Is CCS worth the candle?

 “The costs of carbon capture and storage must come down if it is to play a part in the long-term decarbonisation of the UK’s economy.”

A typically cool response from a government spokesman to last month’s report from a Parliamentary advisory group chaired by Lord Oxburgh.

The debate about CCS has a catch-22 quality to it. It seems we can’t commit to investing in CCS until costs come down. But costs can’t even be properly revealed, let alone come down, until we commit to delivering a large-scale project.

At first sight, CCS scepticism is understandable. Other options, particularly solar and off shore wind, are already on a path to rapid cost reductions. Decc’s ill-fated CCS commercialisation programme would only have delivered electricity at around £170/MWh sometime aft er 2020. So how can it possibly be true that CCS could save UK consumers and businesses billions of pounds (as the ETI claims)? Why did the late, great Sir David Mackay say it was an “appalling delusion” for the UK to rely on renewables and energy efficiency alone, and that “the sensible thing… is to focus on CCS, which the world needs anyway.”

The reason, of course, is that CCS is a strategic technology for decarbonisation and not only about low carbon electricity. But electricity has been the obvious place to start, so those simple £ per MWh comparisons have tended to dominate the debate, even though they are misleading. Comparing intermittent and firm generation in this way simply doesn’t make sense.

The electricity system is an interconnected whole, so its overall cost reflects the interaction of the whole generation mix. If you don’t believe me, then analysis for the CCC showed additional system costs for integrating solar and off shore ranging from £6 to £28 per MWh, with CCS often showing system integration benefits rather than costs. Once we think of CCS as a firm, despatchable part of a low-carbon portfolio, the case for it becomes much easier to understand. CCS in the power mix means savings in capacity market payments for unabated gas backup. And we would also need less generation capacity overall and less inherently expensive electricity storage to balance the system: savings that don’t show up in simple strike price comparisons.

The second key point on costs is that strike prices for CCS projects can be much lower if we pick the right fi rst project and develop the infrastructure strategically. A strong body of evidence suggests that a 1GW-plus scale post-combustion gas CCS plant close to the Tees or Humber with easy access to the best proven storage sites in the southern North Sea, would offer a best value strike price while also providing infrastructure for an industrial CCS cluster. With the right risk-sharing deal, the Oxburgh report’s figure of £85 per MWh could be achieved.

A risk-sharing deal for CCS would be no diff erent in principle to, for example, the insulation from stranding risk offered to investors in off shore wind transmission lines, or the loan guarantee for Hinkley Point C.

This takes us to the wider case for CCS, which is often neglected in the fixation on strike prices and electricity. As well as a more diverse base of reliable options for electricity decarbonisation, CCS also enables cost-efficient emissions reductions in key industrial clusters (Teesside being an obvious case). A clear case of forward-looking “industrial strategy” supporting key industrial sectors, UK skills in off shore engineering as well as a cost-effective pathway to decarbonisation.

Going beyond electricity and industry, CCS unlocks options for decarbonising both heating and transport.

This year we have seen the idea of converting parts of the gas grid to hydrogen gain traction. The huge seasonal swings in demand for heat make decarbonisation particularly challenging. While attention has focused on hydrogen from natural gas feedstocks, ETI’s whole system analysis shows that clean gasification of biomass feedstocks could be hugely valuable, offering negative emissions that look vital for the global 1.5 degrees agenda.

Hydrogen production with CCS offers a uniquely flexible and versatile medium of low-carbon energy for power generation, heat or transport. With the right strategy and commitment, by the mid to late 2020s CCS can deliver cost-effective low-carbon electricity and industrial emissions reductions, with the UK much better placed for the really hard work of decarbonising heat and transport.

But if we never get around to investing in a first project, then we might have to content ourselves with just finding out whether Sir David Mackay was right or not.

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