An influential cross-party committee of MPs have urged the UK government to fast-track final funding decisions on two proposed pilot carbon capture and storage (CCS) projects, one at Peterhead (on an existing gas fuelled plant) and one at Drax (the coal fuelled White Rose oxyfuel plant). The Energy and Climate Change Committee (ECCC) says it wants to see decisions by early 2015, following years of delay in the 'competition' launched to provide capital support for CCS.
The Committee Chair, Tim Yeo, said: "Fitting power stations with technology to capture and store carbon is absolutely vital if we are to avoid dangerously destabilising the climate. After nearly a decade of delay DECC has finally got near to delivering two pilot carbon capture and storage projects in the UK. It must now fast-track these projects and reach final investment decisions before the election to ensure this technology can start delivering carbon savings by the 2020s. These two demonstration projects will not be enough to kick-start the industry or have a significant impact on our carbon budgets, however. Ministers must also ensure that viable CCS projects not involved in the competition are able to apply for guaranteed-price contracts alongside other low-carbon energy schemes."
The government launched a 'competition' in 2007 to kick-start CCS in the UK by offering capital support to winning pilot projects. Seven years on, however, it has only delivered initial FEED funding to two projects and the expected start date of CCS has been pushed back from 2014 to 2020. This delay has called into question the credibility of government policy designed to support CCS deployment in the UK, according to the MPs.
"The 'competition' the government launched to award capital support to CCS has turned out to be a model example of how not to support a fledgling industry, taking successive governments the best part of 10 years to complete."
The higher costs associated with CCS means that it is likely to develop only in response to specific policy intervention and will need subsidy. The government should be transparent about the costs of CCS and how they will be met, says the Committee. Guaranteed price tariffs for low carbon energy - called 'contracts for difference' (CfD) - will be essential to incentivise CCS projects and provide a route to market for non-competition projects. Non-competition projects which do not have the benefit of being eligible for capital support, but are still viable projects are at risk of collapsing unless they get a clear signal from government that they can negotiate for a CfD in parallel with competition projects.
The Committee believes that some CCS technologies may be able to produce electricity more cheaply than conventional fossil fuel power stations and declared itself particularly impressed with the Allam Cycle technology outlined in evidence given by NET Power, which makes carbon capture an inherent feature of the process of power generation by burning fossil fuels in pure oxygen and using the resultant CO2 as a 'working fluid' (rather than steam) to drive turbines (see NET Power's CO2 cycle: the breakthrough that CCS needs MPS, May 2013, pp 35-38).
The ECCC sees carbon capture and storage as vital to limit climate change, quoting the latest climate science assessment by the Intergovernmental Panel on Climate Change. This estimates that to keep the global temperature rise below 2°C, the maximum amount of carbon that can be released into the atmosphere is 1000 Gt. With roughly 515 Gt already emitted to date worldwide, a substantial proportion of current proven fossil fuel reserves - which contain 780 GtC - cannot be burnt safely unless CCS is deployed.
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