The Carbon Capture and Storage Association welcomes today’s publication of the CCS Cost Reduction Taskforce final report on The Potential for Reducing the Costs of CCS in the UK. The key conclusion of the Interim Report (published on 21st November 2012) remains unchanged – CCS on fossil fuel power stations can be cost-competitive with other low-carbon technologies. The final report sets out actions agreed by the Taskforce members and recommended Next Steps. Of the seven Key Next Steps set out in the report, several will include contributions from the CCSA – in particular the development of fit-for-purpose funding mechanisms, setting out a vision for CCS beyond the current Commercialisation Programme and creating policy and financing regimes for industrial CCS.
In addition, the final report recommends the creation of three national leadership groups to take forward the actions of the Taskforce; the ‘UK CO2 Storage Development Group’, the ‘UK CCS Commercial Development Group’ and the UK CCS Knowledge Transfer Network. It is recommended that the last of these should be led by the CCSA, working to ensure that the learnings from CCS projects in the UK and elsewhere are fed back to industry and Government, to enable follow-on projects to reach their full potential in reducing the costs of CCS in the UK.
Dr Jeff Chapman, The Carbon Capture & Storage Association Chief Executive and Taskforce Chairman said:
“The final report of the CCS Cost Reduction Taskforce confirms that CCS is a vital technology in the UK’s low-carbon mix, and with the cost reductions anticipated in this report, will be a low-cost decarbonisation option for both the power and industrial sectors in the very near future.
The CCSA looks forward to taking forward many of the actions in the report, and we are particularly pleased to see that the report has emphasised the need to incentivise Enhanced Oil Recovery – which has the potential to create a vital revenue stream for CO2 storage operators.
The report has also rightly identified a gap in policy and financing regimes for CCS in industrial sectors, and we will be working closely with DECC and BiS in the coming months on how to fill this gap. The availability of CCS for many industrial sectors will be crucial to ensuring the creation and retention of these vital industries in the UK.”
Building on the report's findings, the Crown Estate will establish a new UK CO2 Storage Development Group, which will aim to assist delivery of proven storage sites that are both commercially and technically viable. The group will examine options for site characterisation of reservoirs and aquifers for storage, and link these to potential locations of CO2 capture plants. It will make recommendations on measures that can unlock cost reductions, maximise benefits of scale and decrease technical, commercial and financial risk in storage.
Seeking to optimise UK CCS Transport and Storage network configurations, the group will also identify options for early CCS projects and future CCS infrastructure developments, in order to minimise long-run costs and create large-scale use storage hubs. Critically, this will take into account likely related pipeline networks. The above work will all feed into an industry-led and government-supported vision of how subsequent phases of CCS projects in the UK can be developed and financed.
Michael Fallon MP, Minister of State for Energy and Climate Change said: "I welcome this timely report. We are one of the world leaders for Carbon Capture and Storage and our £1bn competition to kick-start a cost competitive industry in the UK is making good progress. The CCS Cost Reduction Taskforce identifies the key areas that need to be addressed to drive down the costs of the technology and enable commercial deployment in the 2020s. We will be responding in detail to the report's recommendations shortly. We are committed to working with industry so that CCS can realise its potential and compete on cost with other low carbon technologies without capital support from Government."
Dr Ward Goldthorpe, CCS Programme Manager for The Crown Estate, said: "Effectively managing the storage resource and ensuring transport and infrastructure opportunities are optimised over time is key to the cost competiveness of CCS-equipped power generation. The establishment of the UK CO2 Storage Development Group is an important step in creating the industry collaboration needed to address the key issues for de-risking storage and lowering deployment costs."
David Clarke, CEO of the Energy Technologies Institute, said, “Today’s report publication marks another step in the right direction for the creation of an infrastructure framework to support the development of CCS as an industry in the UK. There is still a long way to go to de-risk CCS – storage identification, capture technology development and demonstration, establishing market and investor confidence – all areas the ETI are continuing to address, but this report sets out some clear guidance on how CCS can evolve and become an important contributor to a low carbon economy in the UK. The emphasis now is on making the report’s recommendations a reality. The ETI will continue to play an influential role in helping to push forward CCS development, through our participation in the new Commercial Development Group and the continued roll out of our in-house CCS technology programme supporting academia, government and industry to further understanding and technology innovation in this area.”
Comment from Scottish Carbon Capture and Storage
SCCS welcomes the publication of the CCS Cost Reduction Taskforce’s (CRTF) final report, The potential for reducing the costs of CCS in the UK. SCCS participated in the taskforce, and fully supports the seven key steps which the report highlights as necessary for the development of a sustainable carbon capture and storage (CCS) industry in the UK.
The taskforce has concluded that gas and coal power stations equipped with CCS have the potential to be cost competitive with other forms of low-carbon power generation in the UK. However, the report crucially underlines that a number of key enabling actions must still be taken by both government and industry to make this a reality. Significantly, these are also required to enable the widespread application of CCS to industrial sectors, such as steel, cement or chemicals production, which will remain dependent on fossil fuels.
SCCS warns that the UK Government must rapidly engage with the scale of the problem. There is a looming UK electricity shortage coupled with a legal commitment to significant carbon reductions. At the same time, the UK is switching from secure domestic gas production and diverse coal imports to marketplace bidding for international gas imports. Carbon reduction must be led by fundamental changes to electricity generation, yet some sectors of government are suggesting that CCS may not be necessary.
If the UK is to meet its carbon reduction targets by 2030 then, working backwards to the present day, it is clear that new power plants fitted with CCS have to be built at unprecedented rates throughout the 2020s. At present, CCS is seen as “too expensive” by many electricity generators. Hence the taskforce’s recommended steps to reduce costs are essential in order to bring the price down to less than £100 per MW hour – in other words, midway between onshore wind and offshore wind.
SCCS is therefore strongly supportive of the taskforce’s finding that a longer term vision for CCS in the UK must exist beyond the two demonstration projects currently continuing in the UK’s CCS Commercialisation Programme. The UK will only be able to secure cost reductions and market development if there is much greater clarity as to how additional projects will be supported for both electricity generation and industrial sectors. The UK has put in place a unique pricing mechanism, which rewards low-carbon electricity with a higher price. This same mechanism must now be used to fast-track many more CCS projects.
Professor Stuart Haszeldine, SCCS director, said: “The CRTF’s final report clearly shows that CCS can be a low-cost and flexible route to a decarbonised energy sector, complementing renewable energies. A test of UK ambition and policy is to provide a Contracts for Difference price for the three waiting and ready projects, which are not currently in line to receive government funding. This could result in the UK leading the way on CCS worldwide. Without such a guarantee by the end of June, there is a danger that we will instead lose these projects. China said this week that it anticipates getting CCS up and running within five years. Are we just as serious about CCS in the UK?”