UK decarbonisation and carbon capture and storage

Carbon capture and storage – a definition

Carbon capture and storage (CCS) is a way of ‘decarbonising’ fossil fuel power generation, through capturing and storing the carbon dioxide (CO2) produced.

CCS involves three steps;

• Capturing carbon dioxide (CO2) from power plants or industry, and compressing it to a liquid state
• Transporting the CO2 (usually via pipelines) to deep geological storage points such as depleted oil and gas fields or deep saline aquifers; and
• Storing the CO2 in these sites.

CO2 can be captured pre- or post-combustion;

• Post-combustion removes CO2 from flue gases. This can be retro-fitted.
• Pre-combustion reacts the fuel with oxygen, air, or steam, and after a further catalytic process removes the CO2 and uses the hydrogen left over as fuel in a combined cycle gas turbine generating station. Only new fossil fuel power plants can be equipped with this.
• Oxyfuel technology burns fossil fuels with nearly pure oxygen producing a flue gas of CO₂ and steam; the water condenses leaving flue gas of almost pure CO₂. This can be applied to new and existing fossil fuel stations.[1]

The ideal site for CCS generation is therefore close to a storage reservoir like depleted oil and gas fields and saline aquifers. A network of onshore and offshore pipelines to transport the captured CO2 is also required.[2] This could perhaps even be on a scale equivalent to the North Sea oil and gas industry.[3]

CCS is regulated through a licensing regime laid out in the Energy Act 2008 (section 1(5)). The Secretary of State for Business, Energy and Industrial Strategy (BEIS) is the licensing authority for offshore storage except within the territorial sea adjacent to Scotland.[4]

The role of CCS in meeting UK carbon targets

The 2008 Climate Change Act requires the Government to set five-yearly carbon budgets at least 12 years in advance after taking the independent advice of the Committee on Climate Change.[5]

The first three budgets were approved in 2009 by the Government following the advice of the CCC. The fourth budget, agreed in 2011 and covering 2023-27, set an emissions reduction target in the UK of 50% by 2025 compared to 1990 levels. The advice on the fifth budget from the CCC, The fifth carbon budget: The next step towards a low-carbon economy, proposed the budget should be set at 1,765 MtCO2e for 2028-2032, which would equate to a 57% reduction in emissions compared to 1990 levels. This included the following recommendation on the carbon intensity (amount of carbon dioxide emitted per unit of power) for the power sector and the role of CCS:

The Government should develop policy approaches consistent with reducing carbon intensity of the power sector to below 100 gCO2/kWh in 2030 (compared to 450 gCO2/kWh in 2014 and 200-250 gCO2/kWh expected by 2020).

This reduction could be delivered by a range of different mixes of low-carbon generation (i.e. renewables, nuclear and plants fitted with carbon capture and storage – CCS) to reach a total share of around 75% of generation by 2030.

It is important that the low-carbon portfolio includes roll-out in the 2020s of offshore wind and CCS given their long-term importance and the role of UK deployment in driving down costs.[6]

In 2015, the then Secretary of State for Energy and Climate Change Amber Rudd pledged ahead of the Paris UN Climate Change conference to phase out unabated coal – that is coal that cannot be captured and stored through carbon capture storage – by 2025. The pledge was not unconditional: it is contingent on a shift to gas within that timescale.

To decarbonise to the extent that the CCC has recommended would require CCS to also be applied to gas electricity generation. The CCC’s view is that “the period to 2032 will be vital to the development of carbon capture and storage, which has the potential to almost halve the cost of meeting the UK’s 2050 target”.[7] The Government accepted the advice of the CCC for the fifth carbon budget and in June 2016 Lord Debden, Chair of the CCC welcomed the decision:

The Government’s commitment to reduce UK emissions by 57% by 2030 will open up opportunities for UK businesses both at home and abroad. It also demonstrates the continued broad political consensus to tackle the serious risks posed by climate change.[8]

The second carbon capture and storage competition

The UK has ambitions to be at the forefront of CCS development,[9] given access to depleted oil and gas fields where carbon could be stored, and the potential rewards, such as up to 60,000 jobs by 2030.[10]

However, CCS generation is not yet proven on a large scale in the UK, and nor is long-term storage, despite a series of UK Government and EU initiatives aimed at incentivising its development. It has been argued that CCS technology is too expensive to be commercially viable for private developers without government support in the shape of a strike price.[11] However, a review by the Parliamentary Advisory Group on CCS argued that good design could make CCS affordable.[12]

In March 2013 Peterhead (Aberdeenshire)[13] and the White Rose Project (Yorkshire)[14] were named as the two preferred bidders in the second UK CCS Commercialisation Competition. Both these projects were subsequently called off when one of the bidders (Drax) pulled out of the project and when the Government cancelled the £1 billion CCS Competition in the 2015 Spending Review.[15]

This was the second CCS competition to be cancelled following the first one running 2007-2011. In a report published on 20 January 2017, the National Audit Office calculated that £168 million (in 2015-16 prices) were spent by BEIS on these two CCS competitions.[16]

Planning permission for the Yorkshire Humber CCS Trunkline – a 75-kilometre pipeline between Drax in North Yorkshire and Barmston in the East Riding of Yorkshire that was linked to the White Rose Project – was also formally rejected by Greg Clark on 12 January 2017.

What next for CCS in the UK?

There are currently no CCS projects left open for consideration in the UK. The Oxburgh Review, commissioned by the Government, and the Committee on Climate Change, both came out in 2016 in favour of reviving CCS in the UK:

Oxburgh Review: The group agrees carbon capture and storage is an essential component in delivering lowest cost decarbonisation across the whole UK economy. […]

UK action on CCS now will deliver lowest cost to the consumer. There is no justification for delay. Heavy costs will be imposed on current and future UK consumers by a continued failure to enact an effective CCS policy[17]

Committee on Climate Change: Carbon capture and storage is of critical importance to meet the UK’s carbon targets at least cost and to fulfil the ambition of the Paris Agreement.[18]

However, as part of its obligations under the Climate Change Act, the Government is due to publish its Emissions Reductions Plan – expected in March 2016 - setting out polices aimed at meeting the UK’s decarbonisation targets. It is widely expected to provide clarity on CCS.

This was confirmed by the Minister for Nick Hurd in evidence to the Business, Energy and Industrial Strategy Committee in January 2017. He told the Committee that the issue of CCS would be revisited and that the upcoming Emissions Reduction Plan and Industrial Strategy will provide information on the Government’s thinking. He summarised the position as follows

I know, because of the cancellation of the competition, that we may have given the impression that we are not interested in CCS, but that is not true at all. We are interested in finding a smarter path forward to see whether we can reduce the cost of it, which is too high, and give ourselves some intelligent optionality on it, in the future. […]

The problem we have is that the taxpayer has spent quite a lot of money in the past, running to hundreds of millions, to achieve not very much. I think it was the right decision to cancel the competition. Actually, the advice I have received says that that probably was the right decision; it was not set up in the right way. We now have to find a smart path forward and we have to engage with industry to get its buy-in. We have to engage with places. The Secretary of State has made it clear that the industrial strategy is going to be heavily rooted in place. There are places in the country that are very keen to develop CCS, and part of my priority is to work through this with them and the industry. The past is the past; this could play a very important part in the future. What is the smartest route forward to give ourselves some optionality on this?[19]

The Minister also identified the overriding problems with CCS as “the cost of it, the question of who pays, the incentive structures and the investment and regulatory framework around it” and that because of it the Government “has had to think again”.[20] The Government later confirmed in a written answer that it was studying the recommendations from the Oxburgh review and that it would ‘set out its approach to CCS in due course.’[21]

CCS and Brexit

The EU supports CCS research and demonstration projects through the research framework programmes Framework Programme 7 and Horizon 2020, the NER 300 scheme and the European Energy Programme for Recovery (EEPR).

As set out by the Government in 2015, the UK benefitted from some of these programmes for two CCS projects:

“In 2009 the Don Valley Project was awarded a €180m European Energy Programme for Recovery grant which contributes towards the feasibility and design phase of the project's development. The award is still in place and ~€125m has so far been claimed. In 2013 the White Rose CCS project was awarded up to €300m in potential NER300 funding. This award, which remains available, is subject to the project being able to successfully store carbon dioxide before the end of June 2020”.[22]

Since the UK voted to leave the EU, questions have been asked regarding the future of these funding allocations:

Diana Johnson (Kingston upon Hull North): To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of when the UK will lose EU funding previously allocated to the UK for carbon capture and storage programmes.

Jesse Norman: Two UK carbon capture and storage (CCS) projects have been allocated funding by the European Commission (Don Valley and White Rose); the status of this funding is subject to further discussions with the European Commission. The UK is also participating in a European Research Area Network (ERA-NET) on CCS under the Horizon 2020 programme. On 13 August 2016, the Secretary of State for Business, Energy and Industrial Strategy (BEIS) confirmed that the Government will underwrite certain EU funding, including approved Horizon 2020 research and development and innovation projects, regardless of the UK’s relationship with the EU.[23]

The Government also restated recently that it was still supporting research and development projects into CCS and was committed to continue to do so.[24]

[1] A good description of CCS technology is available on the archived Office of Carbon Capture and Storage (OCCS) website.

[2] Overarching National Policy Statement for Energy (EN-1) DECC July 2011 p.54

[3] Royal Academy of Engineering, Generating the Future: UK energy systems fit for 2050, 18 March 2010, p14

[4] Oil and Gas Authority, Licensing and consents – UK carbon capture and storage

[5] The CCC was set up by the 2008 Act as an independent body to advise the Government on targets, and to report yearly to Parliament on whether those targets will be met.

[6] Committee on Climate Change, The Fifth Carbon Budget: The next step towards a low-carbon economy, November 2015

[7] Ibid., p.28

[8] The CCC, CCC welcomes Government backing for fifth carbon budget and continued ambition to meet 2050 target, 30 June 2016

[9] Department for Energy and Climate Change, Clean coal: an industrial strategy for the development of carbon capture and storage across the UK, March 2010, p16

[10] HC Deb 28 January 2010 c 343WH

[11] See for instance Carbon Capture and Storage Association, Lessons Learned – Lessons and evidence derived from UK CCS programmes, 2008-2015, 29 June 2016

[12] ‘There is a widespread view that CCS has to be expensive. On the contrary, the high costs revealed by the earlier UK approaches reflected the design of these competitions, rather than the underlying costs of CCS itself’, Lowest Cost Decarbonisation for the UK: The Critical Role of CCS, Report of the Parliamentary Advisory Group on CCS, September 2016, p.5

[13] The Peterhead CCS Project involved capturing around 85% of the CO2 from the gas-fired power plant at Peterhead, before transporting and storing it offshore in a depleted gas field beneath the North Sea. (See BEIS, Guidance: UK carbon capture and storage: government funding and support)

[14] The White Rose CCS Project in North Yorkshire proposed to capture around 90% of the CO2 from a new coal-fired power plant at Drax before transporting and storing it offshore in a saline rock formation beneath the North Sea. (See BEIS, Guidance: UK carbon capture and storage: government funding and support)

[15] DECC, HM Government Statement Re Carbon Capture, Storage, RNS Number: 9664G, 25 November 2015

[16] National Audit Office, Carbon Capture and Storage: the second competition for government support, 20 January 2017

[17] ‘Oxburgh Review’: Lowest Cost Decarbonisation for the UK: The Critical Role of CCS, Report of the Parliamentary Advisory Group on CCS, September 2016, p.4

[18] Committee on Climate Change, Letter to Rt Hon Amber Rudd: A strategic approach to Carbon Capture and Storage, 6 July 2016

[19] BEIS Committee, Oral evidence: Outcomes of Marrakesh COP22, HC 923, 10 January 2017, Q28

[20] Ibid Q30

[21] PWQ 58702, Carbon Emissions, 13 January 2017

[22] PWQ 18630, Carbon Sequestration: EU Grants and Loans, 14 December 2015

[23] PWQ 43539, Carbon Sequestration: EU Grants and Loans, 5 September 2016

[24] See for instance PWQ 54710 further in this publication.