14 Sep 2016   |   News

UK advisory group calls for big carbon capture and storage push

New report urges government to give firm backing to beleaguered technology which it says could slash the cost of meeting CO2 reduction targets

The UK should kick-start an industry to capture and bury carbon dioxide emissions in order to save billions a year from the cost of meeting climate change targets, according to a joint industry and parliamentary advisory group.

This would require the setting up of a new government-backed company to build the infrastructure for collecting carbon dioxide from coal and gas power plants and pumping it into spent North Sea oil fields, the group said.

Carbon capture and storage (CCS) has struggled to gain commercial adoption around the world, but “By 2050, [it] could be responsible for curbing as much as 40 percent of emissions, saving up to £5 billion annually compared to alternative strategies," the report says.

A similar analysis has been made by the UN’s Intergovernmental Panel on Climate Change, which identifies the technology as a hugely important part of the fight against global warming. The cost of halting climate change would double without CCS, according to the panel.

The UK report says CCS can compete on price with other forms of clean electricity including nuclear power and many renewable energy options. It envisages new projects being built as soon as 2020, to be operational by 2023.

Despite the nascent technology being ready, no company could justify investing in an expensive CCS pipe network, without the government first investing in the basic infrastructure, said Ron Oxburgh, an independent member of the House of Lords and former chairman of Shell Transport and Trading, who chaired the advisory group.

“There is no serious commercial incentive and it will stay that way unless the state demonstrates there is a business there,” he said.

The UK government first committed itself to CCS in 2007, aiming to deliver an operating CCS project at a coal-fired power station by 2014. However, negotiations with the last remaining bidder ended in 2011 due to concerns that the project could not be funded within its agreed £1 billion budget.

The government subsequently announced a replacement CCS commercialisation competition in 2012, with contracts awarded in 2013-14 to two preferred bidders. £1 billion was to be made available in capital funding to support the initial stages of commercialisation, with projects expected to be operational between 2016 and 2020. 

However, in November 2015, just weeks before the final bids were to be submitted in this process, the government unexpectedly announced that the money was no longer on offer.

In a forward to the report addressed to Andrea Leadsom, Minister of State for Business, Energy and Industrial Strategy, Oxburgh writes, “After so many false starts I began this study, as I know a number of my colleagues did, quite prepared to advise you to write-off CCS as a part of UK energy policy. As you will see, our report recommends the opposite of this.”

“I have been surprised myself at the absolutely central role which CCS has to play across the UK economy if we are to deliver the emissions reductions to which we are committed at the lowest possible cost to the UK consumer and taxpayer.”

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