October 20, 2010

expert reaction to the confirmation of £1billion to be spent on carbon capture and storage

The government today announced that a competition to build a commercial-scale carbon capture and storage project will go ahead.

Dr Hannah Chalmers, Lecturer, Institute for Energy Systems, University of Edinburgh, said:

“It is good to see Government’s continued commitment to commercial-scale demonstration of carbon capture and storage (CCS) in the UK. The UK is in an excellent position to play an important role in global efforts to develop this critical technology. We expect to have some of the best carbon dioxide storage sites in the world underneath the North Sea. A broad range of companies are working on engineering studies for capturing carbon dioxide at UK power plants and other industrial sites.

“It is now essential that firm plans for financing and regulating the four projects that Government is planning to support are confirmed as soon as possible.”

Prof Stuart Haszeldine, FRSE, Professor of Carbon Capture and Storage and Geology, University of Edinburgh, said:

“Carbon Capture and Storage is essential to clean up greenhouse gas emissions from electricity generation in the UK. I congratulate Chris Huhne and Charles Hendry on safeguarding the DECC funding to develop the first UK project, starting in April 2011 and completing in 2014. That will create thousands of new high quality green jobs.

“This CCS validation project will cost £500M to build and £500M to operate. It is likely to be the first full-size power plant in the world to operate with CCS, although the UK will be only just ahead of Netherlands, Italy and Abu Dhabi. On 20 October E.ON formally withdrew their Kingsnorth coal-fired proposition form the DECC competition, leaving the ScottishPower Longannet existing power plant as the only contender.

“It is now important to create sustained funds for future investment in CCS, by using a levy outside of the CSR. That can build 3 more demonstrations to form critical-mass with private investors and create new export-quality science, engineering and finance businesses where the UK will be a global leader. CCS investment on 4 CCS validation plants will cost only 5 pence each week for each electricity consumer for 10 years.”

Impact on bidding into Europe
“The decision to defer a decision on levy funding of CCS projects DECC 2, 3, 4 means that UK bidding in to NER 300, for ‘free’ emissions allowances to sell as a means to fund CCS operations is difficult to fit with EU timescales. Bids will be called for around mid-November, and companies have 3 months to bid to UK Government. UK then has 3 months to decide on submissions to European Commission. EC decide awards around end 2011.

“Problem 1 is that only one UK CCS project now has guaranteed funds (Longannet), but that was not on the EEPR European short-list. The Hatfield project (which was on the EU EEPR short list) now has no guarantee of levy funds, by the time that bids need to be submitted in mid February.

“Problem 2 is that the criteria for winning NER300 awards from Europe are ‘cheap public price per tonne of CO2 captured’. That means that Longannet, being 100% UK funded, will come bottom of the list using that single criterion.”