The government is making a mess of developing carbon capture and storage in the UK, according to a committee of MPs.
In a new report, the House of Commons’ energy and climate change committee says carbon capture and storage (CCS) has the potential to be a “game changer in efforts to tackle climate change”. It could – in theory – allow some continued use of fossil fuels while staying within carbon budgets.
But funding bungles and policy uncertainty have resulted in a “lost decade” for the CCS industry, the MPs say. The report implores policymakers to learn from past mistakes and “fast track” existing CCS projects.
A troubled history
The government launched its first CCS competition in 2007 with the expectation that any funded projects would be operational by 2014. Suffice to say they’re not. The two awardees from that competition – E.On’s Kingsnorth project and Scottish Power’s Longannet scheme – terminated their plans in 2010 and 2011 respectively.
After scathing criticism from the National Audit Office for its handling of the first competition, the government launched a redesigned CCS funding scheme in 2012. Capture Power Limited’s White Rose project was awarded funding in 2013, with Shell and SSE’s Peterhead project getting the nod a year later.
Both those projects are now in the development stage, with the government hoping the projects will be in operation by 2020. But despite the government’s renewed commitment, there are “mixed views” within the industry as to whether such a date is feasible, the committee reports, and chair Tim Yeo calls the government’s approach “a model example of how not to support a fledgling industry” .
Turning things around
CCS has a fairly important role to play in many people’s visions of the UK’s energy future. The Energy Technologies Institute estimates developing CCS could reduce the cost of meeting UK’s carbon targets by £30 to £40 billion by 2050.
If that’s going to happen, the government must ensure the two existing projects are completed as quickly as possible, the committee says, and make a final decision on whether to fund the next stage of their development by the end of 2015.
The government has already agreed to extend its new funding mechanism, contracts for difference, to the CCS industry. That would offer a guaranteed price for electricity generated by the plants.
But the committee says the government must design “bespoke” contracts for the industry, as CCS is not yet mature enough to compete with more developed technologies such as onshore wind.
The government should also clarify how much of its capped low carbon energy fund – the Levy Control Framework (LCF) – will be available for CCS projects being 2020. There’s particular uncertainty about how much of the fund will go to paying for new nuclear plants – and that could squeeze out other technologies.
Finally, costs can be cut if CCS plants are attached to shared hubs of transport and storage infrastructure, a process known as “clustering”, the committee says. The industry-led CCS reduction task force estimates that 75 per cent of cost reduction over the next 15 years could come from sharing the cost of developing infrastructure across companies.
Weighing up promise and past failure
Going all out for CCS isn’t without risks. While CCS has potential to help the UK reduce emissions, it is yet to be proven on a commercial scale for power production.
As CCS projects stutter worldwide, governments have to lean on established low carbon technologies such as wind and solar power to decarbonise their economies.
In the current policy environment, that’s likely to mean balancing limited budgets across low carbon technologies – old and yet-to-be-delivered.