Carbon capture usage and storage: third time lucky? Contents

Conclusions and recommendations

Ambitions and least cost decarbonisation

1.We encourage the Government to view CCUS primarily as a tool for decarbonisation, rather than as an extra cost on power generation. Deployment should be prioritised because CCUS presents an opportunity to reduce the overall cost of meeting the UK’s emissions reduction targets. (Paragraph 11)

2.Whilst we strongly support cost minimisation, we disagree with the CCUS Action Plan’s stipulation that deployment ‘at scale’ should be supported only if ‘sufficient’ cost reductions are achieved. Such vague terminology gives no certainty to investors and does little to ensure that CCUS can contribute to meeting the UK’s overarching climate change targets at least cost, given its existing status as the cheapest—or only—decarbonisation option in many industrial applications. We recommend that Government revise its formal aims in light of the Minister’s more nuanced position and prioritise the development of clear ambitions that will bolster its renewed efforts to kick-start CCUS. We further recommend that the Government commits to supporting CCUS where and whilst it remains the cheapest route to decarbonisation, notably in industrial applications. Rather than seeking unspecified cost reductions, the Government should set out plans to ensure that projects are brought forwards at least cost. (Paragraph 14)

3.We welcome this initiative, as well as the Secretary of State’s confirmation that he would be willing to bring forward the Government’s timeline for deployment of the first CCUS facilities if this enabled delivery at lower cost. We recommend the timetable for policy delivery is accelerated to enable CCUS commissioning from 2023, to avoid the additional cost of recommissioning disused oil and gas pipelines after they have been decommissioned. (Paragraph 15)

4.Our view is that the Government should be both ambitious and clear. We recommend the Government sets a specific target to store 10 million tonnes of carbon by 2030, and 20 million by 2035, to keep the UK on track to meet its 2050 climate change targets, as recommended by the CCC. (Paragraph 16)

5.We recommend the Government expedites safety demonstrations, and—assuming these are satisfied—brings forwards amendments to the Gas (Safety Management) Regulations and the Gas (Control of Thermal Energy) Regulations as a matter of urgency to enable large-scale demonstrations of hydrogen injection into the gas grid. (Paragraph 19)

Industrial opportunities

6.The UK’s storage and supply chain resource strengths mean that we have a unique opportunity to lead the world in the development of a new CCUS industry. The Government should not allow the UK to pass this opportunity up. We recommend that the Government prioritise the development of CCUS to benefit from growing international demand for low carbon products and services–building on the UK’s existing successes with offshore wind. (Paragraph 22)

7.We believe that support for CCUS—an innovative technology expected to be critical to tackling climate change—is also justified on these grounds. (Paragraph 24)

8.We recommend that the forthcoming Comprehensive Spending Review take account not only of CCUS’ costs, but also its wider benefits–notably to extend the lifetime of heavy industries which will otherwise need to close under the requirements of the Climate Change Act. (Paragraph 25)

9.We recommend that the Government tasks the National Instructure Commission—or a third party—to conduct a cost benefit analysis of the potential role of CCUS to decarbonise industrial emissions, taking account of how development of industrial CCUS would affect—and be affected by—the potential development of CCUS for other applications, notably hydrogen and power. The results of this assessment should be taken into account during decision-making on spending for national infrastructure. (Paragraph 26)

Business models and funding

10.We recommend that the funding models for carbon capture are separated from those for carbon transport and storage. We welcome BEIS’ work to consider RAB’s appropriateness for nuclear power, and recommend that this is expanded to consider CCUS, including transport and storage infrastructure to link with industrial carbon emitters. (Paragraph 34)

Clusters and competition

11.We welcome the Government’s recognition of the cluster model for decarbonising industry and delivering industrial CCUS, but the target to deliver only a single first project will limit regional benefits and runs the risk of delaying CCUS development if major obstacles are encountered. We recommend the development and commissioning of first CCUS projects in at least three clusters by 2025 to minimise the risk of a third major delay to the technology’s development and to ensure that its benefits for productivity accrue to industries across the UK. (Paragraph 39)

12.We recommend the Government consults on approaches to allocate funding for CCUS industry clusters, to ensure that the approach selected promotes collaboration and benefits CCUS development across the UK, including those clusters that take longer to get going. It should also seek to ensure that the scope of funding is sufficiently broad to allow consideration of all viable CCUS schemes and avoid excluding particular applications or technology-types. This consultation should be conducted as a matter of urgency and completed by the end 2019, so that there is no delay to the development of projects. (Paragraph 44)

Published: 25 April 2019