Carbon capture and storage (CCS) is a vital part of the global effort to tackle climate change. The technology consists of three parts; capturing carbon dioxide (CO2) emissions from power and industrial emitters, transporting the CO2 via pipeline or ship, and – finally – permanent storage of the CO2 in depleted oil and gas fields or deep saline formations.
Over the years, a growing body of evidence has concluded that without CCS in the mix, it will be almost impossible to meet global climate change targets and that attempting to do so would increase costs substantially.
The Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment report estimated a 138% increase in costs, whereas the Energy Technologies Institute (ETI) calculated that in the UK, the cost of meeting targets without CCS could rise by £32 billion per year in 2050. These are very significant amounts.
The benefits of CCS are far-reaching. In the power sector, CCS enables coal and gas to play an important role in the low-carbon electricity mix – providing vital flexibility alongside inflexible nuclear and intermittent renewables. CCS is also the only option for reducing emissions from energy intensive industries, due to the fact that many of these industries produce CO2 as part of their processes. If we wish to retain the 160,000 direct jobs and £95 billion turnover that these industries support then CCS is an absolute necessity.
Turning to oil and gas, there are some obvious synergies between this sector and CCS. Firstly, depleted oil and gas fields contain significant capacity to store carbon dioxide from CCS plants – so this represents an opportunity to re-use vital infrastructure, which reduces costs and delays decommissioning. Secondly, the skills and expertise that exist in the UK’s world-class oil and gas sector are the ideal skill-set for furthering CO2 storage – ensuring the retention of a crucial workforce in the UK.
Finally, CO2 from CCS can be used for Enhanced Oil Recovery – a technique that has successfully been practiced in the US for more than 30 years, yielding a third more oil than would otherwise have been recovered.
The CCS industry in the UK is currently in a state of disarray. The Government launched a CCS Competition (with a £1 billion capital grant) in 2012, and two preferred bidders were subsequently chosen – the White Rose coal-CCS project in Yorkshire and the Peterhead gas-CCS project in Scotland.
Government was due to make a final decision on whether to proceed with these projects early next year. However, on 25 November, the Chancellor announced the 2015 Spending Review. CCS was not mentioned in the Chancellor’s statement, nor could it be found in any of the supporting documentation. However approximately one hour after the Chancellor’s statement, the Government announced to the London Stock Exchange that:
“[T]he £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available. This decision means that the CCS Competition cannot proceed on its current basis.”
To say this came as a complete shock to the CCS industry would be a gross understatement. Companies are now taking stock and attempting to understand what this means for their business, as well as for the future of CCS in the UK. One thing is certain, the impact on industry confidence has been devastating and there is a real danger that the development of CCS in the UK will be delayed by at least a decade.
A significant delay to CCS has serious ramifications for the ability of the UK to meet climate change targets, decarbonise its energy intensive industries and maintain a leading role in the global implementation of the new Paris Agreement that was signed at COP21 only a few months ago.
It is now absolutely crucial that Government urgently comes forward with a clear unambiguous statement on its ambitions for CCS in the UK. We need to ensure that valuable lessons are learnt from the Competition, enabling the UK to move forward and work with other potential CCS projects to bring these to fruition.
The case for CCS is as strong as ever, and the UK therefore now has a responsibility to ensure that this vital technology can be developed. ■
Carbon Capture & Storage Association (CCSA)
From Adjacent Oil & Gas 2, February 2016