim on CCS, still seems like a good idea.
But does the Government really know what it is talking about? In fact, the Government has yet to develop a definition for a plant being “Capture Ready”, even though it has already granted planning permission on this explicit basis.
In reality, CCS requires far more than simple strapping on a simple bit of kit. Any retrofitted station would need to be able to retrofit each component: capture, transport and storage. This requires a serious logistical and financial commitment.
It is, therefore, essential that Government sets a clear framework for what Capture Readiness really is (in our report we have listed some of the criteria that should be considered, for example an outline planning approval for all three parts of the CCS process); when it should be instituted (e.g. how many years after CCS is commercially demonstrated in Europe); and, how industry can meet some of the costs.
The last point is particularly key. Without some form of financial incentive, the public good created by the CCS (i.e. secure low carbon electricity) will not be recognised in private profit, meaning the technology will never get off the ground. The EU Emission Trading Scheme is one possible route of reward, but the price of permits and lack of long-term certainty may not be the strong signal the industry needs. Alternative mechanisms, such as Feed in Tarrifs, may well need to be considered – and will indeed be so, in a forthcoming Policy Exchange report, due out in June 2008.
What is clear is that CCS is perhaps our best bet of generating secure, reliable and clean baseload electricity – and that this bet is about to be lost through a lack of political and financial commitment. With global emissions set to increase by almost two-thirds in the next twenty years, we have a once in a generation chance to get it right. One competition is not enough. A fudged suggestion of creating stations to be “Capture Ready” is not sufficient. Business needs a clear, bankable signal that their investment now will be recognised in twenty years to come. If we are serious about slashing emissions, now is not the time for political timidity.
