Memorandum from the Government
1. The Government welcomes the Committee's
interest in Carbon Capture and Storage Technology. We are pleased
to provide the Committee with copies of the reports we have undertaken
over the last three years investigating this topic and look forward
to appearing before the Committee in due course.
OF UK GOVERNMENT
2. Government's responsibility for Carbon
Capture and Storage (CCS) Technologies rests with the Minister
for Energy in the DTI with the Energy Group taking overall responsibility
for the development of Government policy to stimulate the Research,
Development and Demonstration of these technologies so that they
can eventually be brought to market by industry. The Office of
Science and Technology (OST) allocates Science Budget funding
to the Research Councils
who are responsible for decisions on the scientific merits of
specific investments in basic, strategic and applied research
in universities and Research Council institutes including those
into CCS which leads eventually through to industrial R&D.
DEFRA also has an interest in these technologies from the point
of view of their potential to reduce carbon emissions both here
and elsewhere in the world from the use of fossil fuels.
3. Over the last three years we have undertaken
a number of studies into the feasibility of CCS. These have resulted
in three reports being published which are available on the DTI's
website. These reports were:
Review of the Feasibility of Carbon
Dioxide Capture and Storage in the UK (published September 2003),
Implementing a Demonstration of Enhanced
Oil Recovery Using CO2 in the North Sea (Published
May 2004), and
Carbon Abatement Technologies Strategy
for Fossil Fuel Use (published June 2005).
All were developed in consultation with industry,
academia and the NGOs. The third report, the Carbon Abatement
Technology (CAT) Strategy for Fossil Fuel Use, drew on the work
of the first two studies and from a Consultation exercise undertaken
during 2004. The Advisory Committee for Carbon Abatement Technologies
(ACCAT), a Nolan body comprising of industry and academic experts
as well as representatives from DEFRA and the Treasury, oversaw
the development work of the CAT Strategy (a list of ACCAT membership
is at annex A). To obtain expert advice for the production of
the other reports special ad hoc advisory groups were established.
4. The "Review of the Feasibility
of Carbon Dioxide Capture and Storage in the UK" was
backed up with a number of studies into various aspects of CCS.
The output from these studies can be found at: http://www.dti.gov.uk/energy/coal/cfft/co2capture/index.shtml.
The Report concluded that fossil fuels will continue to be a major
source of energy for both the UK and the rest of the world for
decades to come and that a means for radically reducing the carbon
emissions from their use will be needed if the UK is to meet its
target of a 60% reduction in emissions by 2050. CCS offered a
way to make radical cuts in these emissions. The report's key
The UK has substantial geological
storage capacity for CO2 in its sector of the North
Sea with depleted oil and gas wells and also deep saline aquifers.
There are also opportunities for
Enhanced Oil Recovery (EOR) using CO2 in the North
Sea fields although the costs at the time made this uneconomic.
A concern was the very narrow window for exploiting this opportunity
before fields were decommissioned.
The costs for CCS were estimated
to add around 1.0-2.3p/kWh to the cost of electricity which still
made it competitive with other large scale carbon abatement options.
However, the costs need to be substantially reduced through innovation,
especially the cost of capture, which is about two-thirds of the
total costs of CCS. International research indicated significant
potential for cost reduction through innovation.
Market incentives would be required
to stimulate the take-up of these technologies, including rewards
for the carbon abated under the EU's ETS.
International collaboration to develop
these technologies will be important and the UK has a leading
role to play. We are already founder members of the USA lead Carbon
Sequestration Leadership Forum and active in IEA bodies which
have an interest in CCS.
The potential for reliable and safe
storage of CO2 in the geological strata beneath the
North Sea needs to be demonstrated if public concerns are to be
alleviated. Despite successful storage projects at Sleipner and
Weyburn, current knowledge on the long-term effects (over 100s
of years) is insufficient to be totally confident that storage
would be possible over millennia. Further geological modelling
is required in this area to give assurances.
Legal issues need to be resolved,
in particular both the OSPAR and London Conventions on dumping
at sea need to be either clarified or amended to allow CO2
storage. However EOR is already permitted as in this context CO2
is deemed a working gas for incremental oil and natural gas recovery
and not ostensibly storage.
A regulatory regime will need to
be developed in collaboration with other countries around the
North Sea rim to control the storage of CO2 and to
monitor its behaviour and to give warning of any leakage.
Public awareness at the time was
low and it was important that the facts about CCS should be well
Although the component technologies
for CCS were already available and deployed worldwide they had
not been demonstrated together in an integrated power generation
The Report recommended a programme of work and
activities to address the above issues which would take forward
5. The Report "Implementing a Demonstration
of Enhanced Oil Recovery using Carbon Dioxide" arose
from a 2003 Energy White Paper commitment to assess the potential
for demonstrating CO2 Enhanced Oil Recovery (EOR) as
a pathfinder for the commercial deployment of CCS technologies
in the longer term. Copies of this report can be found at: http://www.dti.gov.uk/energy/coal/cfft/eorreportfinal.pdf.
This report concluded that with little industry
support for such a demonstrator it would not be feasible to press
ahead with such a project. This conclusion was arrived at despite
its potential to provide a return on the capital investment through
the extra oil recovered, and the general acceptance that it would
be permitted under both the London and OSPAR Treaties. Key issues
which mitigated against support for a demonstration plant were
at the time were:
Oil companies already had the knowledge
to develop a CO2 EOR installation and that a demonstration
project would not add value to this knowledge. The problem was
more that CO2 EOR was not commercially viable at the
The level of support required to
bridge this economic gap was uncertain although companies thought
that the EU's Emissions Trading Scheme would not be sufficient.
The Report finally concluded that EOR was worth
considering over a longer timescale as a base for demonstrating
CCS and it should be included in an overall strategy for the development
of cleaner fossil fuel use. It would therefore be incorporated
into the new CATs Strategy being developed at the time by the
6. "A Carbon Abatement Technology
Strategy for Fossil Fuel Use" was announced by the Minister
for Energy Malcolm Wicks on 14 June 2005 and represents the culmination
of the research which the DTI has undertaken over the last three
years into CCS and other low carbon technologies. The Report can
be found at http://www.dti.gov.uk/energy/coal/cfft/catstrategy.shtml
along with the results of the Consultation which was undertaken
as part of its preparation. Copies of the Strategy should also
be available in the House of Commons Library.
Besides the public Consultation and the overall
direction from the ACCAT, the Energy White Paper modelling work
used to forecast the energy portfolio out to 2050 was extended
and updated to accommodate the various Carbon Abatement Technologies
which could contribute to the Government's 2050 target of a 60%
reduction in carbon emissions compared to 1990. The Strategy developed
the following overview:
It was certain that the UK as well
as the rest of the world will continue to be dependent on fossil
fuel for power generation for decades to come. In fact, IEA forecasts
indicate that by 2030, world-wide demand for energy will grow
by 60% with fossil fuel's share being maintained at around 80%.
This implies that CO2 emissions will increase by 62%
over this period. In particular power generation capacity will
need to increase by 1,300GW by 2020 to meet demand.
Developing economies such as China
and India will be in the vanguard of this growth with fossil fuel
use accounting for about two thirds of their electricity generation.
In China alone this year they are building around 30GW of coal-fired
capacitythat is just under half the total power generation
capacity of the UK. Hence the UK taking a lead to encourage the
adoption of cleaner fossil fuel technologies in the rest of the
world will be important.
The UK only accounts for 2%
of global CO2 emissions so any domestic contribution
will be marginal. Assuming 20% of energy sources come from renewables
and with no nuclear build, DTI energy projections suggest that
around 75% of our electricity will come from fossil fuels compared
to 70% in 2000 although much of this will be from natural gas.
The underlying conclusions from this are that
fossil fuels will be a major source of energy for decades to come
and that to meet our climate change targets they have to be used
much more cleanly than at present and therefore technologies need
to be developed and brought to market which makes them environmentally
acceptable. For the UK, the modelling work demonstrated that to
meet the 60% target by 2050 under a number of scenarios CCS would
need to be deployed to some degree.
The Strategy identified three technology areas
which could deliver carbon savings from fossil use. These covered:
Higher efficiency power generation.
Co-firing with lower carbon
fuels such as biomass.
Carbon Capture and Storage (CCS).
The first has the potential to yield some 20%
in carbon savings. The second around 10% whilst CCS, the most
radical of the options and the least commercially developed, has
the potential to deliver up to 85%.
For CCS two key threads of activity are required
before it could come to market:
Carbon Captureboth capital
and running costs need to be reduced to make the technology commercially
competitive. Also the impact on plant efficiency needs to be reduced.
There is a linkage to improving power generation efficiency to
offset the impact of capture. Box 1 of Chapter 3 (page 25) of
the Strategy illustrates this twin track approach which is essentially
a technology/commercial viability issue requiring R&D and
a very different problem, which is to demonstrate that CO2
can be geologically stored both safely and reliably. This issue
raises a number of issues linked to:
public acceptability not just by
the green NGOs but also by the public in general;
gaining recognition in the London
and OSPAR Conventions on dumping at sea;
the need to develop a regulatory
regime for the control of storage, the monitoring and verification
of the stored CO2 and its long-term ownership; and
earning credits under the EU's Emissions
Trading Scheme which would provide some reward for abating the
The Strategy also recognises that support from
Government will be necessary if CCS is to become a viable technology
and it identified a number of tasks which will be required to
take this forward. These include:
(i) development of a roadmap (to include
a sources and sinks for CO2 study),
(ii) support for R&D and demonstration,
(iii) facilitating international collaboration,
(iv) developing a knowledge base to support
the develop and deployment of the technologies,
(v) examining possible measures to encourage
the early commercial scale deployment of CCS,
(vi) developing a regulatory framework for
CO2 storage, and
(vii) increasing public awareness and understanding
7. At the launch of the Strategy the Government
announced that £25 million for would be made available for
one or more Carbon Abatement Technologies demonstration project
which could include CCS and also be available for the other two
technology areas. This is in addition to the £20 million
allocated from the current spending round for R&D over the
period 2005-06 to 2007-08. The Research Councils have also recently
awarded £2 million towards a "UK Carbon Capture and
Storage Consortium". (Further details on this and other Research
Council investments in CCS research are set out in the separate
RCUK Memorandum). Work is advancing on all these activities.
8. Many of the technologies needed to deploy
CCS are already used in a number of applications although they
have not been completely brought together to demonstrate the entire
process. It is generally acknowledged that CCS has reached the
stage where it needs to progress from small scale research and
prototype development to near to full scale demonstration in order
to give impetus to the innovation process and gain the benefits
of "learning by doing".
9. CO2 capture technologies have
been used in number of applications over recent years. An example
is the Great Plains Synfuel Plant in North Dakota, USA, where
coal gasification with CO2 separation is used, although
the output is chemicals such as hydrogen rather than power generation.
However the separated CO2 is piped some 330 kilometres
to the Weyburn oil field in Canada for Enhanced Oil Recovery purposes.
10. The Sleipner gas field in the Norwegian
sector of the North Sea is an example of CO2 storage
where StatOil are sequestering around one million tonnes of CO2
per year into a saline aquifer. The Norwegian fiscal regime for
offshore CO2 emissions provided the incentive for this
11. Likewise BP have been taking a lead
in developing CCS technologies. They already have a plant in Algeria
at the In Salah gas field where they are stripping the CO2
from the natural gas and re-injecting into the field. They also
are in discussions with the DTI about a project they are undertaking
with Scottish and Southern Energy involving the Miller oil filed
and the Peterhead Power station. A feasibility study is looking
at taking natural gas from BP fields, removing the CO2
to form hydrogen which would be used to generate electricity at
the Peterhead plant. The CO2 would be used to enable
the recovery of additional oil from the Miller field. BP say that
the project can only be successful if they have a market incentive
equivalent to the Renewables Obligation. The question of market
incentives for CCS is currently being looked at within the Climate
Change Programme Review although it is clear that such an incentive
has to be generic rather than aimed at a particular project.
12. A complete CCS process has not yet been
demonstrated in which the CO2 is captured from a fossil
fuel power plant, transported to a storage site and injected.
A number of projects are already being developed to demonstrate
this, in particular the USA's FutureGen project which aims to
generate electricity from a coal-fired power plant with near to
zero emissions. The US Government estimates that this first-of-a-kind
power plant will cost $1 billion although subsequent plants will
cost less. The EU is also considering such a project although
not as advanced as the US work. It is generally estimated that
these CCS plants could be operational by 2015. The CAT Strategy
estimates that a CCS plant in the UK with storage in the North
Sea could be possible by 2020, assuming the issues identified
in the Strategy have been resolved.
13. Cost estimates produced by the DTI suggest
that CCS are likely to be competitive with other sustainable technologies
by 2020. Significant capital investment however would be needed
for both the capture technology and to develop the infrastructure
for CCS. Particularly as pipe work infrastructure would be required
to take the CO2 from the source to the storage site
in the North Sea with installations being required for injection
14. Evidence from around the world indicates
that with careful identification of storage sites it should be
possible to store CO2 both safely and reliably. Sleipner
has for the last nine years been using a saline aquifer in the
North Sea some 800 metres below the sea bed and with monitoring
technology has been able to show that the CO2 does
stay put. Additionally other projects, primarily for EOR, have
shown that with careful selection of the site the CO2
can be sequestered successfully. Supporting this evidence is the
fact there are numerous natural CO2 fields around the
globe where it has been stored for millennia. This suggests that
provided the right storage sites are selected and injection wells
are effectively plugged so the CO2 is permanently sealed,
CO2 storage should be reliable. However more evidence
may be required to ensure confidence that CO2 can be
stored for very long time scales (1,000 years and longer), through
appropriate demonstration projects.
15. It is generally considered that over
the next five to 10 years considerable work will be required to
address the technical and non-technical issues to make CCS a viable
option for sustainable power generation. In addition to the issues
covered above the legal issues arising from the London and OSPAR
Conventions will need tobe resolved and the DTI working with DEFRA
have already initiated studies within these conventions examining
the environmental issues. Work at the EU level is also progressing
on the monitoring and verification standards which would enable
CCS to qualify for carbon credits. Liaison with the other countries
around the North Sea rim, in particular Norway, is also progressing
with a view to develop a common regulatory regime for CO2
16. As a result of this work the Government's
view that CCS could become commercially viable by 2020 if not
1 The Research Councils response to the issues of
this inquiry are set out in their separate memorandum. Back