Memorandum submitted by Scottish and Southern
Energy
Scottish and Southern Energy plc (SSE) welcomes
the opportunity to respond to the Environmental Audit Committee's
inquiry into the Pre-Budget Report, and in particular to the request
for views on the Carbon Capture and Storage (CCS) demonstrator
competition, and also general policy with regard to funding and
developing CCS.
SSE is one of the largest energy companies in
the UK and has been involved in CCS activities for many years,
through the Peterhead project with BP and a variety of other activities.
Although the Peterhead project was based upon pre-combustion technology,
ruled out by the CCS competition criteria, SSE is also involved
in post combustion activities, and is not wedded to either technology.
Against this background, SSE believes the CCS technologies are
not sufficiently mature to choose a winner today, and both require
demonstration in the near to medium term. Longer term, SSE believes
the market will decide which is the most appropriate CCS technology,
and it is likely that both will have a role.
The key criteria of the CCS competition as published,
are that it should be a post combustion technology applied to
coal; it must demonstrate a working end to end chain of capture,
transportation and storage by 2014; a staged approach may be appropriate
and can be taken where 50-100MW are demonstrated by 2014 (with
transportation and storage), and between 300-400 MW size as soon
as possible thereafter.
The rationale given for the criteria was the
international relevance of post combustion technology for rapidly
industrialising countries such as China and India, and ongoing
international activities in relation to pre-combustion and natural
gas fired post combustion capture technologies in the US and Norway
respectively. SSE believes the implication of this decision will
be to delay the implementation of a meaningfully sized CCS demonstration
in the UK. This and other issues arising from the CCS competition
criteria are discussed below.
Prior to the announcement of the criteria for
the competition, a large number of pre-combustion projects were
under development, reflecting the increased maturity of the technology.
Any of these projects would ensure the storage of a significant
volume of CO2 (2+ Mtes/year); support the installation
of a meaningful transportation and storage infrastructure; and
be available in the 2012-14 timescale. These benefits are now
at risk due to the narrowing of the competition to just one technology.
The competition criterion recognises that a
phased approach may be required, and states that this is acceptable
providing 50-100 MW of CCS is installed by 2014. Given the CCS
activity worldwide, it is highly unlikely that the UK will be
teaching the world anything new in 2014 with 50-100 MW of CCS.
SSE is sceptical that the competition as announced
will succeed in having any great impact on the technology choices
made in China. We question, given that UK faces its own energy
challenges, whether it would not be more sensible to use this
competition to focus on meeting our own challenging energy needs
at home—assisting China more directly through the CDM mechanism
or other international funding vehicle. In the meantime the UK
has its own challenging emissions reduction targets and a desire
to maintain fuel diversity. With the right support CCS could play
an important role in this over the next 10-15 years.
The phased approach is potentially inconsistent
with the requirement for demonstration of the end to end chain
by 2014. Early start on a phased approach will involve the use
of a sub-critical plant. The quantity of CO2 capture,
the location of the plant, and the short term nature of a phased
technology development step, means that investment in transport
and storage may not be justifiable. SSE believes that long term
post combustion capture CCS operation should be with supercritical
plant, but none exist today. If the phased technology development
is delayed until a new supercritical plant is available, will
the CO2 quantity and the short term nature of the phased
technology development step justify the investment in transportation
and storage infrastructure, to achieve the 2014 ambition?
In conclusion, if a phased approach is required,
and it is delayed until supercritical plant is available, SSE
see a real risk that the larger scale 300 MW demonstration may
not be operational until nearer the 2020 timescale.
Whilst there were a number of serious pre-combustion
projects under development, SSE doubt if there are many post combustion
projects under serious consideration which would match the criteria.
Whilst SSE can appreciates the desire to develop
a technology of international relevance, it will most likely result
in smaller volumes of CO2 captured and stored in the
medium term, and delay the development of transportation and storage
infrastructure. If this likely outcome is not acceptable, then
the wrong technology choice has been made, and an alternative
project based upon pre-combustion technology is required. There
has been too much focus on the combustion technology at the expense
of ensuring the competition delivers viable long-lasting and re-usable
transportation and storage options.
SSE suggests that if the objective is early
end-to-end chain implementation, then pre-combustion is the more
appropriate technology.
SSE welcomes the leadership shown by the UK
Government in the field of CCS, but feels the CCS competition
as envisaged will not result in the sufficient material progress,
with the real danger that the UK will lose the leadership in this
area that it has enjoyed to date.
SSE believes the Government should quickly announce
a more comprehensive, cost effective and ambitious approach to
demonstrating CCS in the UK. This should be achieved by creating
the right policy environment to encourage a collaborative approach—bringing
together government, energy companies, engineering specialists
and other relevant stakeholders. The new approach should involve
a combination of pre-combustion technology to underpin the end-to-end
chain infrastructure, alongside a phased development of post combustion
technology, connecting into the end-to-end chain infrastructure.
SSE believes this is best achieved through the early announcement
that the UK intends to support a second demonstration project
in the same time period and that this competition will focus on
pre-combustion technology and shared used of transportation and
storage infrastructure. SSE believes it is essential for the UK
to retain its leadership in CCS.
With to regard to policy for funding and development
of CCS more generally, comments made above notwithstanding, SSE
welcomes the commitment shown to date by the UK Government in
these areas, and supports the continuation of the activity going
forward. We believe that a broad policy objective to reduce the
UK's carbon intensity coupled with a stable and longer term framework
for the EU ETS will be sufficient to support the wider deployment
of CCS once both technologies have been demonstrated at scale.
SSE trusts the Committee will find the views
expressed in this letter helpful, and is available for clarification
if required.
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