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Government urged not to “waste” opportunity as it re-launches CCS competition

Green policy news – by GreenWise staff
3rd April 2012
A new push to develop UK carbon capture and storage (CCS) officially got underway today as the Government launched its second competition into the carbon-cutting technology and published the first UK CCS Roadmap.
Energy and Climate Change Secretary Ed Davey confirmed there would be £1 billion of public money set aside for a new CCS competition, the first since the Government pulled the plug on the original, long-running competition last autumn. Davey also committed to further funding through new low carbon subsidies, £125 million to support research and development into carbon capture and storage, and long-term incentives for the fledgling CCS industry through the Government’s Electricity Market Reforms.

"Our offer is one of the best anywhere in the world," he said, adding that the CCS industry could be worth £6.5 billion a year to the UK economy by the end of the 2020s.

The new CCS competition has been revised to include gas as well as coal technologies, while the CCS Roadmap sets out the framework for investment in the CCS industry, recognising it could reach 20 to 30 gigawatts by 2030 and create 100,000 jobs. 

"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," said Davey.

The Carbon Capture and Storage Association (CCSA) welcomed the Government’s latest CCS push, saying it provided a "much-needed boost in confidence" to the CCS industry. 

"We welcome this announcement; it creates an opportunity for the UK to take a leading role in world markets whilst cost-effectively reducing emissions, creating employment and generating prosperity," said Jeff Chapman, ceo of the CCSA.

Government "must learn lessons"
But the UK’s biggest business group, the CBI, warned the Government had to act swiftly this time around.

"While we welcome today’s announcement, the Government must learn lessons from its previous competition, which took too long and was eventually abandoned," said Rhian Kelly, CBI director for Business Environment policy. "This time around the competition must be simpler and completed as quickly as possible […]If we are to gain any advantage from developing this important technology in the UK, the Government cannot afford to waste this opportunity."

CCS involves capturing the carbon dioxide emitted from the burning of fossil fuels, transporting it and storing it in a secure geological facility. Once proven on a commercial scale, analysis has shown that it could play an important part in reducing global emissions. But it is still not known when the technology will be technically proven at full scale, and whether its costs will be competitive with other low carbon options.

The Government's CCS policy was thrown off course last October, when it decided to pull the plug on a £1 billion CCS demonstration project it was backing at Longannet in Scotland.

This time around, as well as £1 billion to fund one or more demonstrations plants, Ministers have allocated £125 million to research and development into CCS, including a new £13 million UK CCS Research Centre. 

CCS Roadmap
The roadmap, meanwhile, commits to create an electricity market that will enable CCS to compete with other low carbon sources, including planned long term 'Contracts for Difference’ to drive investment in commercial scale CCS in the 2020s and beyond. 

And in another move, the Department of Energy and Climate Change announced the launch of a new CCS Cost Reduction Task Force, which will work closely with industry to reduce costs.

The Government said it wants to see the first CCS demonstration projects up and running before 2016, and indicated it was keen to see the development of 'CCS clusters’, but it acknowledges £1 billion will not be enough fund several plants and is no longer committing to backing four CCS demonstration projects, as it was before. 

The European Investment Bank, however, is currently considering six UK CCS projects for funding, three of them in Yorkshire. One of these is Don Valley, which last week saw global industrial powerhouse Samsung coming on board as an investor in the project.

Meanwhile, National Grid and Petrofac announced plans last month, for a seventh UK CCS project at Grangemouth with US partner Summit Power.

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