Select Committee on Science and Technology Written Evidence

Memorandum by Air Products plc


  In the notice given on 18 July, the Committee invited evidence for its new Inquiry into the practicalities of developing renewable energy. Air Products Plc wishes to submit evidence to illustrate weaknesses in the strategy currently being pursued and to identify ways in which the emissions reductions targets could be achieved with greater certainty and at lower cost. While the Energy White Paper set out a most useful insight into key issues, more detailed engineering analysis was needed to assess how the programme was technically robust especially related to electrical power supply.

  Recent events in North America and Europe have highlighted the vulnerability of major electricity supply systems after a relatively short period of operation under a deregulated and competitive regime. While wholesale price reductions have been achieved in the short term, little new capacity has been installed because prices have been too low to attract new investment. Electrical power cannot be stored economically and it is consumed as it is generated. Supply and demand are therefore controlled to be in a constant dynamic balance. Demand for electricity continues to grow unabated throughout Europe. If blackouts are to be avoided and since new capacity takes some years to build, investment decisions must be taken in anticipation of market price response either as an act of faith or with an agreed government safety net.

  Security of electricity supply should be the highest priority item in any energy policy especially for a densely populated island such as the UK. Environmental objectives should then be harmonised with future power generation policy and energy use in the other sectors.


  Government policy is that renewables should form the basis for achieving a large part of the Government's objective for reducing CO2 emissions from electric power production. This policy is fatally flawed because:

    —  The only available renewable resource in the quantity and timeframe required is offshore wind turbines. They would form the bulk of the installations for ecological and wind strength reasons. The total capital cost to the UK of such a programme is huge. Between now and 2010, the best available offshore technology would be very similar to the latest Danish Offshore wind farm at Horns Rev where 80 x 2 MW wind turbines were installed in the summer of 2002.

    —  The Horns Rev unit cost with some downward adjustment for possible cost reduction for a UK order would be £900-1,000/kW[1] at its rated maximum capacity.

    —  The average capacity utilisation is about 25 per cent[2] giving a corrected unit capital cost of £3,600-4,000/kW.

    —  At a 15 per cent overall discount rate on the more favourable figure (which would include maintenance and operating costs) this equates to £540/kWyear or 6.2p/kWh, compared with current bulk prices of 2p/kWh.

    —  Projected costs would also need to include transformer and transmission investment, the cost of standby capacity (spinning reserve) for generation to compensate for the unpredictability of wind power and also back-up capacity required to cover periods of low or zero wind speed (anticyclones).

    —  Para 4.9 of the White Paper cites the need to install 10,000 MW of renewable power to achieve the 2010 CO2 targets. The saving in CO2 emissions from wind power must take account of the high CO2 emissions of necessary standby fossil fuel fired power generation capacity to compensate for the unreliability of the wind power plants. Consequently, to assume wind power is CO2-free is inaccurate because it must be accompanied by inefficient running of fossil-fuelled capacity to stabilise the grid.

    —  Assuming 7,000 MW out of the 10,000 MW capacity delivered to the grid as mentioned above is new renewable power, then in practice 28,000 MW of wind capacity needs to be installed. That translates to 14,000 x 2 MW turbines and at that size, they require 600 metre spacing. That is equivalent to a row of wind turbines 8,400 km long (or nearly once round British coastline).

  The emphasis on renewables is therefore neither technically nor economically feasible as a route to achieving the UK's commitment to CO2 emissions reduction along with a stable power supply.


  The Energy White Paper makes reference to many possible approaches in pursuit of a lower carbon economy. CO2 emissions can best be controlled where fossil fuel is consumed in bulk eg power stations. The CO2 emitted is dependent on the fuel, the type of plant and the conversion efficiency of the plant. Figure 1 illustrates the considerable differences that exist today. It can also be seen that by selecting the combination of fuel and technology, substantial reductions in CO2 can be made.

  In the UK, a typical coal fired power station has a 35 per cent electrical efficiency ie the energy equivalent of the output electricity as it is transferred to the grid divided by the energy in the combustion fuel. Hence, a substantial portion of the potential thermal energy in the fuel is being wasted. A coal burning plant of this efficiency will emit about 1,000g/kWh of CO2 as operated today. The gas fired combined cycle stations operating at present will have an efficiency of about 53 per cent and emit about 380 g/kWh of CO2. GE's latest CCGT design will have an efficiency of 60 per cent and emissions of about 320g/kWh, a very substantial reduction in CO2 and increase in efficiency versus today's coal-fired capacity.

  The least cost way to reduce CO2 is therefore to switch to Combined Cycle Gas Turbines (CCGT) but that raises the question of long term gas supplies and gas price. Figure 2 illustrates the cost of power from CCGT versus the gas price. On the other hand, perpetuating the use of old combustion-based equipment in the interests of "competitively" priced electricity is not compatible with CO2 reduction. The cost penalties being imposed by the EU for non-compliance is likely to force closure of the UK's older coal capacity unless CO2 capture techniques are introduced and will lead to increases in the price of electricity.

  While CO2 can be reduced by a switch to gas, it would lead to increasing dependence on imported natural gas and reduced energy diversity. The UK's coal and oil fired stations are also valuable assets with existing power infrastructure to the grid. It is therefore important to examine what can be done to reduce CO2 emissions in a way which takes advantage of those assets. CO2 capture is possible and is set to become an increasingly important step in achieving the targets that have been tabled in many parts of the world.

  While the capture of CO2 from the flue gases of existing coal-fired power plants is technically possible, it is totally uneconomic. More cost effective routes are available:

    —  Oxyfuel Combustion ie to burn the fuel with oxygen leaving a CO2-rich gas for capture

    —  Gasification—another approach which converts the energy in solid or liquid fossil fuels into gaseous energy in a gasifier. The making of synthesis gas (similar to town gas) lends itself to CO2 removal. At least 85 per cent removable is possible with the added flexibility to convert most of the primary feedstock to hydrogen. Waste streams such as domestic refuse could also be recycled in this way with far greater energy recovery than via incineration.

  Both the conversion and the capture technology is well known and proven albeit that is has not been widely applied to date as a means of reducing CO2 to atmosphere. The processes represent basic chemical engineering whereas the White Paper implies that much research and development would be necessary to implement this type of programme. This rather indicates a lack of consultation with the appropriate engineering disciplines and industrial gas companies.

  The dashed line on the chart in Figure 2 illustrates the added cost of CO2 removal from a (CCGT) system. Figure 3 illustrates the cost of generating power from coal with a similar line for the cost of CO2 removal at different levels of fuel cost. While these added costs are per kW generated with CO2 capture, the cost to the overall system would not be as great because CO2 need only be captured to keep pace with the targets that have been set. Only a limited number of stations would need to incorporate the capture capability.

  The use of Oxyfuel combustion has appeal for existing coal-fired stations. It would create a way to use coal cleanly because the processes used to remove CO2 also remove sulphur and nitrogen oxides. The handling of the captured CO2 will be addressed in the next section.

  The alternative to Oxyfuel combustion is equally effective based on energy conversion using gasification. An early form of this process made town gas but modern gasification designs convert all the feedstock to a fuel gas without the residue of coke. The new high-pressure designs can concentrate the CO2 so that it can be captured easily. This process offers considerable flexibility and energy diversity. Synthesis gas is an alternative for natural gas in many applications.

  The incentive to use the process commercially hinges on the development of natural gas prices. Growth in global demand for gas is leading to increased prices and investment in systems to move gas as Liquefied Natural Gas (LNG) is increasing rapidly. US gas prices already exceed $5/MMBtu (300p/GJ) and the European spot market is catching up. No long-term contracts are being signed in the US—contracts are now limited to no more than one year.

  At a price level of around $4/MMBtu (250p/GJ), gasification is viable as a source of competitive gas. For small incremental cost, the CO2 can be captured so there is a second path to clean power generation using synthesis gas as a source for existing CCGT plant, new CCGT or repowering of existing coal-fired plant. A further conversion step can yield additional hydrogen and more CO2 for capture so it is an attractive pathway to an energy source for fuel cells.

  If combined heat and power can be introduced at a local level, the combined thermal efficiency can rise as high as 95 per cent with corresponding reduction in CO2 emissions. Fuel cells could offer such a route. Hence, major CO2 and energy savings are possible as a direct result of using fuels much more efficiently with today's technologies.


  Figures 2 and 3 indicate the cost of power at different levels of fuel price. The upper line is the added cost of power with CO2 capture from both gas and coal based plant. While the cost of removing CO2 from a coal system is higher than gas, the fuel cost is lower so it is more cost-effective to remove CO2 from a coal system. The two upper lines on the coal-based chart diverge slightly and indicate that gasification is less sensitive to fuel price and would be the preferred route if coal prices were to rise.

  The more important aspect of the analysis is the relatively low cost of CO2 removal by capture/storage versus CO2 avoidance via wind power. Air Products estimate that CO2 can be captured from coal or gas fired plant for £450/kW. If the power plant operated for 80 per cent of the year, some 40 million tonnes of CO2 could be captured from 7500 MW of fossil fuelled capacity. (That would be equivalent of Drax, Ratcliffe and say Fiddlers Ferry). The capital cost would therefore be £3.4 billion. Air Products estimate for infrastructure to store the CO2 is £2 billion or £5.4 billion for a system to remove 40 million tonnes from the UK's power sector. If wind power were assumed to be CO2-free for the purposes of this comparison, some 6000 MW of continuously operating electrical energy would be required. From the annual availability, this would mean 24,000 MW of installed wind turbine capacity costing between £21.4 and 24 billion.

Summary table of costs

Wind power
£21.4-24 billion
CO2 capture
£3.4 billion[3]
CO2 storage
2.0 billion[4]

  The UK strategy should be to attain its CO2 targets at least cost and these figures show the scale of the advantage in progressing capture and storage.

  If a nuclear replacement programme is not implemented, then the CO2 reduction targets can only be achieved through CO2 capture and storage. To the extent that this is applicable throughout the world, the UK has the opportunity to build on the pioneering work already undertaken in the USA and Canada with considerable benefit to UK industry.

  The UK Treasury could also become a beneficiary by following the CO2 capture path. The UK's North Sea oil wells have all passed their peak production and could benefit from Enhanced Oil Recovery by the use of CO2. This technique is being used in both the USA and Canada while a similar application with storage is being used in Norwegian waters at the Sleipner field. The elegance of this approach is that CO2 can be removed from shore based power generation systems and can be used to recover additional oil from existing wells thereby increasing government revenue that they would not otherwise receive. One recent study by BP on the Forties Field suggests that $5 billion of revenue could accrue to the government at current crude oil prices taking CO2 from just 800 MW of new power generating capacity based on the gasification of coal. This is a notable win-win opportunity for government. A substantial additional production of crude oil would be made available saving an equivalent amount of imports. The production of the well is likely to be extended by 20 years so the decommissioning funds that government has to pay to the oil company for removal of platforms etc would be correspondingly deferred while power can be generated from "green" coal offering energy diversity as part of the overall policy. This type of project could be funded commercially without any direct government help if the Treasury were to agree to modify the royalty/tax structure for recovered oil.

  In parallel with CO2 usage, the British Geological Survey has published a study outlining the scope to store CO2 in the structures under the North Sea. They have estimated enough space for the whole of European current levels of CO2 for over 100 years. Again, the development of these opportunities is touched on in the White Paper and reinforced by another DTI report that followed a UK Mission to the USA and Canada. However, if CO2 is to be reduced in line with both the 2010 and 2020 objectives, these positive and low risk steps need to be taken while re-examining the real scope for renewables.

  While the purists for sustainability argue for carbon-free energy and dismiss CO2 capture, it is important to remember that even sustainability must obey the laws of science. Bio-mass and wind power are assumed to be CO2 neutral but this cannot be so. Crops certainly absorb CO2 but to plant, husband, harvest, transport and process crops for fuel will use a considerable amount of diesel, and that excludes the energy used in making the fertiliser. It is unlikely to be better than 85 per cent effective in CO2 reduction—a figure which can be equalled or bettered by CO2 capture techniques. Bio-mass also uses land that may well be required for food production and consumes much water.


  In submitting evidence, we consider that considerably more emphasis needs to be placed on positioning the UK to maintain a balanced portfolio of energy sources while using energy more efficiently. This can be supplemented by the application of CO2 capture which can be implemented at a level to guarantee that the CO2 emissions reduction targets will be met.

  There is virtually no amenity impact associated with capturing CO2 on existing power plants and the electrical infrastructure remains in place. That cannot be said for some 12,000 wind turbines. Capture technology retains the use of high energy density power generation instead of very low density generation from diverse wind farms and the transmission infrastructure needed to transfer it to the market.

  There is increasing potential for enhanced oil recovery because about two barrels of oil are recoverable per tonne of CO2 stored. This could represent as much as 80 million barrels per year that will otherwise have to be imported.

October 2003

1   The Horns Rev capital cost cited in the Press releases was 1,690 Euros/kW for 2002 construction. Current $ conversion would be $1,030/kW. Back

2   The 25 per cent is a typical figure used for delivery of power. Cornwall can achieve 30 per cent at the point of generation. However, factors such as plant availability, wind availability, transformer and transmission losses to the point where power is connected to the national grid can all reduce that 30 per cent and the typical "power to grid" from wind in Denmark has stabilised at about 20 per cent. Figures of over 30 per cent are predicted at point of generation for UK offshore waters but such high availabilities remain unproven and have not been experienced in other parts of the world. Back

3   The figures for CO2 capture assume the use of oxygen in both cases. The cost of oxygen is likely to fall substantially as cryogenic methods of production are superseded by ITM technology within the next few years. Back

4   The figures for CO2 capture assume the use of oxygen in both cases. The cost of oxygen is likely to fall substantially as cryogenic methods of production are superseded by ITM technology within the next few years. Back

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