Supplementary evidence from the Government
ANSWERS TO FOLLOW-UP QUESTIONS FOLLOWING
EVIDENCE SESSION ON 16 NOVEMBER
1. Brian Morris said in oral evidence that
the UK was "trying to promote the idea of `capture ready'
plant" in the G8 [Q 12]. What are the features of `capture
ready' plant and what measures has Government put in place to
encourage new plant to be built `capture ready'? What other measures
are under consideration?
Capture ready refers to plant designed to enable
CO2 capture equipment to be retrofitted with minimum
disruption and in a manner that is optimal for future plant operations.
Some key requirements are: availability of land for the capture
plant; availability of space for the pipe-work and other systems
needed to incorporate capture into the power plant; and the design
of boiler and turbine systems to facilitate optimal integration.
It has been suggested that location relative to CO2
storage sites might be an additional "capture ready"
criterion. The G8 initiative on capture ready is seeking to arrive
at an agreed definition.
The CAT Strategy included £25 million of
capital grants that, amongst other options, could be used to support
a demonstration of capture ready technology. This has since been
increased to £35 million as a result on the Chancellor's
Pre-Budget Statement on 5 December.
Measures to encourage new plant to be built
capture ready must await an agreed definition for the concept,
but once this is agreed, one option would be to use the licensing
and consents process.
2. Could you please provide full details of
the UK-China bilateral agreement on R&D for clean coal technologies,
and the EU-China agreement, mentioned in the response to Q 15?
In particular, could you clarify the amount of UK funding being
provided and the purpose for which it will be used?
The EU-China agreement, called the Near-Zero
Emissions Coal project (NZEC) aims to stimulate the deployment
of CCS in China. This is broken down into three Phases, Phase
One is a feasibility study for CCS in China and capacity building
of Chinese knowledge in this area. This is supported by HMG by
£3.5 million (DEFRA £3 million and DTI £0.5 million).
). The aims of Phase One are to assess the viability of CCS in
China, including mapping of the potential for geological storage,
and identifying CO2 sources and capture options, and
to identify options for demonstration and deployment of CCS. A
briefing paper is attached, (Annex 2).
The UK-China bilateral agreement was signed
last month which commits both sides to collaborate on R&D
into clean technologies. These not only include CCS but also other
future technologies such as wave/tidal and PV. The UK has initially
allocated £750,000 for this activity. A copy of the signed
Memorandum of Understanding is attached, (Annex 3) for information.
It is planned to have a Workshop in China in April 2006 at which
possible areas for collaboration will be discussed and project
3. Brian Morris said in oral evidence: "I
think it is important to emphasise that the Chinese [. . .] are
very aware of the consequences of climate change and [. . .] they
realise the damage that burning coal without trying to control
the emissions is going to do not just to the planet but to their
own prospects in the future" [Q 15]. What evidence is there
that countries like India and China are prepared to fund the costs
of CCS technology transfer?
Both countries are at a very early stage in
considering CCS, and neither country is yet in a position to commit
substantial funding to technology transfer. Hence the timing is
now right for the UK's EU-China NZEC initiative to stimulate and
assist development of CCS in China. Both China and India are starting
small-scale domestic programmes to investigate CCS. We understand
that China is planning to commence R&D into CCS in their 11th
Five Year Plan (starting 2006), so as to develop their understanding
4. Brian Morris said in oral evidence: "we
intend to develop a communications strategy which would try to
raise the issue with people and try to tell them objectively what
it is about, what the risks are and what the benefits are"
[Q 17]. What is the timescale for the development of this strategy
and who is involved in preparing it?
A small preliminary study by the Tyndall Centre
to gauge public attitudes has been completed and the DTI is now
developing a communications strategy. There are a number of current
international initiatives focusing on public perception, public
outreach and communications strategy. The first step for DTI is
to establish the content and range of these initiatives. Early
in 2006 DTI will draw together an expert group to define a communications
strategy that will promote consistent and effective messaging,
based on research into public perceptions and attitudes, and drawing
from the best communications materials available. It is planned
to complete a provisional strategy by late Spring 2006. David
Reiner, Cambridge University, will lead the work for DTI. David
is an expert in regulatory policy, national climate change policies,
international environmental negotiations and policy design, and
is closely affiliated to many of the key international players
already active in this area.
5. George Marsh said in oral evidence: "Last
year we carried out a gap analysis to see which areas of CCS were
already covered by existing regulations and where the gaps were
that might need additional regulation" [Q 23]. Could you
please provide us with this gap analysis and an indication of
what steps the Government has taken, or is intending to take,
to address these gaps?
The regulatory gap analysis paper has been provided
(Annex 1). The DTI is establishing a working group to ensure adequate
regulation is in place for the storage of CO2 in geological
structures, taking account of the fact that existing regulations
and international agreements will apply to the to the rest of
the CCS chain.
6. George Marsh stated that there was sufficient
land available on most UK power plants to enable retrofitting
for CCS [Q 26]. Could you please provide us with the data on which
this assertion was based? Are there any other obstacles to retrofitting
of existing plant with CCS technology?
The information was gathered during discussions
with power generators concerning implementation of the CAT Strategy
and possible incentives to encourage the commercial scale deployment
Currently the main obstacle is that there is
no mechanism that provides a sufficient financial return for the
carbon abated to make this a worthwhile investment.
For existing coal stations it would be desirable
to retrofit advanced boilers with the capture plant. Fitting new
boilers would mean switching off the plant for about 12 months
with associated loss of revenue. This could delay implementation,
but since new boilers will be needed eventually if the plant is
to continue operation, there is scope to optimise timing.
For existing gas plant one retrofit option is
to retrofit pre-combustion capture and burn hydrogen in the existing
gas turbines. Some existing gas turbines may be unsuited for this
in which case post combustion capture (flue gas scrubbing) would
be the only option.
7. Brian Morris said that, in terms of gas-fired
plant fitted with CCS technology, there was a need "in future
spending rounds [for] making a case for identifying what is needed"
[Q 28]. What case is being made for funding of gas- and coal-fired
plant equipped with CCS technology in the next spending round?
The CAT Strategy set out a 10 year programme
for the development of carbon abatement technologies including
CCS. At present funding is committed up to 2008-09. The case for
funding beyond 2008-09 will be made in the normal course of the
next spending review.
8. Brian Morris said in oral evidence: "We
recognise that there is a need for some sort of incentive. We
also recognise that carbon trading in itself is not enough and
that there needs to be some sort of way to bridge the gap [. .
.] There are a number of options for doing that" [Q 30].
What options are under consideration here and what are the key
advantages and disadvantages associated with each?
Budget 2005 set out the Government's intention
to examine the potential of economic instruments to incentivise
carbon capture and storage (CCS). The Climate Change Programme
Review (CCPR) has analysed the costs and benefits of CCS and other
carbon abatement technologies and is due to be published shortly.
Pre-Budget Report 2005 looked to build on this work by committing
the Government to consult further on the barriers to wide-scale
commercial deployment of CCS in the UK, and the potential role
of economic incentives in addressing those barriers. This work
will feed into the Government's energy review, which was announced
on 29 November, and will look at energy supply and demand and
focus on policy measures to help us deliver our objectives beyond
2010. The Review will consider all options including the role
of current generating technologies (e.g. renewables, coal, gas
and nuclear power) and new and emerging technologies (e.g. Carbon
Capture and Storage).
9. Helen Fleming stated: "Carbon emission
is clearly an area where the full cost of the economy and society
is not captured at the moment" [Q 44]. Aside from the EU
Emissions Trading Scheme, what measures are under consideration
by Government in order to better capture the full cost of carbon?
As eluded to above, the Climate Change Programme
Review (CCPR) is reviewing progress under the UK Climate Change
Programme. The Review has considered a number of measures to better
capture the costs of carbon and is expected to report early in
2006. And the Government recently confirmed it will undertake
a wide-ranging review of energy policy but set firmly within the
framework of the four goals set out in the 2003 Energy White Paper,
including to put ourselves on a path to cut the UK's carbon dioxide
emissions by some 60% by about 2050 with real progress by 2020. Hence
the energy review will also consider these issues concurrent with
the Stern Review, which is looking at the economics of climate
change, in a wider global context. The Government's general approach
in determining the most efficient policy measure(s) is to look
at a range of possible approaches (tax alongside spending measures,
regulation, voluntary agreements, trading schemes etc.) and consider
the relative merits of each according to social, environmental
and economic factors including the potential for reductions in
carbon emissions, the cost-effectiveness of those reductions as
well as air quality impacts, fuel poverty, distributional and
competitiveness implications and security of supply issues.
10. Brian Morris said in oral evidence: "One
of the activities coming out of the CAT strategy is to develop
a technology roadmap" [Q 53]. What will be the main purpose
of this roadmap, who is involved in its development and when is
it likely to be published?
The road map will give a more precise definition
of the priority activities to be undertaken in the DTI's CAT Programme.
It will focus our resources by identifying areas suitable for
a UK lead, areas best taken forward through UK participation in
internationally co-ordinated activities and areas where UK activity
should simply be to maintain a watching brief.
Development of the route map is being guided
by the Advisory Committee on Carbon Abatement Technologies (ACCAT).
It is intended to publish the document in spring 2006.
11. Brian Morris stated: "there is no
reason why it [CCS] cannot qualify for carbon credits in the next
phase of the Emissions Trading Scheme" [Q 54]. When do you
expect CCS to be able to qualify for the EU ETS? What are the
obstacles that need to be overcome to enable this to happen?
The DTI has commissioned work and initiated
an EU Ad Hoc Group of Experts to develop recommendations for how
CCS would best work within the EU ETS. Subsequently recommendations
have been made to EC DG ENV. A further piece of work on EOR and
ETS is being commissioned. We understand that DG ENV wishes to
include consideration of the issue of CCS and the ETS in the European
Climate Change Programme, and to use the CCS working group's meeting
next year to develop policy recommendations (reporting later in
2006). The present monitoring and reporting guidelines for the
EU ETS allow CCS provided interim monitoring and reporting guidelines
are agreed with the European Commission (see response to Question
12. Jim Penman said in oral evidence that
"very considerable progress" was being made towards
amending the London Convention [Q 59]. What is the timescale for
clarifying the London Convention to allow CCS? Will projects be
able to proceed in the meantime?
The 27th Consultative Meeting of the London
Convention established a process to consider whether the Convention,
and/or the Protocol that will eventually replace it, need to be
clarified and/or amended in order to facilitate or regulate CCS
in sub-seabed geological structures. A meeting is planned for
April 2006, which will report to the 28th Consultative Meeting
in October 2006, at which Parties will decide clarifications or
amendments as necessary. Since the Protocol will replace the Convention,
most Parties are likely to focus on the Protocol. The whole process
could take two or three years to complete. Meanwhile projects
can proceed within the remit of the Convention. Projects involving
enhanced oil recovery, or in which the CO2 placed in
geological storage is produced with the oil or gas being extracted
(as with the Norwegian Sleipner project), are compatible with
the Convention and/or the Protocol. Projects of this type could
therefore proceed now, consistent with the requirements of relevant
domestic legislation. Some other types of project could also be
consistent, but since the Convention and/or Protocol as they stand
were not drafted with the needs of carbon capture and storage
in mind, trying to apply their current provisions to CCS is correspondingly
complex, and views differ widely on the legality in these other
13. Jim Penman said in oral evidence: "I
think we are looking in the long term to low carbon technologies
and this [CCS] helps us work, starting with the existing energy
system as it is to achieve that. If we did not do that we would
run the risk of incurring higher costs than we would otherwise
have done" [Q 12]. What does DEFRA estimate the cost of doing
nothing to be, i.e. the global damage cost of climate change per
ton of CO2 emitted?
The Social Cost of Carbon (SCC) is the economic
concept used to measure the marginal global damage cost, per tonne
of carbon emitted. In 2002 the Government Economic Service (GES)
published advice with a central SCC value of £70 per tonne
of carbon emitted, within a range of £35 to £140. Per
tonne of carbon dioxide, the corresponding values are, in round
terms, £20 per tonne of CO2 within a range of
£10 to £40. The GES also recommended that these
values should be subject to an annual increase in real terms by
£1 per tonne of carbon emitted. Finally the GES recommended
a periodic review of these values as new evidence comes available.
In 2003 Defra initiated a review of SCC values and a research
report is now available.
This confirms £35 per tonne of carbon emitted as a reasonable
lower limit, with a range going to much higher values, reflecting
values in the economic literature of up to about £1,000 per
tonne C. This range is driven by scientific uncertainty on the
speed of climate change and on the associated socio-economic impact,
but also reflects different (and controversial) judgements on
how to aggregate costs and benefits across different regions of
the world and different generations. The range is very wide for
practical policy purposes and given the balance of evidence, the
Government's view of SCC remains unchanged for the present. The
Government will review this when the a second research report
from the Defra review is published later this year, and this information
will also be available to the Stern review of the economics of
These present valuations are based on the estimated
functional dependences between climate and socio-economic parameters
such as food production or disease incidence. They reflect a variety
of market and non-market impacts of climate change, although the
latter are generally associated with a higher degree of uncertainty.
Only a small number of studies have tried to capture the risks
of irreversible shifts in the climate system such as polar ice
sheet destabilisation, Gulf Stream suppression or methane hydrate
destabilisation. None of the existing estimates capture socially
contingent effects (such as risk of conflict arising from the
impacts of climate change on water supply). These effects may
nevertheless have very significant (and not necessarily marginal)
damage costs which need to be taken into account in policy development.
This can at present only be done by assessment of risks associated
with different levels of stabilisation of atmospheric greenhouse
14. Jim Penman referred to an example of a
project in which low level leakage has been detected [Q 34]. Which
project is this and what information is available regarding this
The project referred to is the enhanced oil
recovery project at Rangely in Colorado where CO2 has
been injected since 1986 and there is evidence for a flux of CO2
from depth which may or may not be associated with the injected
According to the IPCC Special Report fluxes of CO2
from the 78 square kilometre field area are estimated to be between
170 and 3800 t per year.
Because most of the CO2 is determined to originate
from near-surface microbial activity, the surface release from
the storage reservoir is estimated to be less than 170 t per year.
This would amount to an annual leakage rate of the order of 0.00076%
of the total stored Co2 (equivalent to a retention
rate of more than 99% over 1,000 years. The two other projects,
Sleipner (Norway) and Weyburn (Canada) which have been extensively
monitored do not show any such evidence.
15. Brian Morris said in oral evidence:
"We are aware of the infrastructure issue and using the existing
infrastructure" [Q 59]. What steps is Government taking to
encourage adaptation or reuse of the existing pipeline infrastructure
(both on- and offshore)? Has the Government analysed the impact
of re-use of the existing infrastructure on the entry costs for
DTI has sponsored a study by the East of England
Energy Group on the potential to reuse existing pipeline infrastructure
for CO2 transportation. Also we have recently commissioned
work from the British Geological Survey to map potential sources
and sinks for CCS both on and offshore in the UK. We are presently
considering additional work, building on these studies, to estimate
cost versus supply (volume) curves for CCS that will include both
near and medium term options.
16. A wide range of costs are cited in conjunction
with CCS technology. To what extent is this an obstacle in deciding
what investments Government will make and what incentives it is
prepared to put in place? What cost range is the Treasury currently
using for the purposes of policy development (and how have these
costs been defined)?
The Government recognises that there are a range
of cost estimates associated with CCS and carbon abatement technologies
more broadly and that this generates uncertainty for policy-makers.
That is why we have initiated a number of work strands to try
and further build the evidence base surrounding these technologies,
The Climate Change Programme Reviewwhich
is looking at the costs and benefits of CCS and other carbon abatement
technologies and is due to be published shortly.
Consultation with industryPre-Budget
Report 2005 announced the Government's intention to consult further
on the barriers to wide-scale commercial deployment of CCS in
the UK, and the potential role of economic incentives in addressing
Collaboration with NorwayPre-Budget
Report 2005 also announced the Government's intention to work
collaboratively with Norway on the issues surrounding the costs
This work will provide further clarity around
the costs of CCS as the Government embarks on a review of its
energy policy which will consider all options (including CCS).
17. By how much will the costs of CCS have
to be reduced if it is to become commercially viable?
The answer depends on the circumstances. CCS
will never be cheaper than fossil fuel technologies without CCS
since many of the technical advances that will benefit CCS will
also benefit normal fossil plant. However, our assessment is that
CCS is comparable to other large abatement options such as renewable
energy and nuclear power (see DTI CAT Strategy"A strategy
for developing carbon abatement technologies for fossil fuels",
page 24, already supplied to the committee). Moreover, programmes
such as the BP led Carbon Dioxide Capture Project have estimated
that the potential to reduce capture costs, which are about 60-70%
of total CCS costs, is up to 60%.
CCS can also compete where there is an incentive
that values the carbon abatement it delivers.
18. What role will Government play in facilitating
and supporting the BP-led project at Peterhead?
As discussed under Question 5, work has been
initiated to examine and address gaps in the regulatory framework
for CCS projects including EOR projects such as that proposed
19. When is the Climate Change Programme Review
due to report? What kind of incentives for CCS have been under
consideration in the Review?
The Climate Change Programme Review is expected
to report in January. Some support is already available for R&D
projects via the Carbon Abatement Technology Strategy.
20. What steps is the Government taking to
build the skills and human resource base in CCS technologies?
What research has been undertaken to establish the skills needs
of, and the availability of appropriately skilled personnel in,
the UK with respect to CCS?
People with the right skills will be motivated
to work on CCS when there is a clear market demand and career
path associated with these technologies. DTI's CAT Programme is
addressing this at the innovation and technology development level
by supporting R&D and demonstration activities. Additionally
the UK can draw on a strong capability in power and process engineering
to support full-scale design and construction activities.
21. How will Government determine an acceptable
threshold for leakage of CO2 from storage sites from
(i) an environmental viewpoint and (ii) to enable CCS to qualify
for emissions trading schemes?
The Government would expect CCS schemes to conform
to the guidelines for emissions inventory estimation being developed
by the Intergovernmental Panel on Climate Change (IPCC). These
Guidelines will, we anticipate, be agreed in 2006 and are likely
to require that all projects to be accompanied by an assessment
based on geological evidence of potential leakage, or a demonstration
that leakage is not expected to occur, plus a monitoring plan
to check the validity of the assessment by subsequent periodic
measurements. One possibility in response to (i) would be to require
evidence of the expectation of zero leakage, rather than set a
threshold. If a threshold were set it would need to take account
of scientific evidence of the impact of low CO2 fluxes
on marine and terrestrial ecosystems. In response to (ii) the
present monitoring and reporting guidelines for the EU Emissions
Trading Scheme (EUETS) allow CCS provided interim monitoring and
reporting guidelines are agreed with the European Commission.
A possible approach on (ii) would therefore be to base guidelines
on the emissions inventory work of the IPCC, once agreed within
the existing framework of the EUETS. The Government, in consultation
with the European Commission, has commissioned consultants to
examine this approach.
22. Is Government willing to be the guarantor
for long-term storage of CO2 in geological sites?
The proper domestic framework for regulation
is under consideration and no decision on this question has been
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