Based on modelling by the Energy Technologies Institute (ETI) the report shows that including CCS in the mix of technologies for power generation results in a 15 per cent reduction in the wholesale price of electricity compared with alternative scenarios in which CCS is not deployed.
This is equivalent to an additional 1 per cent on UK GDP if CCS is not deployed at all. The cost saving is mainly due to the fact that without CCS there is an increase of approximately 20–25 per cent in electricity generation capacity as well as a requirement for additional investment in electricity transmission capacity.
CCS would also bring economic benefits through additional jobs in construction and plant maintenance and running. The report estimates that around 15-20 thousand jobs could be created by 2030 depending on the scale of CCS adoption. The UK also has the potential to capitalise on expertise in the sector and develop a world-class domestic industry that can form the basis for meeting the anticipated high growth in the global CCS markets.
CCS is also vitally important to maintain the competitiveness of energy intensive industries such as steel, cement, chemicals and refining, for which it is the only technology that can further decarbonise the sector.
The UK has reached a defining moment with regards to the future of a successful CCS industry, says the report. Decisions taken now, and actions taken over the next 7–10 years, will determine the ability of ‘UK plc’ to take advantage of its natural assets (physical and human) and capitalise on the investment, employment and export potential of the sector.
Although Government initiatives such as the competition and Contracts for Difference (CfD) in the Electricity Market Reform have advanced CCS, there are significant policy gaps that will hinder the successful development of the sector. Urgent action is needed to fill these gaps and ensure that the CCS industry develops in a timely manner, delivering significant economic benefits and contributing towards the realisation of carbon reduction targets. The report recommends:
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A strongly endorsed long-term Government vision for the CCS sector.
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Immediate and steady rollout of CCS projects: including a minimum of 2 projects from the current CCS competition, ready to begin operating from 2018; and positive final investment decisions for shovel ready projects outside the competition within the next parliament.
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Successful implementation of the Government’s Electricity Market Reform, particularly through the development of low-carbon support mechanisms, such as the Feed in Tariff with Contracts for Difference, that catalyse CCS investment.
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Development of CO2 transport and storage infrastructure that can service the needs of not just current emitters, but also future power and industrial facilities.
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The development of support mechanisms for CCS in industrial applications.
To ensure a pipeline of projects after the competition, Investors need clear signs that the Government will continue to support CCS infrastructure through the CfD framework and that the returns on investment are transparent and not subject to change.
"We need CfDs for CCS in such a way as they make projects investable and they must be available to more than just the two projects currently involved in the competition," commented Michael Gibbons, co-chair of the Government CCS Development Forum. "The allocation processes have to be clear and predictable so that investors can see the route to market. "