UK CCUS Cost Challenge Taskforce report

Jul 23 2018

An independent report to government on progressing carbon capture, usage and storage in the UK has proposed a viable business plan but urgency is needed.

The report sets out the enormous opportunity and value that CCUS delivers across the UK economy and emphasises the need for urgency to enable CCUS to fulfil its role in achieving the lowest-cost route to meeting the UK’s statutory climate change targets, says the Carbon Capture & Storage Association (CCSA).

The overall conclusion of the Taskforce, which was chaired by Charlotte Morgan, Energy and Infrastructure partner at Linklaters, is that CCUS meets the three commitments set out in the Clean Growth Strategy; reducing emissions in the most cost-effective way, maximising innovation and making the UK a global technology leader. The UK is uniquely placed to grasp the CCUS opportunity, with the potential to develop a large export market delivering significant economic benefits for the UK.

The report recommends a number of key actions and messages, including:

·         A minimum of two CCUS clusters (incorporating capture plants and CO2 stores) operational from the mid-2020s.

·         The development of CCUS clusters delivers value across the UK economy by enabling low-carbon industries and electricity as well as unlocking other benefits such as decarbonised hydrogen for heating, greenhouse gas removal and carbon dioxide utilisation.

·         The development of a new business model for CO2 transport and storage, separate from that which is used for the capture plant.

Dr. Luke Warren, Chief Executive of the CCSA, commented, "“After six months of intense discussions between a number of key CCUS stakeholders, the message from today’s report is clear: CCUS can already be deployed at a competitive cost, through the development of CCUS clusters in key UK regions. These clusters could support clean growth across the UK economy whilst retaining and creating high-value jobs in some of the UK’s most important industries."

"The Government has committed to publishing a CCUS Deployment Pathway by the end of 2018. The next five – six months therefore represent a crucial period for CCUS. It is imperative that industry and Government now work together to ensure that the recommendations set out in today’s report are taken forward and reflected in a strong and ambitious new approach to CCUS.”

CCUS reaches across the whole economy, for example in the retention and growth of high-value jobs in industrial production and the oil and gas industry; and the production of low-cost hydrogen with CCUS to decarbonise heat and transport said Scottish Carbon Capture & Storage. CCUS is vital to the aspirations of industrial growth as defined in the government’s Industrial Strategy and Clean Growth Strategy. A study last year, Clean Air, Clean Industry, Clean Growth: How Carbon Capture Will Boost the UK Economy, concluded that CCUS could boost the UK economy by an estimated £163 billion between now and 2060, outweighing the investment costs of £34 billion by a factor of five times.

The Task Force report recommends focusing on regional clusters around industry, power production and hydrogen production; gathering CO2 and transporting through separately managed, shared infrastructure to offshore storage rather than the end-to-end, single large power plant projects of the past.

The report finds that large cost reductions are possible through this sharing of infrastructure and additionally through the reuse of existing oil and gas infrastructure, both onshore and offshore. Several existing pipelines connected to well-characterised stores are suitable for conversion to CO2 transport, leading to reductions in capital costs of £750 million for the Acorn project and £440 million for the Caledonian Clean Energy Project. These large potential savings can only be achieved if we make sure that the pipelines we need aren’t swept up in the rush for decommissioning. The Oil and Gas Authority and BEIS need to urgently review the decommissioning process and the implementation of the Maximising Economic Recovery Strategy in the next few months.

If government wishes to have the option to deploy at scale in the 2030s the building and operating of CCUS networks must begin in the 2020s, but before construction decisions can be taken early action is needed on legislation, risk management and financial structures. Two such actions include changes to the gas safety management regulations (GSMR) and managing the long-term liability for storage. Regional gas companies will be making investment decisions during 2019 for the period 2021 to 2026 so it is urgent that a commitment is indicated to change the GSMR to allow some hydrogen content in our existing gas networks; and unless the government caps liability or takes some of the burden of risk then storage projects will remain difficult to insure.

Stuart Haszeldine, SCCS Director, said, "“This comprehensive report compiles an integrated examination of industrial need, technical capability and financial investability. The report proposes a very welcome reset of CCUS strategy, which recognises for the first time that CCUS has value across the entire UK economy and enables clean industrial growth."

“East Scotland is extremely well placed as a region of the UK with unique access to commercially-ready very secure CO2 storage sites offshore.  We have two leading CCS projects - Acorn and the Caledonia Clean Energy Project – which are ready to bring costs down further by re-using oil and gas industry legacy pipelines.

“CCUS will enable the retention of tens of thousands high value skilled jobs in the oil and gas industry and is a significant part of the North Sea oil and gas industry’s transition to a low-carbon future. It is positive that the task force has recommended that government and industry undertake a strategic review of the oil and gas assets that could be repurposed for carbon dioxide transport.  However, this needs to go further – UK and Scottish governments and industry need to work together to ensure that these strategic assets are protected and kept in good condition until they can be re-used.  They also need to make sure that decommissioning is paused until this review is completed, otherwise we run the risk of throwing our infrastructure investment away.”

"We now call on the government, and particularly Minister of State for Energy and Clean Growth, Claire Perry to take these recommendations on board, and start taking the action we need to make CCUS a reality."

Download the report
Carbon Capture & Storage Association

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