Select Committee on Environmental Audit Written Evidence

Memorandum submitted by Air Products PLC


  Future energy policy in the UK must take account of the following imprtant factors:

    —  The security of supply of primary fuels and energy sources.

    —  The relative cost of fuels and derived energy.

    —  The mix of fuels required to satisfy the demands of industry, commerce and the private sector.

    —  The ability of users and fuel suppliers, such as electricity utilities to use alternative primary fuels such as coal, natural gas, petcoke, bitumen, renewable sources, etc based on the flexibility of their systems.

    —  The constraints imposed by the requirement to meet our Kyoto objectives for greenhouse gas emissions, particularly CO2.

    —  Our requirement to limit emissions of other atmospheric pollutants, particularly SO2, NOx and particulates, which is focussed on the large plant directive which will compel all existing power stations still in operation by 2012 to meet stringent emission targets.

    —  The effect of the European carbon trading system on the value of traded CO2 allowances, which will govern the incentive for organisations to undertake CO2-free power and fuel production.

    —  The need to include carbon capture and storage in the CO2 trading regime.

    —  The cost of renewable energy, particularly wind power, compared to the cost of CO2 capture and storage from a modern fossil fuel power station, either by retrofit of an existing station or in a newly built station.

    —  The necessity to introduce a tax regime for tertiary oil recovery from CO2 injection which will be sufficiently generous to the oil companies to ensure that they have a powerful incentive to store CO2 in North Sea oil fields by practising enhanced oil recovery (EOR).

    —  The need to finance a network of large diameter high pressure CO2 pipes so that captured CO2 can be transported offshore for disposal.

    —  The need to continue to focus on energy efficiency. Appropriate consideration should given to the effectiveness of price mechanisms rather than subsidising fuel costs for sectional interests.

    —  The complex question of the future for nuclear power in the UK, which involves cost comparisons, the availability of uranium, the problem of plutonium production, particularly from breeder reactors as a means of extending the availability of nuclear energy for thousands of years, the current problems of nuclear proliferation, the question of nuclear waste disposal and spent fuel reprocessing and all the concomitant social and political pressures.


  The most profound changes to our current fuel usage scenario will be caused by the necessity to limit greenhouse gas emissions, particularly CO2, and the cost and availability of secure sources of fossil fuels in the future. The current philosophy set out in the Energy White Paper calls for 20% reduction in CO2 emissions compared to 1992 by 2020 and 60% by 2050. The energy White Paper, based on Markal modelling with assumptions for efficiency improvements, primary fuel costs and growth rates in the future, predicted these reductions were possible with a large growth in renewable energy, particularly wind power, a large and continuing achievement of efficiency gains across industry, commerce and the private sector and a very large increase in the use of natural gas with coal consumption being progressively reduced. The predictions even allowed for the phase out of nuclear powered electricity generation with no planned replacement programme.

  The assumptions on which the White Paper was based have proved to be either based on optimistic judgements or on gross changes in the projected costs of primary fossil fuels.

2.1  Wind Power

  The optimism on the projected capital cost of wind power and its on-stream factor, its effect on the electricity transmission system, its unpredictability and the effect on the environment appear to have been recognised. It is a very low-intensity electrical generation technology requiring substantial areas of land or sea to be covered by wind farms. The cost burden of the existing and projected installations will have to be borne by the consumer, with whatever consequential impact on the competitiveness of UK industry and commerce. The programme of investment in wind energy should be reviewed and its costs, characteristics and performance put on a competitive basis with carbon capture and storage ("CCS") using fossil fuel electrical generation systems. The share of future R & D for wind should be appropriate to wind's objectively determined potential to contribute to the UK's future energy sourcing. The subsidies currently available for wind should be made available for CCS projects, and the lowest-cost solutions will then be naturally identified and pursued. Wind power and other projected renewable energy solutions certainly have their proper place in the UK energy scenario serving markets remote from large base load power generation, but their suitability for provision of large proportions of our current and future power demand must be validated

2.2  Nuclear Power

  It is conceivable that nuclear power will largely replace fossil fuel sources of energy for the generation of electricity in the far future: it is capable of providing, through electrolysis, or thermal generation chemical cycles, the hydrogen transportation fuel of the future; it is CO2-free in operation; we can store enough fuel for a year's operation in an area the size of a football pitch. The real question concerns the need to use this technology now. There is wisdom in keeping a proportion of our electrical generation capacity as nuclear and this will require that we plan appropriately now, allowing us to retain expertise in an energy system of the future. This will probably require an examination of our philosophy of nuclear waste disposal—including examination of global options. The complex social and political issues outlined in the introduction are, of course, relevant to the immediate future and will be of prime importance in any decision to implement a new nuclear programme in the UK. On the technology side, we need to choose reactor systems of the most advanced kind which will offer very long life, good economics and low decommissioning costs. Safety and public acceptability for the whole system are of paramount importance.

2.3  Fossil Fuel Power

  We are currently producing about 75% of our total electrical demand and all of the fuel for our transportation systems and space heating from fossil fuels: coal, oil and natural gas. All of this fossil fuel consumption generates CO2 which is discharged into the atmosphere. Anthropogenic CO2 emissions worldwide are now recognised as being the prime cause of global warming. The huge volume of research into the aspects of climate change reinforces this view.

  Inevitably, fossil fuels will continue to provide a primary source of energy for mankind for the foreseeable future. If we are to have a sustainable future we must implement profound structural and technological changes in the way we use fossil fuels to largely eliminate the emission of greenhouse gases, particularly CO2, to the atmosphere. This can be done in a positive manner by capturing CO2 at the point at which the primary fossil fuel is burned and conveying the CO2 to a storage site where it can be permanently stored with complete integrity for the future. This process of carbon capture and storage (CCS), with all of its complexities, is applicable to both electrical generation and to the production of hydrogen as the transport fuel of the future.

  Power stations burning fossil fuels are massive point emissions sources of CO2. In 2003 Drax power station emitted about 21 million tonnes, roughly 3% of the total UK CO2 emission. The major UK power stations are obvious first choices for CO2 capture. We must consider the problem of retrofitting existing power stations such as Drax with CO2 capture systems as well as the problem of building new fossil fuelled power stations with CO2 capture. The major effect of CO2 capture is to reduce the efficiency of electrical power generation and impose a large increment of capital cost. This results in a large increase in the cost of electricity. We must also take into account the price of different fossil fuels. We could reduce our CO2 emissions drastically by generating all our fossil fuel electrical energy from natural gas, which has about one third of the CO2 emission per kWh of electricity compared to coal. Unfortunately, natural gas prices have been rising sharply and they are likely to be very much higher than coal in the future.

  The question of fuel diversity and security of fuel supplies is also relevant. It is hard to conceive of a viable future in which the UK does other than generate a substantial proportion of its electrical power from coal. We should retain our existing coal fired power stations, modifying them for clean operation with CO2 capture and upgrading their systems to improve basic efficiency and minimise the cost of implementing CCS. "New builds" for electrical generation must look carefully at the alternative systems available and compare total lifetime system costs for available fuels and technologies. This analysis will be possible only if there are stable values for CO2 credits and if the cost of CO2 storage is fixed for the life of the investment. Predicting future fuel costs when making decisions on new capacity is very difficult given the volatility of the future primary energy markets, particularly if demand continues to grow at the current pace and new fossil fuel sources become scarcer and more expensive to exploit. The question of fuel diversity may become paramount in choosing the fuel for new capacity.

  The use of hydrogen as a future transportation fuel will enable fossil fuels to be efficiently converted to hydrogen in large centrally located plants with capture of carbon dioxide. The generation of hydrogen from fossil fuels is a well established technology which is capable, now, of meeting all possible future requirements. Research will concentrate on improvements in equipment and efficiency to reduce hydrogen generation costs. The main research efforts will concentrate on the hydrogen engine technology, using fuel cells and electrical drive systems, and advanced internal combustion engines. Very high efficiencies are possible. Currently, the UK is not contributing significantly to this new research area, which requires very good collaboration between industry and academia. We propose that Government strives to set this objective as one of the primary goals for our future UK research efforts. There are also challenges in the requirements for an efficient hydrogen supply system, using pipelines, delivery as liquid hydrogen or as high pressure compressed gas. There is also the need for further development of storage systems in the vehicle. Again, collaborative programmes are required.

2.4  CO2 Storage

  The UK is very fortunate in having the North Sea oil and gas fields as ideal storage sites for CO2. The first choice for disposal of CO2 offshore would be to use the CO2 for tertiary oil recovery. A recently announced plan for CO2 enhanced oil recovery in the Miller field envisages a recovery of an extra 40 million barrels of oil over a 20 year period by injecting about 1.25 million tonnes/year of CO2 into the field. This equates to about 1.6 barrels of oil per tonne of CO2 injected. Recent statements from oil industry sources suggest that current investment plans are based on an oil price of about $40/barrel in evaluations—a price which should ensure a positive value for high pressure pure CO2 delivered to an offshore oil field. To ensure that this technique is widely used, the Government should consider review of the tax treatment for oil produced by tertiary means using CO2 enhanced oil recovery techniques. There are four major benefits to the UK from CO2 EOR: firstly, the life of North Sea oil fields is extended; secondly, it ensures we have a very positive and continuing saving in our import bill; thirdly, even with concessions, the Treasury will secure a large amount of future tax; and fourthly, the very large cost of decommissioning old oil platforms in the North Sea, part of which must be paid for by the Government, will be deferred for a considerable period.

  The Government should consider supporting the construction of a CO2 pipeline grid connecting large power stations in the UK to the North Sea oil fields.

  The technology required for pipeline transportation of CO2 and its injection into oil fields for EOR is well understood and has been practised in the US for decades. Currently, about 50 million tonnes/year of CO2 is injected for EOR. It would appear that many of the North Sea oil fields could produce additional oil using CO2 EOR. The capacity of the North Sea reservoirs is sufficient to store all fossil fuel derived CO2 for over 100 years and there are also saline aquifiers which could be used for storage. Of great significance to the use of CO2 EOR in the North Sea are the recent developments in directional drilling techniques, which will greatly facilitate the injection of CO2 into the ideal location in a field and the rapid build-up in production of additional oil which will result.


  The Directorate of the International Programme on Climate Control, together with a group of authors who are world experts in their various fields, has produced a major report on Carbon Dioxide Capture and Storage, which will be launched at the forthcoming Montreal Conference on Climate Control. This report gives a complete and up-to-date summary of the current status of the technology, the legal position and projected economics of carbon dioxide capture and storage based on an analysis of all available published data in the world. It is the document which the Committee should use when they consider current technology and economics. It also contains valuable projections of the likely direction for future technology developments.

  This report can be used to assess the technical viability of CCS as a carbon abatement technology for the UK. The summaries which have been produced as part of the report should be particularly useful to the Committee members.


4.1  The Current State of R & D and the Deployment of CCS Technologies

  CO2 capture from fossil fuels uses one of the following technologies.

Post combustion CO2 capture

  The waste gases from fossil fuel combustion are treated to remove CO2 before being discharged to atmosphere. The best means for CO2 separation is the use of an amine scrubbing fluid, which reacts with the CO2. The CO2 is separated from the amine using a steam heated regeneration step and the amine is recirculated back to the scrubbing tower. Equipment sizes are very large and the steam consumption for regeneration is also large, affecting power station efficiency. In addition, the amines are prone to attack by other impurities in the flue gas, such as SO2 and NOx, producing solid salts which must be removed and treated. This technique is well established for CO2 removal in hydrogen production systems and has been used on power station flue gases on a small scale.

  Scale-up studies and costing have been carried out. The technique could be deployed now on a large power station using existing technology. Research has been on-going for decades to obtain better amine formulations and improve equipment design and performance. Breakthroughs in technology are unlikely, but some future cost reductions are possible.

Precombustion CO2 Capture

  The fossil fuel is converted to hydrogen and carbon dioxide in a high pressure reaction with oxygen or with steam and oxygen or with steam plus external heating. Catalysts are used to enhance reaction rates. The CO2 is separated from the gas mixture using liquid phase scrubbing with a chemical absorbent such as an amine or a physical absorbent such as cold methanol. Other methods of CO2 separation used include a solid adsorbent in a multi-bed cyclic process or, less commonly, by using membranes.

  The process of large scale hydrogen manufacture from fossil fuels is the most highly developed method available for CO2 capture. It has been practised on a very large scale for decades, producing hydrogen for ammonia and methanol and for hydrotreating in the petroleum refining industry. Future research will involve new catalysts, new reactor designs, improved CO2 separation systems and better process integration. The system can be used for any primary fossil fuel or for waste fuels such as petroleum coke or bitumen, or for biomass.

  The largest natural gas based systems are currently being commissioned for conversion of natural gas to synthesis gas (hydrogen plus carbon monoxide) which is then converted to liquid transportation fuel using the Fischer-Tropsch process. Plants are being constructed in Qatar and Nigeria using remote gas deposits. This size of plant could produce hydrogen for large (300MW plus) power stations. The hydrogen would be available as a carbon free fuel for use in a such gas turbine combined cycle electricity generation systems or it could be used as a transportation fuel.

  Coal gasification with CO2 removal producing pure hydrogen has been demonstrated on a large scale and can be implemented now for new power stations. H2 from coal as a transport fuel would also break the monopoly position of oil.

Oxyfuel Combustion

  As its name implies, this technique involves the combustion of a fossil fuel with pure oxygen. The combustion temperature is moderated by either recycling flue gas or by adding a diluent such as steam or water to the gases in the burner. Current studies on oxyfuel systems mostly relate to coal fired pulverised fuel power stations. The technology is ideal for conversion of existing coal fired power stations to CO2 capture. It competes with the amine based post combustion capture option. At Air Products we have devoted significant efforts to study this technology. We believe it will have very significant cost and operating advantages compared to amine based flue gas scrubbing. This should become apparent with current studies commissioned by the DTI on retrofitting UK power stations such as Ratcliffe and Drax and by the DTI and the Canadian Clean Power Consortium on a new build 400MW coal fired station in Canada. Both these studies will include both oxyfuel and amine based systems for comparison. The oxyfuel system has not been demonstrated at any real scale except in lab scale tests. These have concentrated mainly on burner performance. The oxygen production, although very large, uses proven technology at the scale required for a 500MW boiler. The burner design would require testing on existing test rigs at large scale (such as the Mitsui-Babcock testing facility at Renfrew).

  We believe it is entirely feasible, using current technology to retrofit a 500MW boiler such as one of the Ratcliffe boilers. The grouping of Mitsui-Babcock, Alstom, E.On and Air Products would be capable of executing a retrofit contract which would include: a Mitsui-Babcock advanced supercritical steam boiler rebuild; a modified steam turbine system designed for the new supercritical steam conditions and supplied by Alstom; a new cryogenic oxygen plant and a combined CO2 compressor and CO2 purification system supplied by Air Products. The combination of a boiler/steam turbine upgrade plus the oxyfuel conversion would ensure CO2 capture and delivery to a pipeline system at high pressure with only a very small reduction in overall station efficiency.

  There is a need for further R & D on oxy-fuel systems, particularly covering the effects of CO2 rich gas streams containing increased levels of SO2 on corrosion, the problems of sulphur dioxide and nitrogen oxide removal and burner design. Future developments in oxygen production using high temperature ceramic membranes will significantly reduce CO2 capture costs and make oxyfuel a clear winner for low cost CO2 capture from coal fired power stations. This technique of oxygen production is in the pilot plant stage in the US in a programme led by Air Products. There may be opportunities for demonstration in Europe in the future. A 30MW oxyfuel boiler demonstration is currently being constructed by Vattenfall in Germany and another 30MW test is planned in Australia. A 500 MW boiler conversion in the UK would produce about 3.5 million tonnes/year of CO2 and would need to be linked to a CO2 EOR project in the North Sea.

  There is significant scope for further efficiency improvements and capital cost reduction using oxyfuel systems in coal-fired pulverised fuel ("PF") power stations. Air Products has been developing technology which aims to raises the overall efficiency of the system with CO2 capture to above 40% compared to the Ratcliffe current efficiency of about 38% without CO2 capture. These developments mean that the oxyfuel system is capable of giving about the same overall cost of electricity generation as the IGCC system now and that further developments will continue to ensure its competitive position in the future. It could be a system with huge export potential, particularly to China, which is installing a very large amount of coal fired electrical generation capacity, based on conventional PF coal fired power stations.

  There is one other area of oxyfuel technology which must be mentioned as a route to low cost, high efficiency power production with CO2 capture. It is the direct combustion of a gaseous fuel with pure oxygen and preheated water at very high pressures to supply ultra high temperature, high pressure steam plus CO2 directly from a compact burner with no requirement for a boiler. The steam/CO2 mixture would be expanded in turbines producing electrical power with pure CO2 produced from the steam condenser. Efficiencies of over 50% are possible, with low capital cost. This is another area which could be developed in the UK.

4.2  Deployment of CO2 Capture Technologies

  The three major CO2 capture technologies could all be deployed now in a large scale demonstration using current technology. R & D should be planned for cost reduction and other improvements in the construction of follow-on facilities. CO2 capture does not require any R & D period before its first large scale implementation. The first plants require good project planning based on careful preliminary design and evaluation in order to control overall project costs and performance.

4.3  Costs

  The likely costs of CO2 capture and storage have been carefully analysed based on published information and they are presented in the IPCC report on CO2 capture and storage, which is currently in the hands of the Government and will be published in December 2005 following the Montreal conference.

4.4.   Geophysical Feasibility

  We are not qualified to comment on this area which is dealt with at length in the IPCC report.

4.5  Other Obstacles or Constraints

  There must be sufficient incentives for the investments which must be made to introduce CCS for fossil fuelled energy systems. The incentives will be required to be assured for the life of the investments.

  We would urge that CCS and nuclear be competitively evaluated on exactly the same basis as renewable energy in terms of life-cycle carbon abatement potential and overall cost of electricity produced. It would be a distortion if there were to be economically and environmentally unjustifiable subsidies for renewables which have no inherent moral superiority over, for example, fossil-fuel-based systems.

  There is clearly a necessity to inform the general public of the issues involved. Pressure groups clearly have their place but their views should be balanced by dissemination of information, and informed opinion, based on objective evaluation of the economic, scientific and engineering realities pertinent to the debate.


  The role of the UK Government in funding issues should be seen in the context of funding provided by the European Union. We must be aware of the fact that CCS technology and implementation is a global issue and that although the UK has some special characteristics, these are minor in the context of overall development of the technology. The major source of potential funding for the UK programme could be made available under the EU FP-7 programme. To attract this funding, it is necessary for all interested UK bodies, industrial technology and equipment suppliers, power companies, oil companies, natural gas suppliers, motor companies, universities and any other institutions or organisations to link with groups in other EU countries to form the necessary project or research focused interest which can be the basis for an application for funding under FP-7. This process of building a group focused on a relevant topic is the only way in which funds can be readily obtained from the EU. The opportunity also exists now to influence the level of overall funding which will be allocated to CCS topics in FP-7 and also to influence the guidelines setting out the objectives of FP-7 in the CCS area.

  Our links with programmes on CCS in the US and Australia, in particular, through international organisations and treaties may allow us to participate in a minor role in important research. Of particular interest, in this context is the US FUTUREGEN programme on high efficiency power generation, using coal fuelled oxygen based gasification with a combined cycle gas turbine system. The CO2 will be removed and used for enhanced oil recovery. This programme targets a completed demonstration plant by 2012. It might be considered ill-judged to to duplicate this work by funding IGCC coal-based power stations in the UK. We could gain much by joining the FUTUREGEN programme as a partial funder of the work in return for the research and design data. We, the UK, could also provide some of the technology and possibly even some of the equipment—and we might also obtain some of the associated research contracts. We should consider carefully before supporting the building of expensive IGCC systems in the UK based currently known technology.

  Our strength lies in our knowledge of oxyfuel and amine based technology for CO2 capture applied to PF coal fired power stations. We also have good indigenous technology in hydrogen production on a very large scale. These, together with our ability to demonstrate CCS as a complete system with valuable benefits from CO2-based EOR, should form the basis for our research contribution. The Government role could be to co-ordinate our efforts in these three areas and help set up the combined industrial/commercial/academic groups needed to secure large scale EU funding. One important programme might be a full scale demonstration of CCS with CO2-based EOR based on a retrofit programme on a 500MW set at Ratcliffe power station, for example. This would probably cost about $750 million. This is the level of funding required to implement just one of the new technologies under consideration. Given the right incentives, industry and the power companies will provide funds but launching new technology like this requires a grant of probably 50% of the cost for the first installation. If the UK were to take a lead in large scale CCS demonstration there is a good chance that funding could be obtained from the US and possibly also China. Only by globalising our common efforts in this way will we achieve rapid progress, worldwide, in implementing CCS technology.

  I would also like to draw to the Committee's attention the formation of a new major activity soon to be launched by the Imperial College of Science and Technology, London, called "The Future Energy Lab". Imperial College is, in my opinion, our major UK technological Institute. It can act as a very powerful focus for future research and development in the CCS area. It would have the ability to co-ordinate R & D in this area in the UK and act in an overall management role with participation from UK industry, commerce and other Universities, etc. It also has established links with overseas institutions particularly in the US.

30 September 2005

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 16 April 2006