Select Committee on Science and Technology Written Evidence


Memorandum from Green Alliance


  1.  Green Alliance's mission is to promote sustainable development by ensuring that the environment is at the heart of decision-making. We work with senior people in government, parliament, business and the environmental movement to encourage new ideas, dialogue and constructive solutions.

  2.  Green Alliance welcomes the opportunity to contribute to this inquiry on the role of Carbon Capture and Storage (CCS), which comes at a crucial time in the development of UK climate and energy policy.

  3.  We welcome the development of CCS but are concerned that the introduction of additional policy mechanisms to encourage this technology may divert attention and/or funding streams away from promoting energy efficiency and renewable technologies. There is still much to do to fully develop these areas, which we see as a priority.

  4.  Green Alliance would like to highlight in this submission a set of concerns regarding CCS that must be addressed by government and industry. The outcome of these questions will determine the extent to which CCS should contribute to climate change policy: (a) How will the technology be supported? (b) How secure will storage of CO2 be?


  5.  In the Energy White Paper (2003) the Government stated that, in reducing carbon dioxide emissions, their priority was "to strengthen the contribution of energy efficiency and renewable energy sources." Green Alliance supports this viewpoint and believes that policies that rely on clean renewable energies (such as renewable heat, wave, solar, biomass and wind energy), energy conservation and demand reduction must be the focus of climate change mitigation.

  6.  When applied on a global scale the attractions of CCS technology are understandable. It is particularly applicable to growing economies, like China, with an extensive program of new coal power-station construction.

  7.  Green Alliance is concerned that the role CCS can play in climate change mitigation is not overstated. CCS should be used under certain conditions in order to gain the time to switch to a genuinely zero carbon energy supply system.


Support mechanism

  8.  Any mechanism to support CCS must not divert support away from renewable technologies or the promotion of energy efficiency.

  These are proven, presently less risky and have an increased security of supply—they do not rely on imported fossil fuels.

  9.  Renewable technologies and the promotion of energy efficiency still require additional support and strong programmes to underpin their adoption and overcome market barriers. The government must therefore not divert public funds away from renewable energy and efficiency technologies to support CCS.

  Government support of independent and transparent research on this technology may be necessary but should not replace or delay government support for existing renewable energy sources, and should be part of a package with a clear priority for energy efficiency and renewables.

  10.  Before extending the life of fossil fuel power stations by equipping them with CCS technology, feasibility of replacement with renewable energy generation should be analysed. CCS plants would still have a range of environmental and social impacts as a result of fossil fuel extraction, transport and production.

  11.  The Intergovernmental Panel on Climate Change (IPCC) formally adopted a new "Special Report on Carbon Capture and Storage" this month (which month?), which finds that CCS will only truly take off when the right policy frameworks, including implementing carbon dioxide (CO2) reduction targets, are in place.

  12.  The core problem facing investors is that there is no carbon market over the relevant investment period for CCS. The EU ETS only extends until 2012 and permit levels are only known until 2008.  Investors are currently facing political risk, which increases the cost of capital for low-carbon investments. Green Alliance has therefore identified a number of support mechanisms that could be used to support, and encourage investment in, CCS.

Capital Grants

  13.  The government has recently made a limited amount of money available for demonstration CCS projects—£25 million. This form of funding is unstable because of its stop/start nature and does not give a long-term revenue stream to investors, nor help provide a market for the technology.

A dedicated zero carbon electricity mechanism

  14.  The Renewables Obligation (RO) could be extended to award ROCs for output from carbon-neutral electricity generation or a separate obligation similar to the RO could be created for these technologies. This would give the same level of support to zero-carbon generation as is already offered to renewables. Drawbacks to this option include; disrupting investor confidence in the RO market; the possibility that carbon-neutral projects could claim some of the subsidy currently distributed to renewable technologies and diluting the current signal for government support to renewables. Introducing another policy mechanism would also add further complexity to an already complex market.

A revival of the Fossil Fuel Levy

  15.  The existing fossil fuel levy mechanism, which is currently dormant, could be revived to provide a long-term funding stream for zero carbon technologies.

Carbon contracts

  16.  As proposed by Dieter Helm[36] government could issue a long-term carbon contract, to support the delivery of emissions reductions. This would provide a forward revenue stream with long-term price certainty. The contracts would be technology blind with government taking the risk if the carbon price falls below the price of the contract. If the carbon price is higher than the contract price then the government would be able to make money back.

A robust EU Emissions Trading Scheme (EU ETS)

  17.  One of the core purposes of the EU Emissions Trading Scheme is to encourage investment in low-carbon technologies and discourage more polluting methods. A robust national emissions cap and longer-term certainty in the scheme would encourage not only the development of CCS but also renewable technologies and increased energy efficiency.

  18.  Auctioning allowances would create a pot of money that could be used to support CCS and other low and zero carbon technologies.

  19.  This mechanism would be easy to implement and would be using the EU ETS for what is was designed to do. If the scheme is not able to encourage low-carbon technologies, like CCS, then what is its purpose?

  20.  Green Alliance believes that a robust EU Emissions Trading Scheme and a tight national cap on emissions should be used to support the development of Carbon Capture and Storage. Key characteristics of the scheme must be a carbon price that is high enough to drive development, and a long-term market that is secure enough to attract investment in low-carbon technologies.

  21.  The government needs to ensure that its national allocation for the second phase of the EU ETS is aiming to meet its target of a reduction of a 20% reduction in CO2 by 2010. This would mean an allocation of 224 MtCO2 compared to the 245 MtCO2 allocated in the first phase of the scheme.

  22.  Furthermore the government must continue to commit to its short-term and long-term emissions reduction targets (a 20% reduction of CO2 by 2010 and at least a 60% reduction by 2050).


Green Alliance is concerned about the lack of knowledge on storage of CO2

  23.  Research is needed to improve the gaps in knowledge on CCS; independently verified pilot projects should test its effects on biodiversity, geological suitability and the security and permanence of carbon stored in geological strata. Likewise all pilot projects should have stakeholder processes allowing for review, comment, and addressing concerns. Any research undertaken should cover: environmental consequences including those associated with fossil fuel extraction; capacity of safe, long term underground storage of carbon; risks to public safety; characteristics of the currently much less understood saline formations.

Green Alliance's support for CO2 storage will always be on a case-by-case basis.

  24.  Any CCS initiative must prove its robust storage capabilities and be subject to strict environmental assessments.

The Government should set up a regulatory framework for the development of CCS projects.

  25.  This should cover all the risks and uncertainties related to CCS and include full public consultation. An Emergency Management Plan for each site should be set up and a full Environmental Impact Assessment carried out. Each site should prove its net environmental gain to avoid an increase in conventional pollution as a result of the introduction of CCS.

  26.  Green Alliance currently only supports CO2 storage in disused oil or gas fields where the science and geology is more certain.

Acceptability of storage sites will depend on their gas leakage security

  27.  The proportion of gas leakage from any site chosen for storage is critical. Ideally we would like zero leakage. Just a small percentage of leakage is needed to return all stored gas to the atmosphere. For example, a 0.1% leakage would mean all CO2 will re-enter the atmosphere within 1,000 years, with a 1% leakage rate, within just 100 years. Locations should not allow any leakage rate or "gassing out" that would be higher than those from conventional natural gas fields. This would mean a permanence time of longer than 100,000 years.

Green Alliance calls for an independent monitoring body to be given responsibility for storage monitoring and verification.

  28.  The monitoring body should publish an annual audit of the state of the UK's storage sites. There must also be international agreed procedures for independent monitoring and verification before CCS technologies should be allowed to count against greenhouse gas reduction targets.

The question of liability needs to be addressed

  29.  Who should be liable for any leakage from the storage site over its lifetime? Whilst it is essential that the storage site is properly managed, we don't want to penalise the development of low carbon technologies by expecting them to be responsible for the long-term liability of the stored CO2, when other high carbon technologies have no liability for the emissions they emit into the atmosphere. The government must establish a strict legal framework to regulate this.

November 2005

36   Helm, D and Hepburn, C. Carbon contracts and energy policy: An outline proposal. 6 October 2005. Back

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