UK energy ministry rules out nationalisation option for CCS

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The UK government will continue to place its faith in a competition framework to drive carbon capture and storage (CCS) on the island, despite industry chiefs suggesting that a national corporation be set up to push the technology on a temporary basis.

Amy Clemitshaw, a top official at the department for energy and climate change, responded to that effect to a point from the floor at the Westminster Energy, Environment and Transport Forum on Tuesday that the UK ought to set up a 1980’s-style British national storage corporation in order to give CCS the lift it needs to succeed.

Lord Oxborough, President of the Carbon Capture and Storage Association, attempting to relate why progress had been so sluggish, told delegates that he had been asked by the Gordon Brown-led Labour administration to set up a small team aiming at just that brief.

“(Then energy minister) Charles Hendry had approached me to get off the ground a government-backed corporation which would then be sold off over the next 5-10 years. CCS has got to look like an attractive investment and government must give a fiscal nudge to make it attractive.”


“I am asked why big oil doesn’t get into this (investment). It’s not like the traditional business that oil companies have been doing – its waste disposal – a different approach is required and we are looking at utilities for investment."

“Why hasn’t it happened? It’s down to lip service. Because it’s a long term project, to politicians it doesn’t look urgent."

In response to the possibility of temporary nationalisation, Clemitshaw, deputy director with responsibility for fossil fuel generation and carbon capture and storage policy at DECC told the audience, “We have a market in place at the moment that provides incentives for companies and then looks to leverage their appetite to deliver and put that infrastructure in place. With contracts for difference, the competition will show what we can deliver that way and we need to test that model before considering a complete change of approach.”

Despite that, the energy spokesperson left delegates with no doubt but that CCS was to the forefront of the government’s mind when considering the country’s future energy mix.

“CCS is particularly attractive when considering satisfying the energy trilemma of affordability, sustainability and security of supply despite the tensions that exist between those imperatives. Its good news for the technology that can play a positive role in terms of all three.

“It helps keep coal and gas in the mix which is obviously important in terms of baseload and flexibility of generation and how we manage that transition is one of the policy challenges. Then for affordability no one can deny it is expensive but over the long term as the ETI has shown, CCS can make the cost of meeting our decarbonisation target substantially lower. Potentially, without CCS, the additional costs to run a decarbonised UK economy in 2050 will be £32bn according to ETI analysis. That’s clearly a long term affordability that’s not lost on ministers.”

“I take a lot of confidence from the fact that independent observers like the global CCS institute independently rate the UK policy regulatory environment for CCS really highly and that is a position we want to maintain while working with other countries to ensure that CCS is fostered elsewhere as well. While its early days for this government we have a strong record that we will want to maintain.”

Clemitshaw added that the government is in negotiation to develop a CFD that is tailored to the requirements of CCS, and stressed that it is not just important for phase 1, but also for phase 2 and everything that comes after it in the power sector as it will ‘hammer out a template of commercial terms that we can see’.

The British government has invested £130m on research and development since 2011 in a bid to help reduce costs associated with the technology from both a power generation and industrial perspective.

Clemitshaw told the forum, “We want to put aside half our R & D budget this year and focus that on the next stage of storage appraisal at some of the promising sites in UK waters and start the process of de-risking them for future investment appraisal and development.”

She then returned to the area of most concern with reference to CCS technology - its expense.

“Who pays for the cost? This is the challenge with industrial carbon capture that you can’t duck from a policy perspective and the question arises how much it costs and the other question is who pays for that cost? In the power sector we’ve taken the decision that it will be borne by the consumer. There is a legitimate political debate which will need to happen around how progress in industrial CCS can be supported and who pays for it.”

She reminded the audience that UK energy secretary, Amber Rudd stated last month that while she could not pre-empt the decisions being made by the cabinet over the next few months and years about the long terms support framework for any low carbon technology the government’s commitment to CCS is clear.

“It’s about really testing it potential and giving it the opportunity to succeed and that is the starting point for this government in terms of these big decisions over the next year.”

Earlier at the forum, Matthew Bilson, former head of strategy at DECC’s Office of CCS noted the progress made, paying tribute to the previous energy secretary Ed Davey for winning an EU-wide target for decarbonisation by 2030 that is technology-neutral.-He also reminded those present of the responsibility of talking up CCS

Prof Stuart Haszeldine, Professor of CCS at Edinburgh University pointed out the opportunity CCS provides for industry, particularly ‘ global shares of iron and steel, cement, refineries and chemicals – industries that could be taxed out of existence’ without it.

“CCS ensures these jobs are kept and industries protected in a decarbonised world” he added.

Peter Emery of Drax said there needs to be ways of decarbonising more effectively than depending on what he termed, ‘inflexible nuclear and intermittent renewables’, adding that backing industrial CCS would mean ‘a genuine northern powerhouse could be achieved with 100,000 jobs and £6.5bn in investment.’

 



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