Memorandum by the Carbon Capture and Storage
Association (CCSA)
INTRODUCTION
1. The Carbon Capture and Storage Association
(CCSA) welcomes this opportunity to submit its views to the Committee's
inquiry into the economics of renewable energy.
2. The CCSA brings together a wide range
of specialist companies spanning the spectrum of CCS technology,
as well as a variety of support services to the energy sector.
The Association exists to represent the interests of its members
in promoting the business of CCS and to assist policy developments
in the UK and the EU towards a long term regulatory framework
for CCS, as a cost-effective means of abating carbon dioxide emissions.
3. The Main Points Arising are:
— To solve the climate problem needs
all technologies as quickly as possible.
— Fossil fuel with CCS is comparable
in cost to renewable sources and is likely to be able to achieve
major cost reduction as it matures.
— Fossil fuel with CCS is entirely
complementary to renewables. Indeed it can help to increase renewable
penetration.
— CCS is not currently given favourable
treatment in the UK, in Europe and elsewhere to enable it to become
a mature and mainstream technology.
— Given the complementary nature of
the two technology types and the fact that the sources of emission
reductions are immaterial in hitting global targets, the incentivisation
of both technologies should be broadly comparable.
POTENTIAL FOR
CCS
4. CCS has the capability to deliver large
quantities of carbon abatement. As an example, annual emission
reductions of seven million tonnes CO2 could be delivered by capturing
emissions from a single large new coal station, equivalent to
the savings from around eight hundred wind turbines. A study recently
published by Yorkshire Forward outlines how 60 million tonnes
of CO2 could be collected and stored from the Humberside region
alone. Internationally, the market for equipment and services
for CCS is likely to be extremely large and will be interdependent
with that for renewables.
5. The CCSA argues that there is a strong
case for predicting that costs of carbon abatement from carbon
capture and storage are likely to be comparable with a large proportion
of renewables in the longer-term—a view supported by several
independent researchers due to the fact that CCS:
— Is a relatively immature technology
with major scope for cost reduction through learning;
— Has lower external costs than many
renewable technologies (less backup generation and grid reinforcement);
and
— Gives the opportunity for economies
of scale in CO2 transport and storage network with multiple CCS
projects.
6. We submit that given the above, CCS should
be considered as an additional and complementary generation technology
to renewables for decarbonising the electricity sector in the
UK, and be given access to comparable levels of incentives.
CHALLENGE OF
DECARBONISING THE
POWER SECTOR
7. The British Government[32]
has committed to a target of reducing targeted greenhouse gas
emissions by at least 60% by 2050. It is highly likely that the
majority burden of this target will fall on the electricity sector,
and it is not unreasonable to suggest that over this timescale
complete decarbonisation of the electricity sector is likely to
be required. The prospect of decarbonisation of the heat and transport
sectors further raises the need for new low-carbon energy conversion.
8. The primary choices for new low-carbon
generation technologies lie between nuclear, CCS, solar-, wave-
and wind power. To achieve large scale decarbonisation, and given
that photovoltaics are a long way from being cost competitive
in the UK, the greater part of this new and replacement capacity
will come from nuclear, CCS and wind power.
9. Recent lead times for power station projects
and networks reinforcements, combined with a world market in which
equipment suppliers are struggling to produce sufficient supplies
of (amongst others) turbines, boilers and cables, suggests that
reliance on any single technology to deliver the new generation
capacity will be extremely risky[33].
Experience also suggests that the lead times required for both
wind and nuclear projects to gain public consent can be considerable,
and it is not clear that the aims of the Government's Planning
White Paper[34]
will be fully realised.
10. We believe that constraining policy
to renewables and nuclear in these circumstances would be very
unwise. Incorporation of CCS into policy thinking would not only
create diversity in the fuel mix but significantly strengthen
the UK's potential to deliver rapid reductions of carbon emissions.
LIMITS TO
THE ROLE
RENEWABLES CAN
PLAY
11. The primary renewable technologies in
the UK electricity sector are likely to be limited to onshore
and offshore wind in the near future. Typically the load factor
for viable windfarms is 25-40%, with the higher end of the range
only achievable by offshore windfarms.
12. Wind intermittency will be a major challenge
for the electricity system. Industry experts[35]
suggest that a wind capacity of 25GW will offset only 5GW of thermal
power meaning that a further 20GW of thermal capacity will be
needed on the system. This sets some natural limits to the capacity
for delivery of a decarbonised power sector from wind.
13. As a low-carbon thermal generation technology,
CCS is very well placed to complement wind power with the additional
capacity needed to maintain system flexibility and operational
security of supply. Such flexibility will be in greater demand
due to the system effects of substantial intermittent generation
volumes, while the ability of other low-carbon technologies to
provide sufficient volume (at a reasonable price) is very limited.
14. A mix of wind, nuclear and CCS appears
to provide a technically feasible way forward, and to deliver
the best prospect of rapid reductions in carbon dioxide emissions.
NEED FOR
NEW TECHNOLOGY
INCENTIVES FOR
CCS
15. Making a robust economic comparison
between renewables and CCS is not straightforward. Like many renewable
technologies, CCS requires credible and material policy support
to realise its longer-term potential and with these we believe
that CCS will be competitive with other generation technologies.
The current approach of selecting the renewables sector as a technical
winning sector carries the real risk of delaying CCS development.
16. A historical comparison between offshore
wind and CCS is limited by technological immaturity: the few offshore
windfarms in UK waters have a limited track record, and economic
assessments of CCS projects are limited to those based on engineering
studies. In a similar vein, both wind and CCS can legitimately
claim the potential for cost reductions in the future as their
deployment grows worldwide.
17. Events in world markets have made comparisons
even more difficult: global demand for Engineering & Procurement
Contracting services in the energy sector in recent years has
increased costs of engineering projects by around 25% annually
and, in several cases, suppliers not quoting for projects; rising
gas and coal prices have had a direct impact on the generating
costs of all thermal power stations.
18. Although skewed by recent movements
in the market the CCSA believes that there is a strong body of
evidence from recent studies to conclude that CCS generation costs
can be comparable with renewables. A study published by DTI in
2006 provided estimates of the costs of CO2 abatement from CCS
that would be comparable to many renewable technologies[36].
We also believe that CCS will be competitive with nuclear power
stations, although the comparison is even more complex. As CCS
is high on its learning curve it is reasonable to expect costs
to fall rapidly with deployment, while in contrast, nuclear power
and onshore wind are mature technologies, and the costs are therefore
less likely to fall.
19. Of the three low carbon power generation
technologies, nuclear power has benefited from many billions,
maybe trillions, of public support, and renewable energy has certainly
benefited from many billions. Even though nuclear power and some
renewables can be considered quite mature technologies they still
receive considerable public support. We must ensure that CCS,
which is not a mature technology, is similarly treated.
20. A truly comprehensive economic comparison
between wind and CCS should also consider additional costs for
renewables attributable to its intermittency and any additional
networks investment. Inclusion of these system-wide costs will
only strengthen the competitiveness of CCS.
21. As CCS is not yet a proven commercial
generation technology, it should be considered as an "early
mover". In order more strongly to stimulate investment in
demonstration projects we believe that robust incentives will
be required to overcome the particular risks of a technology at
this stage of development. Access to comparable financial support
available to more mature renewable technologies would provide
an appropriate stimulus.
RECOGNITION OF
CCS CONTRIBUTION TOWARDS
EUROPEAN CARBON
TARGETS
22. It is worth noting that reductions in
carbon emissions from CCS will have exactly the same effect on
climate change as emission reductions arising from renewable generation
technologies.
23. By limiting the EU renewables targets
to those achievable by renewables technologies, we believe that
the proposed Directive is unwisely limiting its technology choice
from an implementation view, as well as from an economic standpoint.
Enabling CCS to contribute to European renewable energy targets,
as has been suggested by a number of commentators, is likely to
make delivery far more likely as it provides an incentive for
EU Member States to put in place incentives for CCS as well as
renewables. At present the renewables targets disincentivises
Member States support for CCS because the renewables commitment
will be joint & several and binding whereas the EU aspiration
for 12 CCS demonstration projects is not several and not binding
and is thus secondary in competition for State funding. We would
therefore urge the inquiry to recommend that policy support for
renewables does not distort incentives for other low-carbon options
like CCS.
24. Given the immense challenge of the draft
Renewables Directive and the high risk of not meeting it, inclusion
of CCS could well help to reduce potential EU penalties if the
UK fails to meet its target.
CONCLUSION
25. The CCSA believes that Carbon Capture
and Storage should be adopted by policymakers as a parallel approach
to renewables in the drive to reduce greenhouse emissions.
26. Expanding the range of credible choices
open to governments and markets to deliver carbon abatement will
give greater chance of meeting already ambitious targets.
27. By providing system flexibility fossil
fuel power plants with CCS will actually enable greater penetration
of intermittent generation sources.
28. CCS is cost competitive with most renewables
now, especially if intermittency and system costs are factored
in. It has the potential to become cheaper than renewables in
future with greater maturity, and indeed is expected in due course
to be competitive on the basis of the carbon price alone. However
this will only happen if CCS is given financial incentives of
the sort renewables have been granted, to enable early deployment.
16 June 2008
32 UK Government Climate Change [HL] Bill-2007-08 Back
33
For example anecdotal evidence suggests the current lead time
for a new CCGT is in excess of five years. Back
34
Planning for a Sustainable Future, White Paper, May 2007 Back
35
Strbac et all, 2007 Back
36
www.berr.gov.uk/files/file36782.pdf Back
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