Carbon capture and storage (CCS) has a troubled history with the Conservative Party. Two failed competitions, two National Audit Office inquiries, and millions of pounds spent without a single operational large-scale project to show for it is hardly an endearing track record for any new Minister to inherit. But with the publication of the Clean Growth Strategy, Ministers across government have signalled renewed, albeit cautious, enthusiasm for CCS as part of new plans to decarbonise and grow the UK economy.
“It is very much a personal commitment and something I strongly believe is exceptionally important”, Claire Perry MP, Minister for Climate Change and Industry, told a Westminster Hall debate back in October 2017. “We want the prize of global leadership in this area: we want to be the people who break the deadlock, deploy CCS in the UK and capture the export opportunities”. Strong statements, considering the rocky history.
Newfound enthusiasm for CCS in the Conservative Party however doesn’t come without its caveats. “Costs must come down” has been the go-to line for Energy Ministers since the ill-fated CCS commercialisation programme was brought to an abrupt conclusion in November 2015. But as Offshore Wind Week has so aptly demonstrated, cost reduction for low-carbon technologies is as much within the gift of governments as it is of the private sector and research communities.
Consider how relative policy certainty and clear commitments to offshore wind, for example, have made the UK a global leader in the field; and then contrast that to the indecision and sporadic flip-flopping that has characterised political appetite for CCS in the UK. That’s the scale of the challenge facing Claire Perry, and overcoming it will require much more than £100 million worth of research and development and a CCUS (carbon capture, utilisation and storage) pilot.
The UK isn’t the only country grappling with the ‘how to do CCS’ question though. At the vanguard of international efforts on CCS is the International Energy Agency (IEA), who recently hosted a high-level roundtable with Ministers and CEOs from some of the world’s largest energy companies. The IEA’s Executive Director, Fatih Birol, described it as the “highest level of industry and government engagement that we have seen on CCUS”. (Unfortunately, the UK chose not to send a Minister.)
New IEA analysis published that day shows that global capital investment in large-scale CCUS projects has now surpassed $10 billion. A huge amount of money no doubt; but not when compared against investments in other low-carbon technologies, which came close to $850 billion during the last year alone.
“Without CCS, the challenge [of meeting global climate goals] will be infinitely greater”, said a joint statement from Birol and US Energy Secretary, Rick Perry, adding, “we know this is essentially a policy question”. Part of the problem with CCS policy (and politics) though is that perceptions of costs continue to dominate the discourse, often before any discussion around the benefits has even begun.
Robust policy development requires a proper understanding of the costs and benefits of different investments and different technological pathways. In the UK to date though, CCS policy has been based predominantly around cost and risk management. In its review of the second CCS Competition, the National Audit Office found that the responsible department (the Department for Energy and Climate Change, at the time) hadn’t even fully assessed the benefits of the programme.
That’s why a new study from Summit Power, a US project developer with a portfolio including both traditional and alternative forms of electricity generation, has started to turn heads.
In the aftermath of the November 2015 cancellation of the CCS commercialisation programme, Summit quietly began developing options for a new gas CCS project at the Grangemouth industrial site in Scotland. With an anchor power project helping to de-risk investments in CO2 transport and storage infrastructure, industrial emitters in the region would be able to access an affordable solution for reducing their CO2 emissions.
Working with a range of academics, consultants and other CCS organisations (including the Teesside Massive, sorry, Collective), Summit has turned the typical CCS cost debate on its head. Instead of focussing only on what CCS might cost, its first-of-a-kind analysis has also shown the economic benefits that it might bring.
Based on Committee on Climate Change (CCC) analysis and guidance from the HM Treasury Green Book, Summit found that CCS could deliver £169 billion in benefits to the UK economy between now and 2060, compared to total costs of £34 billion.
A significant portion of the benefits identified derive from avoiding CO2 emissions, but by working with the University of Strathclyde to assess ‘linked economies’, the analysis found that the project could deliver £5 billion worth of health/wellbeing benefits and a colossal £54 billion increase in domestic economic activity. Between now and 2060, the analysis estimated that more than 225,000 jobs could be created or retained as a result of investing in CCS.
Aside from costs, the other main hurdle that CCS has struggled to overcome in the UK is the scale of commitment required. Summit’s approach, again, tackles this challenge head-on and illustrates how a UK CCS programme could be structured so that each individual phase would make sense in its own right.
Far from requiring government to commit to an endless roll-out of projects in order to justify initial investments in infrastructure, Summit’s analysis shows that a decision to invest in just two initial phases of CCS between now and 2025 could provide £8.1 billion in economic benefits to the UK in return for a total investment of £3.8 billion. What’s more, that initial investment then provides optionality for the future: invest further if more CCS is needed; don’t bother if it’s not. Nothing lost.
The coming weeks will see the first meeting of the new CCS Cost Challenge Task Force and the Ministerial CCUS Council. It’s not yet clear what impact Summit’s analysis will have on the direction of future CCS policy, but one would at least hope that it helps shift a conversation dominated by costs to one that also recognises the substantial benefit that CCS could bring to the UK. As David Cameron once said:
"This isn't a distant dream. CCS is truly within our grasp. And we in Britain have got what it takes to make that a reality. We've got an army of experts who have worked for decades in the energy sector. We've got a manufacturing and energy industry that wants to invest and get things going. What's more, we've got the depleted oil and gas fields in the North Sea in which to store the carbon.”
Theo Mitchell is Director of Enerfair Engagement, a policy and communications consultancy dedicated to industrial decarbonisation and the energy transition. Previously, he was Head of Office and Energy Policy advisor to Lord Ian Duncan in the European Parliament and Policy Manager at the Carbon Capture and Storage Association
The views expressed in the article are those of the author, not necessarily those of Bright Blue
