Catch it, keep it: the role of CCS in decarbonising gas and heat

It is almost a year since the government unceremoniously pulled the plug on the £1 billion competition to commercialise carbon capture and storage technology, leading to the cancellation of Yorkshire’s White Rose and Aberdeenshire’s Peterhead demonstrator projects.

The abrupt scrapping of support for these pivotal British carbon capture and storage (CCS) projects was condemned at the time by the environmental lobby, researchers, and the nascent CCS industry. They denounced the move as being inconsistent with the government’s desire to see a new wave of investment in UK CCGT plant while still meeting emissions-reductions targets. They also said it undermined the ability of carbon-intensive industries – which are crucial to the UK’s economic growth prospects – to transition to a low carbon economy.

As time wore on and government refused to back down on its withdrawal of CCS support, criticism did not die down. Indeed, if anything it grew, with more groups adding new perspectives to the case for CCS. Over the past 12 months, the UK Energy Research Centre, the Energy Technologies Institute, the Institution of Chemical Engineers. The National Audit Office and the now defunct Energy and Climate Change Committee (ECCC) have all produced evidence to show why scrapping CCS support will add billions to the cost of decarbonisation.

In February, ECCC chair Angus MacNeil said unequivocally “Government cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed. Getting the infrastructure in place takes time, and the government needs to ensure that we can start fitting gas-fired power stations with carbon capture and storage technology in the 2020s.”

CCS for low-carbon heat

But, CCS is not only crucial for the low carbon future of power generation and heavy industry. Mounting evidence and an increasingly vociferous lobby group also show that CCS must play a fundamental role in the decarbonisation of the UK’s gas grid. The prominence of this lobby is intrinsically linked to the fight for recognition of the continued need for gas networks in an affordable low-carbon future.

Today, natural gas – a fossil fuel – delivers heat to over 80% and ideally suited to the task. Heat demand is highly variable, especially interseasonally, and so the ability to cheaply store gas in readiness to meet demand give it a major advantage over other heating technologies – most notably electric heat pumps.

The challenge of decarbonising heat is particularly pressing because it accounts for half of the UK’s total energy demand. If new ways to decarbonise a national gas grid can be supported, therefore, the UK could take a significant step forward towards the CO2 emissions reduction targets it signed up to in the Climate Change Act and at the Paris COP 21 meeting last year.

CCS, which has been pushed forward as a means for decarbonising the electricity system, could play a significant role here. Indeed, a recent report from the Parliamentary Advisory Group on CCS, led by Lord Oxburgh, found that “heat may be the most important sector for CCS in the long-term”.

In exploring the role of CCS in decarbonising heat, Oxburgh’s report focuses heavily on hydrogen – which has zero carbon emissions on combustion – as an opportunity to convert the UK gas grid from its fossil fuel reliance today, to a green heat conduit. “Decarbonised hydrogen can be produced by electrolysis of water and could open the way to a future fossil fuel-free economy,” says the report, “but for the immediate future, would be produced from hydrocarbons with CCS.” 

Pushing forward hydrogen production in tandem with CCS would bring added benefits, says Oxbrugh, because synergies could be supported with other hydrogen-based energy scenarios – for example, “a hydrogen network could also be used for clean power generation and for emission free vehicles”.

Such arguments are not new. Dreams of a hydrogen economy – including hydrogen fuel cell vehicles as the dominant mode of transport rather than EVs – have existed for decades. However, these visions have struggled to gain widespread buy-in from policy wonks because of technical hold-ups in various parts of the value chain and lack of infrastructure co-ordination – as well as doubts about cost, as we shall see.

More recently though, gas networks have become keenly aware of the need to justify their long-term value to a low-carbon economy and society. They have been compelled to show why they should not be written out of future energy scenarios and this has led new interest in the scope for a hydrogen economy to flourish.

A range of Ofgem-funded network innovation schemes have sought to explore the feasibility of hydrogen gas grid conversions – among which Northern Gas Networks’ Leeds City Gate H21 project is arguably the most ambitious. H21, funded under the Network Innovation Allowance, has made a case for the conversion of the gas grid for the entire Leeds City region to carry 100% hydrogen.

Balancing act

 

Assuming policy support for the rollout of gas grid-focused CCS can be secured, doing it in a best value for money way may present conundrums. If, for example, expansion of a hydrogen gas grid is promoted, a balance would need to be found between approaches that favour localised versus centralised hydrogen production facilities.

A centralised approach might propose that the UK invest in, say, five big hydrogen production facilities nationally, in locations that are favourable for CO2 storage. This would minimise the investment required in CO2 transport networks. Conversely however, it would mean significant investment in new hydrogen transmission – and distribution too depending on whether existing gas GDN assets are widely updated to carry the new gas or not.

A decentralised approach would invert the issue. Finding the optimum between these two extremes would be a balancing act – and one which some have argued would best be performed by the existing gas transmission and distribution operators.

Dr Keith MacLean explains the argument: “A good way to drive down costs and finance growth of CCS for gas applications would be to have the steam methane reformation and CCS networks as regulated assets that the gas network owners would be responsible for – a bit like the old gas company which produced locally and distributed locally.”

An alternative, as Lord Oxburgh’s report advocated, would be to set up a state-owned CCS company to own the assets and keep cost of capital low. Either way, MacLean emphasises: “Having CCS networks developed in a regulated monopoly is the right place for it. It won’t develop properly in a commercial world.”

It also conducted a feasibility study which showed how sustainable local production of hydrogen for injection into this grid could be supported by CCS. Dan Sadler, head of energy futures at Northern Gas Networks, led the project and is currently seconded to the new Department for Business, Energy and Industrial Strategy as technical adviser on the future of the gas networks. “My view is hydrogen offers a large-scale solution to decarbonisation,” Sadler enthuses. “Reusing our gas network and with a proven supply chain, it could provide a long-term sustainable solution to decarbonisation of heat in the UK.

“The challenge of the Climate Change Act is an 80% reduction in emissions from 1990 levels by 2050. Such a challenge requires big solutions. ‘Bio’ forms of gas can clearly contribute, but it is unlikely that they can meet the 80% challenge and have the scale to fully decarbonise the UK gas grid.”

However, although hydrogen is an attractive zero-carbon fuel, making it in the quantities that would be required to support a gas grid conversion is significantly more carbon intensive. The cheapest methodology for industrial scale hydrogen production today, and the one proposed under the Leeds H21 scenario, is steam methane reformation (SMR).

But in order to produce enough hydrogen to meet Leeds’ current gas demand, an SMR plant would create approximately 1.5 million tonnes of CO2 per year – this is where CCS can shine.

It’s not just that CCS can extract carbon emissions from the SMR hydrogen production process in the same way it has been proposed it could suck CO2 from coal and gas-fi red power stations, it’s that it could do so far more efficiently and cheaply. Dr Keith MacLean at the Energy Research Partnership explains: “The hydrogen production process is much better suited to CCS than power stations because the process is characterised as continuous, with high concentrations of CO2 in an easily separable mix.” Hydrogen production plants would also be “willing hosts” of CCS, says MacLean, unlike the average power station owner to whom the technology represents expense and a potential compromise for plant efficiency.

H21 proposes to apply 90% CCS to new SMR hydrogen production facilities on Teeside. The captured CO2 would then be compressed to 140 bar and sequestered deep under the North Sea. The approach has already been proven cost-effective and effi cient elsewhere. Air Products at Port Arthur, Texas, uses steam methane reformers to produce hydrogen from fossil fuels, feeding a 600km industrial corridor, and employs sequestered carbon dioxide for enhanced oil recovery – a process that uses CO2 as a solvent to “clean out” existing oil field with residual oil left  in hard-to-reach pockets, thereby stalling investment in expensive and environmentally damaging new fields.

Globally, the H21 project report says that production of hydrogen by steam methane reformation runs to 50 million tonnes a year. This compares to just 0.15 million tonnes required for the demand needs of the conversion area in Leeds, so it’s an eminently achievable production goal, Sadler argues.

Not everyone is convinced by the idea of a hydrogen gas grid conversion, however – with or without the carbon-controlling benefits of CCS to clean up hydrogen production.

A hole in the hydrogen hypothesis

A report published this summer by Policy Exchange, titled Too hot to handle: How to decarbonise domestic heating, acknowledges that a large-scale move to a hydrogen gas grid, coupled with CCS for hydrogen production, would enable rapid and radical decarbonisation – but at an eye watering cost.

Converting the gas grid to run on hydrogen would “achieve an estimated 73% reduction in greenhouse gas emissions” says the report – in other words the lion’s share of the UK’s reductions commitments. However, Policy Exchange also observes that hydrogen conversion would require gas boilers and cookers to be changed in every home, causing cost and disruption to consumers.

Furthermore “the construction of new infrastructure to produce hydrogen and store the CO2 produced as part of the process” would be “very costly”. Referencing the H21 project in Leeds, the report points out that the upfront costs calculated for converting the city’s gas grid are £2 billion, plus an annual cost of £139 million. “If these costs are scaled up to all 23 million UK homes on the gas grid,” the report says, “this implies a capital cost in the order of £180 billion and ongoing cost of £12 billion per year.”

Adding a final blow to the hydrogen lobby, Policy Exchange also observes that H21 forecast the cost of hydrogen delivered to customers for heating and cooking in homes would be almost double the retail cost of gas. Others have argued it would be even higher.

Do these arguments undermine Oxburgh’s theory that CCS will be most valuably deployed in the decarbonisation of heat? Not necessarily. Tony Day, director of Low Carbon Gas Ltd, is a committed proponent of bioenergy with CCS, or BECCS, as a route to affordable decarbonisation of the gas grid – and therefore heat.

BECCS involves the production of synthetic methane from a combination of fuel inputs including waste, biomass and coal. This process is also proven but has the added benefits of being even lower cost than carbon capture from SMR hydrogen production and is certainly “up to two orders of magnitude cheaper” than the application of CCS to power production according to Day (see chart).

 

Day explains that this is because the methane production process operates pre-combustion and at high pressure. This improves the efficiency of the carbon capture process and removes the need for cost intensive carbon compression after capture. 

According to Day’s calculations, the synthetic methane produced with the BECCS methodology is carbon negative – due to its balanced inputs of biogenic and fossil carbon and the application of CCS. It also has a variety of potential uses in the energy system.

First and foremost, Day suggests that the methane should be mixed with conventional natural gas in the “public access gas grid” which would continue to serve 80% of UK gas demand. The proposal to maintain 40% fossil-based natural gas in the network might strike some as a non-starter for a decarbonisation solution.

But Day is confident that by injecting 25% synthetic methane, produced with CCS and from partially biogenic fuels, and topping this up with an additional 15% biogas, the UK would take a significant stride towards its CO2 reduction targets.

A further boost to decarbonisation would be enabled by a second use of BECCS-based synthetic methane. Day says that it could be used “as a base from which to produce deeply decarbonised hydrogen with CCS”. Rather than using this very carbon negative hydrogen in the public access gas grid, Days says it would be better applied in private networks to supply about half of industrial gas demand. This would cut a significant swathe through the carbon emissions of the UK’s dirtiest but still economically important sectors.

Day is keen to stress that he is not antihydrogen, but supports methane because “it can be decarbonised more cheaply than any other energy vector, it supplies 40% of total UK energy demand and supports UK winter heat demand”. The BECCS proposal is convoluted and difficult for decarbonisation-focused policy makers to get on board with because it retains elements of “dirty” fuels like coal – in methane production – and natural gas.

Even some of the energy system’s leading lights find it difficult to grasp how the BECCS approach delivers a better cost and carbon emissions reduction scenario than other options – like hydrogen. However, they are swift to add that the complexity of the model should not lead to its dismissal.

See an opinion piece from George Day at the Energy Technolies Institute on the future of CCS here.

Generally, there is a feeling that more applications of CCS, leading to a mature understanding of its potential whole system costs and benefits, should be explored – especially if they seem to enable quicker routes to the large-scale deployment of CCS that would lead to big economies of scale and technology cost reduction for all. The future remains unclear for CCS policy in the UK. Despite continued criticism of its decision to withdraw CCS support, the government has given no official sign that it will consider a new subsidy mechanism or competition for the technology.

If and when a new strategy does arise, however, it must be acknowledged that there is an opportunity to re-set CCS policy so it is less focused on applications for generation and more appreciative of the full range of decarbonisation opportunities it represents. As MacLean concludes: “We should be assessing CCS for its overall system value and the flexibility that it gives rather than coming up with a ‘killer application’ which will be a silver bullet for everything. That’s a mistake we keep making.”

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