Engineering news
Image of Drax site where White Rose CCS project would have been built
Key figures from the carbon capture and storage industry have called for a clear strategy from government on the future of the sector following the decision to cancel its £1 billion CCS competition in November 2015.
Two projects had previously been in the running to build commercial scale demonstration carbon capture storage (CCS) plants, one backed by Shell and SSE at Peterhead, and the second White Rose consortium, which was based at Drax, the UK’s largest power plant. Shell has since announced its UK project can no longer continue, while the future of White Rose has been called into question in “the absence of crucial government support”.
At the Energy and Climate Change Select Committee, industry figures, including Richard Simon-Lewis, financing director at Capture Power - the company responsible for delivering the White Rose plant – and Professor Jon Gibbins, director of UK CCS Research Centre, presented a united front against the decision to end the CCS competition.
Perhaps the strongest attack on the governmental decision was Christ Littlecott, programme leader of fossil fuel transition and CCS technology at independent energy advisory company E3G. Speaking about the last minute announcement of the project cancellation, which was given weeks before final competition submissions were due, Littlecott said: “Treatment of the project was shabby and reflects poorly on government and its ability to deal long term with business...It changed the goal posts at the last possible moment.” He added: “This was a fundamental change in government energy policy masquerading as a spending decision.”
Industry members called for a new CCS government strategy to be drawn up as soon as possible in order to keep up momentum, utilise knowledge gained in preparation for the White Rose and Peterhead projects and encourage future overseas investment. Luke Warren, chief executive of the CCS Association, said: “The new government strategy must be developed quickly and partnerships with industry must be established for credibility. In addition, cross-party consensus must be sought.”
It was stressed that the cancellation had led to a loss of investor confidence, which could put future investment and applications for EU funding, such as the €26 billion Juncker fund, at risk. Ensuring that there would be a new round of Contracts for Difference was said to be an important aspect in attracting future investment for CCS projects.
The Committee was also asked to consider the need to invest in CCS pipeline and storage infrastructure. Richard Simon-Lewis, financing director at Capture Power, said: “We have to prepare the ground for CCS coming again. We know that the technology works but we need to develop commercial risk assessments, particularly over transportation and storage.”
The importance to invest transport pipelines and storage was raised repeatedly during the Select Committee. In particular, it was said that this would be vital if the government goes ahead with its “dash for gas”. This was highlighted in a letter to the Committee from the Energy Technology Institute, which stated that new gas plants should be sited and financed in line with any new CCS strategy, even if they are not fitted with CCS from day one.
The benefits of investing in CCS sooner rather than later were widely discussed, with industry members voicing fears that the UK would risk falling behind in the global CCS market if projects weren’t on line by 2025. Arguments for early investment included the vital role CCS would play for the future of energy intensive industries in the UK and its potential for enhanced oil recovery in the North Sea.
Fears of high initial costs and strike prices, estimated at around £140/MWh, were knocked back, with Warren stating that if at least two sizeable projects, located in two main regions, are invested in that the strike price could reach £100/MWh by 2025.
Simon-Lewis confirmed that Capture Power intends to share its lessons learned on the White Rose CCS project and is working on 45 key knowledge deliverables that will be sent to the DECC and made available to the public. “This is so the value of what we have done is not lost and it will be with the government by the end of the month [January 2016],” he added.