Carbon capture and storage - Energy and Climate Change Contents


Carbon capture and storage (CCS) has the potential to help keep carbon emissions within the limits that are needed to avoid dangerous global temperature rises. As such, it could be a game changer in efforts to tackle climate change, but high energy and financial costs currently make CCS uneconomic without specific policy interventions to support it. These are likely to be subsidies from the public purse and/or the consumer. As a result, progress on CCS has been extraordinarily slow with only a handful of projects in operation around the globe and none fitted to power stations at full scale. In the UK the expected start date has been repeatedly pushed back from 2014 to potentially after 2020. This delay has called into question the credibility of Government CCS policy and has resulted in a lost decade for this vital fledgling industry.

To ensure CCS can start helping us cut power sector emissions by the 2020s, the Government needs to prioritise designing a credible financial incentive framework using guaranteed-price 'Contracts for Difference' (CfD) and commit to a realistic but ambitious timeline for awarding support to projects both inside and outside its CCS commercialisation competition. Viable projects outside the competition, in particular, could be at risk of collapsing unless they get a clear signal from Government that they can negotiate for a CfD in parallel with competition projects. CfDs need to be tailored for all these projects to suit the unique characteristics of CCS.

Getting the first CCS projects built will be key to reducing the cost of future CCS projects. It is unclear whether any financial advantage accrues to first movers, so there is a case for limiting the amount of consumer support which is allocated to the first CCS projects. It is likely that most benefits will be accrued by second movers, which may explain why the big companies are reluctant to spend so much of their own money at this early stage of CCS development. It would be wise for the Government to direct its resources at the uniquely British aspects of CCS deployment. This includes, promoting clustering of projects, encouraging enhanced oil recovery and reducing the regulatory and technical barriers associated with storing CO2 underground. With the right regulatory approach, it could one day be feasible to create a 'storage market' where other countries pay to permanently store CO2 in the UK's disused offshore geological sites.

The UK has previously experienced significant opposition to new energy infrastructure such as coal plant, wind farms and shale drilling. In some instances this has been driven by misinformation and misunderstanding. A national CCS engagement strategy emphasising the potential benefits, dispelling myths and listening and responding to public concerns over safety would help to address public opposition to CCS and to try and prevent it from growing.

To increase the chance that the first CCS project will be operational in the UK by 2020 the Government should aim to reach final investment decisions with the two projects left in its competition by 2015. Too much time has already been wasted by badly designed bureaucratic policies. CCS technology could be vital to keep climate change within manageable bounds, there is no further time to lose.

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© Parliamentary copyright 2014
Prepared 21 May 2014