APPENDIX 36
Supplementary evidence from Air Products
PLC, submitted by R J Allam
1. U.K. R AND
D
Air Products is a multinational company with
R&D facilities in the United States, UK, in the rest of Europe
(Germany and the Czech Republic), Russia and China. We have an
R&D budget of about US$160 million per annum which represents
about 2% of our turnover. Our budget in the UK is about US$6 million
per annum. About half of this budget relates to technologies relevant
to CCS. The strength of our position in the UK in the field of
CCS is based on the location in the UK of our major world-wide
engineering, project management and manufacturing base for all
large scale Cryogenic, gas separation, hydrogen, energy systems
and liquifaction facilities. The UK is also the headquarters of
our European Operations Group and also our Administrative Headquarters.
This complete capability from research inception to operation
of the final developed system has enabled us to provide a wide
range of technology solutions to the problems of CO2
capture from energy systems producing electrical power and hydrogen.
2. CARBON CAPTURE
AND STORAGE
AUTHORITY
We believe that CCS must provide the majority
of the CO2 free electrical power and future H2 fuel
produced worldwide if the CO2 concentration in the
atmosphere is to be stabilised at tolerable levels to control
global climate change. It is a matter of great concern to us that
CCS is an option that is only understood by the small group of
people working in the technology, the government groups and the
industries focused on climate change issues. It is vital that
this option for combating climate change is as vigourously publicised
as the other major areas such as renewables such as wind, energy
saving and nuclear. We would actively support the establishment
of a Carbon Capture and Storage Authority. We are already one
of the founder members of the recently formed CCS trade association.
We would also like to draw the committees' attention to the need
for an independent body of technical experts who can provide the
government with the necessary comparative data on the various
options for reducing CO2 emission. This could be one
of the functions of the new Energy Futures Lab recently launched
by Imperial College London under the direction of Professor Nigel
Brandon.
3. IMPLEMENTATION
OF CCS
We believe that CCS technology exists now which
can be used to provide CO2 free power from either natural
gas fuelled gas turbine combined cycle systems or from pulverised
coal fired power stations in the UK. Our assessment of the current
technologies shows that it should be possible to separate CO2
at a fully costed penalty of £30 to £35 per ton. With
current oil prices in the range of $50 to $60 per barrel for the
low sulphur oils typical of the North Sea fields, the value of
CO2 used for tertiary oil recovery together with CO2
credits obtainable under a future carbon trading regime would
provide all of this CO2 penalty and possibly even lead
to lower power cost. There are two major problems. The first is
the need for the power companies and the oil companies to agree
on a transfer price mechanism for CO2 delivered for
storage. The second is the relatively small window of opportunity
to set up a stable long term regulatory and price guarantee framework
which will allow the huge investments need to implement CCS to
be made before large numbers of North Seas offshore facilities
are permanently decommissioned.
December 2005
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