10 December 2018
Carbon Capture, Usage and Storage (CCUS): BEIS Committee evidence session.
Thank you for your letter of 26 November 2017 on CCUS following the oral evidence session on the 21 November 2018.
Since the evidence session, I have made a number of announcements that underline the Government’s support to progressing CCUS in both the UK and globally. This includes, for example, with the Scottish Government, Total and the European Commission, our support for Project Acorn in St Fergus Scotland. I have also co-hosted, with Dr Fatih Birol of the International Energy Agency, the world’s first dedicated global CCUS Summit on 28 November 2018 in Edinburgh. This brought together 50 world energy leaders to progress CCUS, confirming its central role in meeting global climate ambitions.
In parallel to the Summit I published ‘The UK CCUS Deployment Pathway: An Action Plan’.
Our Action Plan is designed to enable the development of the first CCUS facility in the UK, commissioning from the mid-2020s. The action plan has been well received by industry, including the Carbon Capture and Storage Association (CCSA) and Energy UK.
You raised four specific questions seeking more information on the Government’s ambitions and I have set out a response to each of these below.
1. A clear and specific explanation of what must be achieved in order to satisfy the requirement of “costs coming down sufficiently”, including further detail on who is expected to achieve these cost reductions, and the role of Government in supporting investable business models.
Our Action Plan is designed to enable the UK’s first CCUS facility being commissioned from the mid-2020s and this is an important step in satisfying our 2030s ambition.
This approach is supported by the Committee on Climate Change, who in response to the Action Plan, stated that “the Action Plan rightly identifies a need and opportunity to proceed at considerably lower cost than expected under the previous UK approach”.
Government, industry, finance, innovators and academia all have a role to play in supporting cost reductions which is why our Action Plan commits us to work with all relevant sectors to explore cost reductions. For example, we will work with stakeholders to identify existing oil and gas infrastructure that could be re-used to support CCUS projects at lower cost and will develop a policy on re-use of infrastructure for the purpose of CCUS.
The UK government has invested over £365 million since 2011 in CCUS since 2011. We continue to support innovation in CCUS. We are investing £45 million in CCUS innovation programmes including:
Establishing market-based investment frameworks will be important to enabling cost reductions. This is why we are currently completing a Review of Delivery and Investment Frameworks which is considering investable business models for CCUS, across power, industry, and transport and storage, as well as assessing the relative roles of Government and industry. In parallel to this, we will be undertaking detailed engagement with industry on the critical challenges to delivering CCUS in the UK, including risk sharing and cost structures. We will consult on the findings of this review and publish the outcome next year.
2. An explanation of how the Action Plan addresses our concern that the requirement for sufficient cost reductions will impede deployment of CCUS in a timely fashion.
As I outlined during the evidence session, we are committed to supporting the development of CCUS in the UK, recognising its potential important role in meeting our 2050 emissions reduction target. That is why we are investing £45 million in CCUS innovation to March 2021, to support technological development to drive cost reductions.
Our Action Plan is designed to enable the UK’s first CCUS facility to be operational from the mid-2020s. The Action Plan introduces a staged approach to allow Government, industry and finance to develop and test commercial and regulatory concepts during the 2020s.
This approach has been welcomed by industry, for instance Luke Warren, Chief Executive of the CCSA, said: “the Government’s announcement in Edinburgh recognises the need for urgent action, with a commendable commitment to develop the first project by the mid-2020s as a first step towards having the ability to deploy CCUS at scale”
We will, in 2019, work with industry to develop a shared understanding of the cost structures and risk sharing arrangements. This will allow the development and testing of commercial and regulatory concepts incrementally during the 2020s, including enabling initial deployment from the mid-2020s.
3. A clear explanation of what the Government means by deployment of CCUS “at scale”, and how this differs from deployment of initial industry clusters.
The definition of “scale” varies and the range of “at scale” deployment that might be required between 2030 and 2050 similarly varies. For the example, the Committee on Climate Change states that the scale of CCUS required by 2050 may be between 60–180MtCO2/year, whilst modelling by the Energy Systems Catapult shows capacity of approximately 80MtCO2/year by 2045.
At an individual facility level, according to the Global CCS Institute, a large-scale facility is defined as “involving the capture, transport and storage of carbon dioxide at a scale of at least 400,000 tonnes of CO2 annually”.
With regard to CCUS clusters, we will examine the opportunity that industrial clusters – regional groupings of multiple CCUS facilities connected to a shared transport and storage infrastructure – can offer.
4. Confirmation of whether the Government’s ambition is to deploy CCUS “at scale” during the 2030s or by the mid-2020s.
Our ambition is for the UK to have the option to deploy CCUS at scale during the 2030s, subject to the costs coming down sufficiently. To help realise this ambition, our Action Plan is designed to enable the development of the first CCUS facility in the UK, commissioning from the mid-2020s.
I hope you find this information helpful.
THE RT HON CLAIRE PERRY MP
Minister of State
137 Energy UK press release, 28 November 2018:. CCSA press release, 28 November 2018
140 CCSA press release, 28 November 2018
141 Upper limit of 180 MtCO2 per year by 2050: Committee on Climate Change, 2018, pers.comm. to the Cost Challenge Task Force, 29 June.
142 Options, Choices, Actions Report: 2018 Update.
143 The Global Carbon Capture and Storage Institute define large-scale as integrated facilities involving both capture and storage at a scale of: at least 800,000 tonnes of CO2 annually for a coal–based power plant, or at least 400,000 tonnes of CO2 annually for other emissions–intensive industrial facilities.
Published: 25 April 2019