Does the UK have strategic green business opportunities in Europe, or is it simply dragging its feet in perfecting a commercially viable carbon capture and storage technology to lock away up to 70 billion tonnes of the world’s most abundant greenhouse gas ad infinitum? Jon Herbert looks at developments.
It is a technology that should be about to have its day. Yet, despite a £1 billion government commercialisation competition to demonstrate and to speed up its introduction, carbon capture and sequestration (CCS) technology remains an elusive part of the UK’s low-carbon energy mix.
The Government is also sponsoring a £125 million research and development (R&D) programme; UK electricity market reforms should also give CCS a level playing field with other low-carbon energy sources.
In theory at least, CCS on a large scale should have the potential to make some traditional fossil fuels environmentally acceptable, at least for a while. Its global market is said to be enormous.
As a mechanism to remove carbon either before or after the combustion process, CCS could give new environmental credentials to dirty old coal, conventional oil and gas, and even shale-derived gas and oil beneath the rolling English countryside. The present focus is on post-combustion.
Recently, MPs have suggested CCS could be a new UK revenue-bearing growth industry, not only as a commercial solution to Europe’s growing greenhouse gas problem, but also in stimulating further output from the ageing North Sea oil and gas industry.
However, there are also warnings that CCS is not a complete panacea. Some welcome its revenue potential, others say this is fanciful, at least until CCS becomes workable and mainstream.
For a pivotal transitional technology, its day does seem to be coming rather slowly. Which is why members of the Commons Energy and Climate Change Committee say commercialisation is now an urgent priority that must be fast-tracked to approve the first operational plant within a year.
CCS comes in several forms. It is generally understood to mean the removal of CO2, its safe transportation and permanent injection into competent geological formations that can hold it for a very long time — from the human perspective, effectively for ever. The Government estimates that the UK has enough offshore capacity to store 70 billion tonnes of CO2.
In practice, this means depleted, and partially depleted, subsea oil and gas reservoirs. Captured CO2 would be piped out to sea under pressure, often through existing pipelines, from power plants and heavy energy industries.
However, to date just two sizeable UK projects are under way. The first is the White Rose oxyfuel and CCS demonstration plant with a 426MW gross output being developed in Yorkshire by Capture Power, formed by Alstom, Drax and BOC. In parallel, the National Grid will construct and operate a CO2 transportation pipeline and, with partners, permanent subsea store under the North Sea. The £2 billion project will capture some two billion tonnes of CO2 annually — circa 90% of all project carbon.
The second centres on FEED (front-end engineering and design) study funding announced in February 2014 for the next stage of Shell’s Peterhead CCS project in Scotland. This will be used to finalise and remove risk from all aspects of the proposal before a final investment decision is taken for a commercial plant. The project will investigate the capture of more than 85% of CO2 emissions from Peterhead power station to be taken 100km offshore through existing pipelines to the Goldeneye depleted gas field. If built, it will be the world’s first operational CCS gas-fired power station.
New business opportunity
However, there is more. Ageing UK oil and gas fields could profit from sequestrating CO2 piped from European neighbours, says the Energy and Climate Change Committee. However, Committee Chair Tim Yeo MP adds the qualification that “the key to carbon and storage is economics”.
He explained recently: “The UK’s geology under the North Sea is a potential asset to exploit and if we can find ways of getting another income stream by accepting someone else’s unwanted CO2 it might move forward the date when CCS in the UK is commercially viable.”
But he envisages a greater opportunity if waste CO2 is used to force extra hydrocarbons from exhausting wells. The committee is critical of the Government’s commitment to bringing CCS on stream. Further, if CCS becomes a commercial reality, a new transportation and storage industry could be created as an additional economic benefit, a report by the MPs has concluded.
Using CO2 to stimulate wells is already a reality. Norway’s national Statoil company extracts natural gas from the North Sea’s Sleipner field, 250km (160 miles) west of Stavanger. For a decade and a half, it has injected CO2 to enhance production. CO2 makes up some 9% of the extracted gas. However, subsequent capture and recycling means some one million tonnes are returned underground.
The challenge facing the UK Government is that bringing CCS technology to market is extremely expensive. Energy companies that ministers hope will take up the CCS challenge have little incentive while the carbon price is low. However, different people like CCS for different reasons.
CCS is seen as a supplement to the long-term use of renewables and should not delay their introduction, say green groups who want CCS to be a temporary measure. Energy companies are apt to see CCS value in extending greater use of fossil fuels. Critics note that even with CCS, gas-fired power generation cannot achieve the low-carbon emission levels needed to meet safe carbon-reduction targets. However, CCS is a lifeline for high-carbon industries such as steel and cement-making.
Common ground might be found in that, while the technology appeals to traditional energy producers, it will also allow the existing base-energy load to be decarbonised until renewables become the primary source of future power. In other words, don’t plan new fossil fuel plants today on the assumption that CCS is a “cure all”. Conversely, CCS-based plants could provide the consistent power output needed to counteract the intermittency of renewables that rely on weather windows. There is also the enticing prospect that CCS, working with bio-energy plants using crop fuel that takes carbon out of the atmosphere, could slightly reduce global carbon levels. Negative emissions!
Although it might make the cost of CCS reasonable, committing the billions needed seems to be a sticking point. CCS trials start at full size and are difficult to pilot and scale up. While without CCS, energy companies face restrictions on the long-term use of conventional fossil fuels, cost uncertainty and a lack of confidence mean that R&D is still largely tied to the public purse.
The Government’s CCS Demonstration Programme, with additional EU funding from the NER programme, was launched in the hope that the refined technology would now be operational. Two initial awards, one for the Kingsnorth plant in Kent and a second for the Longannet project in Scotland, were halted for economic reasons.
One suggestion is that government should offer the same fixed-price electricity contracts that apply to nuclear and offshore wind power to encourage investors.
While announcing the Peterhead FEED funding, Energy and Climate Change Secretary Ed Davey pointed out that the UK’s two current CCS projects are Government Top 40 infrastructure projects, which together could cut UK carbon emissions by some three million tonnes annually and provide clean power to more than one million homes.
While the essential technology is not new, what is new is the commercial and legal frameworks needed to entice business to invest, Mr Davey said. The Government’s view is that it needs to invest on a commercial scale and set a precedent.
However, the Government sees three development phases, said Mr Davey, with other projects of a similar size to White Rose and Peterhead perhaps forming phase two. By 2050, CCS-based projects could contribute more than 20% of UK power supply. Bringing forward CCS will save in excess of £30 billion a year, he added.
Achieving a cost-effective, secure, low-carbon energy mix would be more difficult and expensive with nuclear and renewables alone, he explained. CCS could also create thousands of jobs and a global market opportunity worth £300 billion by mid-century.
Mr Davey noted the procurement chain opportunities for UK industry; the first US CCS project given the green light will be powered by compressors made in Glasgow. He also referred to Process Systems Enterprise, a spin-out from Imperial College, London, and its software designed to model and optimise CCS schemes of all sizes and network complexities. In addition, the multinational engineering company Technip is setting up its CCS Centre of Excellence in Milton Keynes.
The UK’s CCS R&D programme is also looking at alternatives to simply storing CO2 beneath the sea, such as a small project initially funded by the Department of Energy and Climate Change to develop new plastics. There is also work with industry to reduce costs with the help of a CCS Cost Reduction Task Force. The Energy Secretary said that 194 countries have agreed to negotiate a new emissions reduction deal by 2015 and that UK CCS leadership, plus sharing knowledge and learning from the experience of other countries also committed to CCS, would help to power the planet sustainably.
Commitments in the CCS Roadmap include:
- Creating an electricity market that will enable CCS to compete with other low-carbon sources
- Launching a CCS commercialisation programme with £1 billion of capital support
- Working closely with industry to reduce costs, including through the establishment of a CCS Cost Reduction Task Force
- Removing barriers and obstacles to deployment
- Developing the regulatory environment, including for the long-term storage of CO2
- Promoting the capture and sharing of knowledge to accelerate deployment
- Helping to build a stable foundation by supporting private sector access to skills and developing the supply chain.
Last updated on 17/06/2014
First published by Croner-i on 17 June 2014