The future of carbon capture and storage

Materials World magazine
5 Jan 2016

Khai Trung Le looks at the ramifications for CCS in the UK, following the withdrawal of the UK Government’s £1bln CCS Competition.

Following the Spending Review and Autumn Statement 2015, the Government has withdrawn its £1bln competition for carbon capture and storage (CCS) technology. The uncertain futures of Peterhead, a gas power station in Aberdeenshire, and White Rose, a proposed standalone coal plant in north Yorkshire adjacent to Drax Power Station, leave the UK’s commitment to CCS in jeopardy four months before a winning bid was to be announced.

The future of Peterhead and White Rose

The announcement, absent from the Autumn Statement, was made in a letter from DECC to the London Stock Exchange on 25 November and briefly notes that the ‘£1bln ring-fenced capital budget for the CCS Competition is no longer available. This decision means that the CCS Competition cannot proceed on its current basis.’ No further information surrounding the decision has been released since.

The decision has been criticised by energy experts, politicians and environmentalists, and the competition forerunners have predicted their own downfall as a result. Shell, which had partnered with Peterhead, believes the project has met its end, with a spokesperson commenting, ‘While we acknowledge this decision has been made in the context of a difficult spending review, without that funding, we no longer see a future for the Peterhead project in the near term.’ The company maintains that CCS is ‘an important part of a low-carbon energy future,’ and will push ahead with other projects including the Gorgon gas fields, Australia, and Quest, exploring opportunities in the oil sands industry in Canada.

Shell’s despondency has been mirrored in north Yorkshire. Leigh Hackett, Chief Executive of Capture Power, the developer of the White Rose Project, stated, ‘It is too early to make any definitive decisions about the future of the White Rose CCS Project. However, it is difficult to imagine its continuation in the absence of crucial Government support.’ White Rose previously faced uncertainty when the Drax Group, a former partner of Capture Power, pulled out of the project in September 2015, citing ‘a drastically different financial and regulatory environment’, although Drax remains committed to completing the project’s Front End Engineering and Design (FEED) study and will continue to allow Capture Power the use of the site.

BusinessGreen published speculation on the ramifications of the competition withdrawal, said to have endangered a £100m investment from a ‘major Chinese investor’ in White Rose. Hackett declined to confirm to the environmental business site whether a Chinese investor had been waiting in the wings, commenting that the company ‘had made no secret of the fact that we have been talking to potential funding partners, but no agreements have been entered into.’

Global promise

A report from the Global CCS Institute claimed that large-scale CCS projects show promising results across the world, with 15 live sites having captured 28Mt of CO2 in 2015 alone, and on course to have captured 40 million tonnes by 2017, when the Global CCS Institute hopes to see 22 large-scale projects online – although this figure includes both Peterhead and White Rose. Standout projects highlighted in the report include the Abu Dhabi CCS Project, the world’s first large-scale iron and steel project to apply the technology, and Kemper County Energy Facility, which will be the largest CCS power plant in the world.

The previous Conservative-Liberal Democrat coalition government matched this optimism. Former Energy Minister John Hayes spoke on the ‘significant appetite from industry to invest in UK CCS, providing jobs and investment opportunities’ in 2013, and positioned the competition as the first step towards ‘ensur[ing] we have further CCS projects by the end of the decade.’ Along with controversial projects Hinkley Point C and the delayed Swansea Bay tidal lagoon, the £1bln CCS Competition was a pledge in the Conservative 2015 General Election manifesto as part of the party’s commitment to greener energy.

However, at the Carbon Capture and Storage Association’s (CCSA) annual reception in June 2015, when asked to clarify the extent of government support and endorsement on three separate occasions, Energy Secretary Amber Rudd responded, ‘You’re asking for more certainty than I can give at the moment […] We need more private sector investment.’

In Materials World September 2015, Simon Frost reported on a cross-disciplinary study, published by Nature Communications, which identified CCS as essential in all possible routes towards keeping global warming levels below 2˚C. The study, conducted by researchers from Laboratoire des Sciences du Climat et de l’Environment and Centre International de Recherche sur l’Environnement et le Développement, France, the Japan Agency for Marine-Earth Science and Technology and the Met Office, UK, called for the acceleration of CCS development following claims that in both best and worst-case figures aiming at a 2˚C target were unfeasible. This call was matched in a report from the Intergovernmental Panel on Climate Change in November 2015, which estimated that the cost of significant emissions cuts would double without CCS.

However, few CCS projects have progressed smoothly. Despite announcements of performance exceeding expectations in October 2015, the coal-fired Boundary Dam plant, Canada, revealed in an internal memo dated February 2015 that the CCS unit was operating at 45% of its rated capacity. The CCS unit was also revealed to have been shut down early, and owner SaskPower has so far only sold around 400,000 tonnes of captured CO2, half as much as predicted. Other projects facing difficulties include the aforementioned Kemper County Energy Facility, which has missed its latest start date of March 2015, and seen project costs escalate from US$2.4bln to $5.6bln.

This is not the first time a UK £1bln CCS Competition has been withdrawn at the 11th hour. A similar four-year competition was withdrawn in October 2011 when relationships between the owner of Longannet, the third largest coal-fired power station in Europe, ScottishPower and its partners Shell and the National Grid were reported to be on the brink of collapse regarding the commercial viability of the project without further public backing. Longannet was the sole bidder in the competition as of October 2010 after E.ON pulled out of the Kingsnorth project, with a Conservative backbencher at the time attributing the blame to the prior Labour government, stating that negotiations had extended so long that bidders were forced to drop out.

Critical timing

Many of the criticisms are centred on the timing of the withdrawal, so close to both the competition conclusion and COP21. Luke Warren, Chief Executive of the CCSA, said, ‘Moving the goalposts just at the time when a four-year competition is about to conclude is an appalling way to do business.’

The SNP has been vocal in its opposition to the withdrawal, with Scottish Energy Minister Fergus Ewing remarking that the decision was ‘another UK Government hammer blow to energy generation in Scotland […] This should have been a huge industrial opportunity. Instead, the decision to pull the plug on the CCS programme – to meet a deeply flawed austerity agenda – is breathtakingly short-sighted, even for this UK Government.’ Although the SNP has been accused of hypocrisy by Scottish Liberal Democrats Energy spokesperson Liam McArthur, who questioned why the Scottish Government hadn't supported CCS with the £10m Saltire Prize, a fund devoted to developing renewables in Scotland untouched since its launch in 2008.

Professor Stuart Haszeldine, Director of Scottish Carbon Capture and Storage, has accused the Government of placing too much faith in recent developments in nuclear, stating its ‘reliance on nuclear power to deliver our future electricity needs depends entirely on whether projects such as Hinkley Point can actually be delivered on time […] If new nuclear cannot be delivered at scale and on time, the UK runs the future risk of becoming a distressed buyer of rapidly built gas power plants, which locks in UK carbon emissions for the next 40 years. To me, this does not look like prudent management.’

Geoff Maitland, Professor of Energy Engineering at Imperial College London, UK, remarked on the loss to industrial opportunities of CCS, stating, ‘Cutting the funding to establish CCS commercially now is false economy. With the £1bln competition, the UK has been leading the world in development of CCS for both coal and particularly gas-fired power plants, with the economic potential of CCS in the UK for both jobs and technology export being estimated to be more than £30bln by 2030.’

The Government has yet to elaborate on the decision to withdraw the project, and has since avoided calls for comment from Materials World beyond a statement from DECC noting that ‘CCS has a potential role in the long-term decarbonisation of the UK.’ The future of homegrown CCS, as opposed to a reliance on imported technology, looks increasingly distant.

For more information on mitigating carbon emissions, see Engineering the Earth.