Carbon Capture and Storage
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House of Commons Energy and Climate Change Committee Carbon capture and storage Ninth Report of Session 2013–14 Report, together with formal minutes relating to the report Ordered by the House of Commons to be printed 13 May 2014 HC 742 Published on 21 May 2014 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Energy and Climate Change Committee The Energy and Climate Change Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Energy and Climate Change and associated public bodies. Current membership Mr Tim Yeo MP (Conservative, South Suffolk) (Chair) Dan Byles MP (Conservative, North Warwickshire) Ian Lavery MP (Labour, Wansbeck) Dr Phillip Lee MP (Conservative, Bracknell) Rt Hon Mr Peter Lilley MP (Conservative, Hitchin and Harpenden) Albert Owen MP (Labour, Ynys Môn) Christopher Pincher MP (Conservative, Tamworth) John Robertson MP (Labour, Glasgow North West) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine) Graham Stringer MP (Labour, Blackley and Broughton) Dr Alan Whitehead MP (Labour, Southampton Test) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication Committee reports are published on the Committee’s website at www.parliament.uk/ecc and by The Stationary Office by Order of the House. Evidence relating to this report is published on the Committee’s website at www.parliament.uk/ecc Committee staff The current staff of the Committee are Farrah Bhatti (Clerk), Vinay Talwar (Second Clerk), Tom Leveridge (Committee Specialist), Marion Ferrat (Committee Specialist), Shane Pathmanathan (Senior Committee Assistant), Amy Vistuer (Committee Support Assistant), and Nick Davies (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Energy and Climate Change Committee, House of Commons, 14 Tothill Street, London SW1H 9NB. The telephone number for general enquiries is 020 7219 2569; the Committee’s email address is [email protected] Carbon Capture and Storage 1 Contents Report Page Summary 3 1 Introduction 5 What is carbon capture, transport and storage? 7 Government support for CCS 8 Global progress on CCS 11 2 Deploying CCS in the UK 13 Benefits of CCS 13 The cost of deploying CCS 15 Political risk 17 Financial support 17 Clustering and common infrastructure 21 Enhanced Oil Recovery 24 Industrial CCS 25 Safety and reputational risks 26 Regulatory risk 30 Scientific and engineering challenges 31 First mover advantage 34 3 Conclusion 36 Conclusions and recommendations 38 Annex 42 Canada programme and visit notes 42 Formal Minutes 58 Witnesses 59 Published written evidence 60 List of Reports from the Committee during the current Parliament 62 Carbon Capture and Storage 3 Summary Carbon capture and storage (CCS) has the potential to help keep carbon emissions within the limits that are needed to avoid dangerous global temperature rises. As such, it could be a game changer in efforts to tackle climate change, but high energy and financial costs currently make CCS uneconomic without specific policy interventions to support it. These are likely to be subsidies from the public purse and/or the consumer. As a result, progress on CCS has been extraordinarily slow with only a handful of projects in operation around the globe and none fitted to power stations at full scale. In the UK the expected start date has been repeatedly pushed back from 2014 to potentially after 2020. This delay has called into question the credibility of Government CCS policy and has resulted in a lost decade for this vital fledgling industry. To ensure CCS can start helping us cut power sector emissions by the 2020s, the Government needs to prioritise designing a credible financial incentive framework using guaranteed-price ‘Contracts for Difference’ (CfD) and commit to a realistic but ambitious timeline for awarding support to projects both inside and outside its CCS commercialisation competition. Viable projects outside the competition, in particular, could be at risk of collapsing unless they get a clear signal from Government that they can negotiate for a CfD in parallel with competition projects. CfDs need to be tailored for all these projects to suit the unique characteristics of CCS. Getting the first CCS projects built will be key to reducing the cost of future CCS projects. It is unclear whether any financial advantage accrues to first movers, so there is a case for limiting the amount of consumer support which is allocated to the first CCS projects. It is likely that most benefits will be accrued by second movers, which may explain why the big companies are reluctant to spend so much of their own money at this early stage of CCS development. It would be wise for the Government to direct its resources at the uniquely British aspects of CCS deployment. This includes, promoting clustering of projects, encouraging enhanced oil recovery and reducing the regulatory and technical barriers associated with storing CO2 underground. With the right regulatory approach, it could one day be feasible to create a ‘storage market’ where other countries pay to permanently store CO2 in the UK’s disused offshore geological sites. The UK has previously experienced significant opposition to new energy infrastructure such as coal plant, wind farms and shale drilling. In some instances this has been driven by misinformation and misunderstanding. A national CCS engagement strategy emphasising the potential benefits, dispelling myths and listening and responding to public concerns over safety would help to address public opposition to CCS and to try and prevent it from growing. To increase the chance that the first CCS project will be operational in the UK by 2020 the Government should aim to reach final investment decisions with the two projects left in its competition by 2015. Too much time has already been wasted by badly designed bureaucratic policies. CCS technology could be vital to keep climate change within 4 Carbon Capture and Storage manageable bounds, there is no further time to lose. capture and storage in keeping carbon emissions within the global carbon budget 515GtC,1,2 already emitted Global Carbon Budget 1000GtC1,3 CCS Potential emissions from remaining fossil fuel reserves amount to Technical 780GtC4 potential of at least 545GtC of geological storage5 1 gigatonne of carbon (GtC) is equal to 1,000,000,000 metric tonnes 1 IPCC, Summary for Policy Makers, Climate Change 2013: The Physical Science Basis (2013), p27 2 Uncertainty range: 445 to 585 GtC 3 1,000 gigatons of carbon (GtC) represents the amount of carbon that can be emitted for it to remain “likely” (66% chance) that global temperatures do not rise by more than 2°C (relative to pre-industrial times) 4 IEA, World Energy Outlook (2012), p259 5 IPCC, Special Report on Carbon Dioxide Capture and Storage (2005), p12 Carbon Capture and Storage 5 1 Introduction 1. The latest assessment of climate science published by the Intergovernmental Panel on Climate Change (IPCC) concluded that, “it is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century”.1 It is estimated that for it to remain “likely”2 that global temperatures do not rise by more than 2°C (relative to pre-industrial times) the maximum carbon that can be released into the 3 atmosphere is 1,000 gigatonnes of carbon (GtC) (3670 GtCO2). This is sometimes referred to as the global carbon budget. Between the start of the industrial revolution and 2011, 515 GtC (1890 GtCO2) have been emitted to the atmosphere (roughly half the carbon budget), mainly as a result of burning fossil fuels.4 According to the International Energy Agency (IEA) total potential emissions from fossil fuel reserves in 2012 amount to 780 GtC (2,860 5 GtCO2). As a result, there is more CO2 locked up in fossil fuels than can safely be emitted to stay within the global carbon budget. The IEA argued that without a significant deployment of carbon capture and storage (CCS) a substantial proportion of current proven fossil-fuel reserves cannot be commercialised in a 2°C world before 2050. 2. CCS enables CO2 emitted from large sources to be permanently stored instead of released into the atmosphere. It is one of the only technologies available that has the potential to turn high carbon fossil fuels into genuinely low carbon sources of energy. There is also potentially significant storage available. In 2005, the IPCC estimated, for example, that there could be a technical potential of at least about 545 GtC (2,000 GtCO2) of storage capacity in geological formations globally.6 Without CCS there is a risk that the CO2 locked in the remaining fossil fuels reserves will be released to the atmosphere. 3. The UK is well suited to take advantage of CCS and it could bring several benefits. Support for CCS is found at the highest levels of Government with the Prime Minister repeatedly emphasising the importance of CCS to meeting future climate change targets.7 Despite this, progress on CCS in the UK has been frustratingly slow. We have an ongoing interest in the deployment of CCS because of its potential to help the UK meet its energy and climate change policy goals. It is an issue we have regularly touched on in oral evidence sessions and in past reports, as set out below. 4. In our 2011, report, The