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The APPG on Energy Costs


 

23/06/15 - George Day from the Energy Technologies Institute and Leigh Hackett, CEO of Capture Power: "10 years to prepare for a low carbon transition"


 

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23 June 2015

 

10 years to prepare for a low carbon transition, and the viability of CCS

 

Chair: Lord Palmer

 

Speakers:

 

George Day, The Energy Technologies Institute (ETI)

 

Leigh Hackett, CEO of Capture Power, responsible for the White Rose CCS Project

 

 

George Day

 

Energy costs are vital to the economic competitiveness and standard of living of a country.

 

ETI is a private public partnership, set up in 2005 by 5 different organisations, including EDF, BP and Shell. It is a cost conscious organisation, in terms of looking at the challenges of energy. There are engineering and technology challenges to be considered in how the UK meets its carbon targets at the least cost.

 

ETI looks across the whole energy system; heat, transport and energy sectors each are required to cut emissions.

 

The technology options that are the most viable and lowest cost way of cutting emissions are Carbon Capture and Storage (CCS) and bio energy. Both of these technologies are versatile and flexible in helping to cut emissions.

 

There are 10 years to prepare the preferred technology to meet the 2050 targets. These technologies need to be ready to deploy. The early links in these technologies; the supply chain the business model, have been resolved. They can deliver transformation of the energy system at an acceptable cost. Power generation can be combined with heat networks to heat homes.

 

ETI built a sophisticated model to see whether we can meet our energy requirements while reducing carbon as a % of GDP. This suggests that the cost impact is lower than the oil price shock in the 1970s.

 

There will also be a need for new nuclear and offshore wind, and also low carbon vehicles and the supporting infrastructure. It is significant that in the next 10 years we need long-lived decisions on energy policy. There will be a need to accelerate the rate of investment by the 2030s and the technology needs to be ready to deploy.

 

Why does ETI believe that biomass and CCS should be used? They are both flexible and able to deliver synergies to the system. CCS combined with bio energy allows for carbon to be taken from the atmosphere and stored underground, which makes it very helpful in reaching carbon targets. Preparation requires putting in place the business and investment models to allow the private sector to invest on a large scale. The market cannot be relied on to develop the networks. This needs policy support from government.

 

In summary, for us to have an affordable low carbon energy system, CCS and bio energy are groups of technology vital in the transition.

 

 

Leigh Hackett

 

Consider CCS in the context of climate change: an international panel of the Climate Change and Energy Association report states that the targets cannot be achieved without CCS; therefore whatever the costs we need to have CCS.

 

Affordable low-carbon power and security of supply are parts of the current energy trilema.

 

The cost of CCS le is favourable in comparison to renewables (£100 per megawatt hours in 2020) and costs will reduce significantly. The system-wide cost will be 1% of GDP by 2050.

 

This technology answers the questions on decarbonisation, as a low carbon technology (alongside biomass) it removes 90% of carbon. Whilst in terms of security of supply CCS militates against risks of gas and oil. It also allows the UK to keep the options of coal and gas.

 

It is a flexible technology that can compete with new nuclear and intermittent renewables. This offers a low cost solution to the trilema.

 

In addition to electricity generation, CCS will provide an effective, secure and low-carbon source of power for industry. This will be key to meeting the UK emissions requirements.  It s also an important pathway to achieving the global agreements.

 

Roll out in the UK will create jobs and be a multi-billion pound industry; the White Rose project is an example. The technology is developing in China and the US; the UK needs to compete.

 

Public acceptance of CCS will be important; consultations suggest there are not the immediate challenges of the kind that nuclear, fracking and onshore wind farms have faced. Peterhead and White Rose are vital projects. The development of the industry depends on government support.

 

 

Questions and comments

 

Are the strike prices in 2014 money? Can the build for 10 GW be done with £50 billion of savings?

 

£50-100, so this is effectively 2014 money.

 

Is it happening in the UK and who is funding it?

 

There are 2 competing projects, which are the closest to it happening anywhere in Europe. Government support has been significant. The availability of CFDs will be important. Combined with grant-funding this gets the project over the line. The White Rose project at Drax has yet to break ground.

 

It is taking far too long for CCS to develop in the UK. The technology is not the problem, the commercial model is. How you combine all the elements of the chain and allocate risks is a huge challenge. We need to look at the market failures to get it off the ground.

 

Where is the billion pounds of set aside subsidies for the projects going?

 

That grant funding goes into the infrastructure.

 

Whilst accepting the role that CCS can play and the fact that it does not have the same concerns and issues as fracking; it is at the same place as 5 years ago, the industry has not moved forward. What are the reasons for that and how do we overcome them?

 

CCS has suffered from false starts. There was going to be a CCS levy, to create a fund for projects. The amount of money and focus for off-shore wind energy was enormous and CCS has not had the same level applied to it.

 

Lord Palmer: The problems have been caused by a lack of joined up government activity.

 

Regarding the suggestion that CCS helps to stabilise energy costs: there will still be fuel price hikes and we should not assume that the dominant producer’s prices will not react to international market hikes.

 

 What are the plans for off-shore storage on the White Rose project?

 

CO2 will be stored in a saline formation offshore. The plant is designed with enhance oil recovery (EOR) specifications, so EOR can be implemented. Once the CO2 deliveries are steady then attention will be turned to oil recovery. White Rose will deal with 2 million tons of CO2. There needs to be a couple of projects to give the scale required by the oil industry for EOR. A waste product could be turned into a valuable commodity for all the industry.

 

There are delays on onshore storage for political reasons; offshore now has a problem because of the Dutch government’s decision regarding the recent earth quakes.

 

The problems at Groningen relate to subsidence. The government there looked at other projects too. When CO2 is stored it is done based on geological limitations; with sandstone it is squeezed into the pore space in the rock, only as much as can be taken by the mechanical strength of that formation.

 

This is not an issue from an engineering point of view, but it is from a political one.

 

Yes, agreed. It is right to currently promote this offshore, over the decades, as we show that the technology is safe, we will be able to consider it onshore.

 

The value that CCS can bring is worth going from the one kind of large road block to another.

 

We have one decade in which to prepare, but for business to take these issues seriously there needs to be board level involvement as well as technical know-how and infrastructure. This has not happened to date.

 

This is a staggeringly expensive way to reduce carbon; all of the technologies are too expensive.

 

This is the least-cost way of achieving decarbonisation given the basket of technologies available. One theory is that we wait for a miracle, that’s not a proper strategy.  We need to develop the technologies and infrastructure now.

 

This is being developed without EOR, despite that being a potential benefit; there is no partner from the oil sector.

 

The Peterhead project has looked at that. The US and Chinese projects are looking at EOR. In the UK context this is the first demonstration of the seriousness and commitment to the technology. The aim is to get it right offshore and then see how EOR can be involved.

 

The Grantham Research Institute published a report on the barriers to CCS. Given the importance of negative emissions on future emissions, what is the industry point of view on biomass?

 

Biomass is more expensive with less energy coming from it. You have to be paid to process it; the considerations are; what is the value price per tonne? Is it worthwhile? This needs lots of thinking and policy on this area. There must be a positive incentive to biomass.  The thinking around biomass is not matured enough.

 

 

 

 

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