On 25th November, the UK Government’s Department of Energy and Climate Change (DECC) announced to the London Stock Exchange that:
“Today, following the Chancellor's Autumn Statement, HM Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available. This decision means that the CCS Competition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them.”
Those involved in progressing CO2 storage in the UK, including project developers, their contractors, researchers in universities and research institutes, and workers in many other organisations involved in the decarbonisation of our energy system, were left shocked by this announcement. On the face of it, this development does not look good for the future for the two projects involved in the competition: the Peterhead CCS Project in Aberdeenshire, Scotland, which is being developed by Shell and SSE; and the White Rose Project, which is being developed by Capture Power Ltd. (a consortium of Alstom, Drax Power and BOC) and National Grid. However, on 26th November, the day after the above announcement, the Committee on Climate Change (the CCC), a body established under the Climate Change Act 2008 to advise the UK Government and Devolved Administrations on emissions targets, issued its “5th Carbon Budget”, which states that:
“Carbon capture and storage (CCS) is very important in meeting the 2050 target at least cost, given its potential to reduce emissions across heavy industry, the power sector and perhaps with bioenergy, as well as opening up new decarbonisation pathways (e.g. based on hydrogen).”
“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.”
The big picture is that if the UK is serious about preventing unacceptable climate change, while at the same time securing its energy supplies, it will be much more expensive and difficult without CCS than with it. Unless CO2 emissions targets are to be abandoned (presumably unlikely) a business case for CCS will emerge eventually. It follows that CCS in the UK may have suffered a setback, but it is not yet down and out.
The competition that was abandoned this week and an earlier one (which also failed to reach a successful conclusion), combined with private sector investment and support for R&D from the UK government and the European Commission over many years, has established a well-developed supply chain in the UK that stands ready to implement CCS in the UK. A fundamental question is whether this supply chain can be maintained for long enough to ensure the eventual deployment of CCS. If not the costs of implementing CCS when the business case matures will be higher than it needs to be.