Memorandum submitted by UKCCSC and UKERC
This document is a joint response from the UK
Carbon Capture and Storage Community Network (UKCCSC) and the
UK Energy Research Centre (UKERC) to the Select Committee inquiry
on EPS. The UKCCSC is a collective of over 200 engineering, technological,
natural, environmental, social and economic academic members,
whose biannual meetings and other knowledge sharing events and
activities are funded by a grant from the Research Councils UK
Energy Programme. The UKERC carries out world-class research into
sustainable future energy systems and is also funded by a grant
from the Research Councils UK Energy Programme. The text has been
discussed and drafted by a self-selected group of UKCCSC and UKERC
academics and researchers, each contributing according to their
own particular interests and expertise, and also submitted to
the whole membership for further comments. The final version was
then circulated for members to sign up to if they wished; it should
be noted that signatories below are signing as individuals.
| Name | Job title
| Institution |
| Ann Barrett | Researcher |
Cranfield University |
| Michael Bickle | Professor |
University of Cambridge |
| Mariolino Carta | Research Associate
| School of Chemistry, Cardiff University |
| Robin Cathcart | Network Manager
| UK Carbon Capture and Storage Community Network
|
| Hannah Chalmers | Lecturer of Power Plant Engineering and CO2 Capture
| University of Edinburgh and Scottish Carbon Capture and Storage
|
| Tina Düren | Senior Lecturer
| School of Engineering, University of Edinburgh
|
| Olivia Errey | PhD Research Student
| University of Edinburgh |
| Benjamin Evar | PhD Research Student
| University of Edinburgh |
| Paul Fennell | Lecturer |
Imperial College London |
| Nicholas Florin | Research Associate
| Grantham Institute for Climate Change, Department of Chemical Engineering, Imperial College London
|
| Jon Gibbins | Professor of Power Plant Engineering and CO2 Capture
| University of Edinburgh and Scottish Carbon Capture and Storage
|
| Jon Gluyas | Professor and Chair of Geo-Energy and CCS
| University of Durham |
| Jeff Hardy | Knowledge Exchange Manager
| UKERC |
| Tom Lynch | Low Carbon Technologies DTC Research Student
| University of Leeds |
| Mathieu Lucquiaud | Research Fellow
| University of Edinburgh |
| Nial MacDowell | Research Associate, Energy Systems Engineering
| Imperial College London |
| Nils Markusson | Research Associate
| University of Edinburgh |
| Chijioke Nwankwor | PhD Research Student
| University of Nottingham |
| Christopher M. Rayner | Professor
| University of Leeds |
| David Reiner | Senior Lecturer
| University of Cambridge |
| Dermot Roddy | Science City Professor of Energy & Director of the Sir Joseph Swan Centre for Energy Research
| Newcastle University |
| Vivian Scott | Researcher |
University of Edinburgh |
| Nilay Shah | Professor of Process Systems Engineering
| Imperial College London |
| Jim Skea | Research Director
| UKERC |
| Joshua Swithenbank | Emeritus Professor
| University of Sheffield |
x
Question 1: What are the factors that ought to be considered
in setting the level for an Emissions Performance Standard (EPS)
and what would be an appropriate level for the UK? Should the
level be changed over time?
1. A properly designed and implemented EPS has the potential
to push forward development of low carbon technologies such as
carbon capture and storage (CCS), and these technological advancements
can in turn help curb greenhouse gas emissions. When designing
an EPS, a broad range of factors should be considered and stakeholder
consultation should be thorough. Any EPS design needs to be based
on scientific evidence and should at a minimum consider the factors
identified below (paragraphs 2-7):
2. An EPS should cover all carbon dioxide (CO2)
emitting sources of power generation (ie coal, gas and biomass),
not just coal. If the EPS were to focus on coal alone, it would
likely drive the expansion of unabated natural gas-fired power
plants, rule coal out of the generation mix and thus inhibit the
development of CCS. If the UK hopes to achieve even intermediate
emission targets, power generation as a whole will need to be
decarbonised.[23] This
aim ought to be kept in mind when drafting an EPS.
3. It is important to balance needs for providing sufficient
certainty to encourage CCS (and other low carbon technologies)
with providing flexibility to avoid micromanagement of power providers.
Given the long-lived nature of CO2 in the atmosphere,
it would be sensible to extend compliance periods to a year (or
potentially even longer). One could also add flexibility to an
EPS by allowing operators to trade off over-performances amongst
their various assets creating many operating options within their
portfolios. There could also be some benefits associated with
allowing operators to trade their over-performances with each
other, although there are also concerns that this approach would
effectively create a new emissions trading scheme.
4. The differences in CO2 emissions from different
power generation sources need to be considered if trying to level
the regulatory burden across the power industry. Coal plants emit
more CO2 than gas plants, so if for example 85% of
CO2 is captured by a coal plant you may then emit around
150g CO2/kWh where as if 85% is captured with gas you
may emit down to 70g CO2/kWh with the same 85% level
of capture. If however different plants have different standards,
an EPS could be designed to reflect the relative difficulty associated
with CCS for each fuel. Differentiated standards of this sort
have been implemented before, as in the EU Large Combustion Plant
Directive.
5. Clear definitions of applicable EPSs at variable plant
load factors should be carefully thought through. In particular,
how an EPS might be applied to non-baseload plants needs to be
considered, with a clear definition established to ensure clarity
on what constitutes a "baseload" or "non-baseload"
plant. As a result of recent and expected growth in renewables
and nuclear energy, it is thought that many UK coal and natural
gas plants will see declining load factors during the 2020s. If
this is the case, CCS will become less financially viable since
reduced operating hours tend to imply less stable revenue streams
for paying off the capital investment required.
6. The timing of an EPS announcement and any step changes
or other tightening in standards is important. The timing and
level of a power sector EPS should, however, be set to promote
large-scale CCS projects from the outset. The market might be
provided with much needed clarity and have ample opportunity to
prepare along a specified timeline with an early EPS. It is also
important to consider specific needs of operators of early commercial-scale
demonstration plants and how EPS design is linked to significant
lessons that are expected from these early plants. However, a
tightening in EPS as CCS and other low carbon technologies are
refined could be expected to promote low carbon technology development
whilst allowing power providers to deploy flexible and dynamic
management of their assets. Careful consideration should be given
to reductions in allowable CO2 emissions with a clear
date of introduction and intended pathway for changes in levels
and/or plants covered by an EPS.
7. Given the scale of our climate change problem, and
that other industries will eventually have to be decarbonised
if to meet emission targets, it would be an advantage to have
an adequate piece of legislation that can easily be transferred
or adapted from power to other industries such as cement or steel.
For example, where metrics could be adapted for non-power based
units of production, an EPS might be transferable to other industry
sectors. An EPS holds a lot of potential for curbing greenhouse
gas emissions and could be developed for more wide scale application.
Question 2: What benefit would an EPS bring beyond the
emissions reductions already set to take place under the EU ETS?
8. An EPS could drive CCS and other low carbon technologies
if implemented correctly. There is widespread concern that the
EU ETS is not currently driving low carbon technologies and will
not sufficiently drive them in the foreseeable future. The UK's
coalition government has stated that a carbon price "floor"
is one of its aims, so that the finance sector can more confidently
appraise investment in the power sector. However, emerging low
carbon technologies need more than just a stable carbon price
to overcome challenges faced by many new technologies as they
are introduced to the commercial market for the first time. In
particular, there is a body of evidence pointing to market failures
where innovation could lead to technology becoming cost-competitive
in the future, but only after sufficient time has been allowed
for mature technology to develop.[24]
While the EU ETS is a minimum benchmark of sorts for power markets,
an EPS could push forward CCS and other low carbon technology
implementation at a faster and more reliable rate than with the
EU ETS alone.
9. The infrastructure needs for commercial scale CCS
are capital intensive and will require financing over several
decades (eg capture plant, pipeline, CO2 injection
wells). A well-designed and effectively implemented EPS would
bring investment certainty to the sector by providing clear and
long-term standards. The fluctuating nature of the EU ETS along
with non-specific climate change regulations have led to greater
uncertainty in the power sector, which can inhibit financial investment.
It is important that an EPS is designed to help reduce uncertainty
if it hopes to bring forward large capital investment.
Question 3: How effective is an EPS likely to be in driving
forward the development of CCS technology? Should the UK's CCS
demonstration programme cover gas-fired as well as coal-fired
power stations?
10. There are two technology effects that are most often
discussed in conjunction with an EPS. The first is a "shut
out" or elimination of coal from the generation mix if an
EPS is only associated with coal fired power plants. In 2006,
the State of California, in the USA, passed an EPS of 1,100 lbs
CO2/MWh (equivalent to 500g/kWh) that essentially prevents
unabated coal from being developed. Given the current economics
of the energy market, this EPS could drive the development of
unabated natural gas fired plants. Since the UK already has an
implicit EPS for coal fired power plants with the "no new
coal without CCS" requirement, any formal EPS for the UK
would have little effect if other carbon emitting power plants
(natural gas and biomass) were not covered.
11. The second technology effect could be the forcing
of CCS and other low carbon technology development. If this is
an aim of the EPS, one can point to historical examples where
legislation has indeed helped drive the development of pollution
abatement technologies. For example the improvement of flue gas
desulphurisation (FGD) technologies in the last half century was
a direct result of tightening pollution legislation in the US
and elsewhere. Similarly catalytic converters on motor vehicles
were developed on the back of strong legislation that limited
automotive exhaust emissions.
12. However, this type of technology forcing only appears
to work where no real alternative to the target technology is
available. The reality of the UK electricity market today is that
many decisions for investment in coal-fired generation have been
cancelled/delayed while there appears to be another "dash
for gas" with more than 10GW of gas-fired power stations
currently applying for planning consent or recently granted Section
36 planning permissions. In fact, since the late 1990s, the largest
percentage of UK energy supplies has come from natural gas.[25]
Decarbonising power generation to the level recommended by the
Committee on Climate Change is unlikely to be achieved without
at least some CCS on gas. A demonstration project on gas would,
therefore, be a much-needed step in the right direction.
13. An effective EPS set for coal, gas and biomass fired
power plant coverage would give CCS technology sufficient momentum
to progress towards commercial scale application of the technology.
It should be noted, however, that if CCS is driven by an EPS,
this technology forcing will critically depend on the details
of the EPS design and implementation. It is also essential that
an EPS is not seen as an alternative to adequate funding, particularly
for initial commercial-scale demonstration of CCS.
14. An EPS could not only help drive development of a
technology, but it could also help ensure that CCS technology
is actually used once installed. If carbon prices were sufficiently
low, plant operators could run unabated fossil fuel-fired plants
and bypass their CCS units. However, a well-designed EPS could
be one method to avoid this scenario.
Question 4: Could the introduction of an EPS pose any
risks to the UK's long-term agendas on energy security and climate
change?
15. As already noted, if an EPS covers only coal (like
the California EPS) it is likely to reinforce investment in gas-fired
generation, increasing the country's dependence on gas imports
and delaying decarbonisation of electricity supplies. There are
two well-established lines of thought in relation to potential
impacts to energy security from an EPS that includes natural gas.
One being that the introduction of an EPS on gas-fired power generation
"too soon" could reduce the capacity of gas-fired power
plants actually constructed in the UK, with associated suggestions
that this could lead to insufficient electricity supply to meet
future demand. It will be particularly important not to discourage
investment in the CCGTs (combined cycle gas turbines) needed to
maintain generating margins when existing coal and nuclear plants
close, from 2015-16 onwards. The second suggestion is that there
is also potential for an EPS to increase long term energy security
in the UK if all carbon emitting power plants are covered. Because
then all fuel sources would have level regulations, allowing more
fuel types to remain in the overall fuel mix. A greater diversity
in fuels is typically expected to increase our overall fuel security.
16. Ideally, the UK should pursue the development of
an EPS at the EU level. However, should this not prove possible,
it will be important that there is consistent treatment of electricity
imports within an UK EPS, although there is currently limited
potential to import (or export) electricity in to (or out of)
the UK. This should help ensure that the UK generated power is
not put at a competitive disadvantage. Successful implementation
of an EPS including imports could also help to provide a model
that may be appropriate for an EU EPS if this approach is pursued
in the future.
Question 5: What is the likely impact of an EPS on domestic
energy prices?
17. It is very likely that any measure we take to change
"business as usual" will at least in the short-term
increase the costs of providing electricity. Whether the measure
is increasing renewable energy production or adding CCS to existing
coal or gas fired power plants (or requiring it at new-build plants),
they will all increase the costs of electricity supply that are
likely to be passed through to both industrial and domestic customers.
Question 6: Are any other European countries considering
an EPS? If so, should the standards be harmonized?
18. As stated previously in our answer to question number
3, the UK already has an implicit EPS with the "no new coal
without CCS" provision. Additionally an EPS has been under
discussion at European level for several years. It appears likely
that if the UK were to implement an EPS rapidly then the form
of a UK EPS could have a significant influence on the development
of any future European EPS (or indeed an EPS introduced in other
European Member States—and potentially other non-European
countries/jurisdictions such as US states).
19. It is important to consider impacts to investment
when designing an EPS. Since the UK power industry relies on foreign
investment for large capital expenditures, a poorly designed EPS
could be seen as harmful to British investment profitability.
One could argue that an EU EPS would limit this threat and should
be further pursued.
Question 7: Could unilateral action by the UK to introduce
an EPS contribute towards global climate negotiations in Cancun
in November 2010?
20. Certainly, if the UK were the first nation to implement
a national EPS, it would be noted and could potentially add leverage
to future climate change negotiations. However there is little
time between now and November, so the effects of any UK EPS (even
if implemented immediately) would not be apparent straight away.
A well executed EPS in the UK with tangible and positive results
could serve as a model to hold up in global climate negotiations,
but it will likely require several years post EPS implementation
before results at this level are understood.
Question 8: Can greater use of Emissions Performances
Standards internationally help promote agreement on global efforts
to address climate change?
21. International use of EPS-type measures could be a
large step forward in mitigating climate change impacts, but as
in the UK, the precise outcomes will depend on the detailed EPS
scheme design and implementation. Consistency in regulation could
also be expected to help level energy costs on a global scale
and create a larger market for low carbon energy technologies
that are developed and patented by early adopters.
September 2010
23
For example, as outlined in analysis undertaken by and for the
Committee on Climate Change. See www.theccc.org.uk for further
details. Back
24
Stephen Martin, John T. Scott (2000) The nature of innovation
market failure and the design of public support for private innovation.
Research Policy 29: 437-447. Back
25
http://www.decc.gov.uk/en/content/cms/statistics/publications/dukes/dukes.aspx Back
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