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UK launches new $1.6B commercialization program for Carbon Capture and Storage (CCS) and first UK CCS Roadmap; making a play for global leadership
3 April 2012
|Proximity of the UK’s largest industrial emitters to CO2 storage sites in the North and Irish Seas. Map provided by the Energy Technologies Institute. Source: CCS Roadmap. Click to enlarge.|
The UK Department of Energy and Climate Change (DECC) has launched a new competition for Carbon Capture and Storage (CCS) technology to drive down costs by supporting practical experience in the design, construction and operation of commercial scale CCS (CCS Commercialization Programme) with £1 billion (US$1.6 billion) direct grant support for capital funding, and additional support, subject to affordability, through low-carbon Contracts for Difference.
Carbon Capture and Storage (CCS) is a process to capture carbon dioxide that would otherwise be emitted to the atmosphere by large point sources, such as fossil fuel power stations, and permanently to store the CO2 deep underground. The UK Government has identified three key challenges to be tackled to enable commercial deployment of CCS in the UK:
reducing the costs and risks associated with CCS so that it is cost-competitive with other low carbon technologies;
putting in place the market frameworks that will enable CCS to be deployed by the private sector cost effectively; and
removing key barriers to the deployment of CCS for both the power and industrial sectors.
The goal of the Commercialization Programme—currently the most ambitious of its kind in the world—is that:
As a result of the intervention, private sector electricity companies can take investment decisions to build CCS equipped fossil-fuel power stations, in the early 2020s, without Government capital subsidy, at an agreed CfD Strike Price that is competitive with the strike prices for other low carbon generation technologies.
According to DECC, without government intervention, the processes that will ultimately drive down the cost of CCS to a level where the risks come within commercial norms are unlikely to enable commercially deployed CCS to contribute to decarbonization of the UK’s power and industrial sectors in the 2020s and beyond. If CCS is to be deployed in the 2020s, final investment decisions for commercial-scale CCS will need to be made in the early 2020s. For this to happen, DECC concludes, investors must have confidence that CCS is an attractive option that is cost-competitive with other low carbon technologies.
The program puts the onus on industry to bring forward CCS solutions. This includes encouraging innovative solutions that utilize part-chain, full-chain and the clustering of projects, including industrial emitters. As a result, DECC designed the program to be broad in scope and flexible, so as to be receptive to the different approaches that may come forward. This could include:
demonstrations of full-chain CCS;
developing infrastructure, including that which might be available to subsequent projects;
including emissions from sources other than power stations;
developing parts of the CCS chain (providing there is a clear view of how such activities will subsequently become part of full-chain projects); and
investigating alternative options, including storage combined with enhanced hydrocarbon recovery.
To qualify for the competition, projects:
may be full-chain or part-chain that can demonstrate the prospect of being part of a full-chain project in the future;
comprise a power plant and capture facility located in Great Britain and a storage site offshore;
must be able to be operational by 2016-2020, though earlier is desirable;
must abate CO2 at commercial-scale (or be a substantive step towards that objective) while meeting all relevant environmental requirements; and
may contain an electricity generator or an industrial emitter which is part of a cluster project.
To participate, developers must have relevant expertise and experience of managing complex projects in this or a closely associated field, and the backing of at least one parent company with a significant balance sheet.
DECC recently published a notice about the CCS Commercialisation Programme in the Official Journal of the European Union inviting organisations to register an interest. Prime (or lead) contractors or consortium members are invited to register, with one registration required per proposed bid/consortium by 13 April 2012.
The potential rewards from Carbon Capture and Storage are immense: a technology that can de-carbonize coal and gas-fired power stations and large industrial emitters, allowing them to play a crucial part in the UK’s low-carbon future.
What we are looking to achieve, in partnership with industry, is a new world-leading CCS industry, rather than just simply projects in isolation—an industry that can compete with other low-carbon sources to ensure security and diversity of our electricity supply, an industry that can make our energy intensive industries cleaner and an industry that can bring jobs and wealth to our shores. The CCS industry could be worth £6.5 billion [US$10.4 billion] a year to the UK economy by late next decade as we export UK expertise and products.
This is a really exciting time for the fledgling CCS industry. Our offer is one of the best anywhere in the world. We have £1 billion available to support the upfront costs of early projects along with a commitment to further funding through low carbon Contracts for Difference, we have £125 million to support research and development including a new UK CCS Research Centre, and we have the long term incentives in place through our Electricity Market Reforms.—Edward Davey, Secretary of State for Energy and Climate Change
CCS Roadmap. DECC also published the first UK CCS Roadmap. This sets out the steps that the Government is taking to develop a new world-leading CCS industry in the 2020s, including:
the £1-billion competition;
£125 million (US$200 million) funding for Research and Development, including a new £13 million (US$20.8 million) UK CCS Research Centre;
planned long-term Contracts for Difference through Electricity Market Reforms to drive investment in commercial scale CCS in the 2020s and beyond;
commitments to working with industry to address other important areas including developing skills and the supply chain, storage and assisting the development of CCS infrastructure; and
a focus on international engagement, in particular on learning from other projects around the world to help accelerate cost reduction in the UK, and sharing the knowledge generated through its program.
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