The case for carbon capture and storage (CCS) is increasingly confused. The IPCC suggests CCS makes quick, low cost decarbonisation much more feasible, and the prime minister recently declared the technology “absolutely crucial.” But a recent UCL study found that CCS makes little difference to the proportion of fossil reserves that cannot be burned. Less than a quarter of people support CCS in the UK, compared to the 80 per cent supporting renewables, and activists led anti-CCS protests at the recent Lima climate conference because they fear it will be used as a smokescreen for additional unabated fossil fuel use.
The picture on the ground is equally mixed. Progress on UK CCS deployment in the power sector is at least five years behind schedule. But interest is rising amongst industry, with Teesside leading the way, and the first commercial scale CCS project in the world has just begun operation, scotching the myth that the technology can’t work.
The next government’s decisions on CCS will have major implications
What should pragmatic politicians and policy makers make of these mixed messages? Whatever they decide matters because the next government’s decisions on CCS will have major implications for both the power sector and industry.
The UK already has two CCS demonstration projects in the works. Both are expected to start construction toward the end of 2015, if approved by new ministers. The trouble is that they’re expensive ‘first of a kind’ projects, potentially costing between £150 and £250 per tonne of avoided CO2. At this price there’s a real risk that renewables or nuclear will seem like a better deal, and ministers will choose to delay CCS. For the power sector, this would mean giving up the UK’s attempt to develop a three pronged approach to decarbonisation: developing nuclear, CCS, and renewables so they can compete on price by around 2030.
CCS is the lead technology to decarbonise industry
But, whereas CCS is one (rather useful) option amongst many in the power sector, for energy intensive industry it is clearly the lead technology for carbon mitigation. In fact, it’s hard to see how some industries will decarbonise their process emissions without it.
This complicates the decisions on power sector CCS: how much should we pay for technology development? Should we pay more for power if it helps to commercialise an essential technology for industry? And how much should industry pay?
Our new analysis shows that using the infrastructure developed for power sector demonstration projects to create wider industrial CCS clusters would alleviate some of the pressure, bringing the cost of CCS in line with other large scale low carbon technologies:
The map below shows the large volume of relatively low cost CO2 available in the vicinity of the proposed White Rose power plant. Capturing this as part of a cluster could cut the cost of CCS per tonne by nearly two thirds, and increase the amount of carbon abated nearly nine-fold, compared to the demonstration project on its own. Equally importantly, such a cluster would help industry to compete in a much lower carbon economy.
CCS for industry will help to bring down the overall cost
There is a catch. Building a whole CCS cluster would cost around four times in total as much as a single project. And, in absolute terms, the numbers are big: £20 billion in total expenditure for the cluster, compared to £5 billion for the power project alone. This isn’t a uniquely large amount of money: other low carbon projects, like the Hinkley C or large offshore wind farms, are comparable in cost. But our analysis shows that current grants, EU funds and electricity contracts for difference won’t be able to support a cluster.
Our conclusion is that government should raise its bets: spending more on CCS looks very likely to reduce the cost of decarbonisation. The key question for policy makers is how to allocate the costs across the electricity and industrial sectors, and how to refocus policy to foster competition between different means of capturing CO2 to drive down the costs for industry.
Decarbonising British industry: why industrial CCS clusters are the answer is published today