Doosan Babcock Response to Scotland Energy Strategy Consultation: May 2017 Executive Summary Doosan Babcock Investment in the Scottish Energy Strategy As a UK based energy engineering services specialist operating across the Thermal, Oil and Gas, Nuclear and Distributed Energy sectors, Doosan Babcock takes a strong interest in the proposed Scottish Energy Strategy. Employing over 4,000 professional and blue collar staff and with manufacturing capacity based in Scotland, Doosan Babcock has felt the impact of the evolution of the energy sector. The whole systems approach taken in the Scottish Government’s Draft Energy Strategy document is welcomed to allow Scotland, and Scottish businesses, to move ahead and become global leaders in driving the interaction that is necessary between the heat, transport and power elements of the energy system in a modern low carbon environment. Distributed Energy, Low Carbon, Whole System Approach Doosan Babcock applaud Scotland’s progress in decarbonisation of the electricity grid We recognise the upcoming challenges in the decarbonisation of heat and transport - Scotland has the opportunity, capability and drive to take a leading global role in this activity The Scottish Government should produce, as soon as possible, a detailed sector road map, setting out the process for decarbonising heat (electrification and the role of hydrogen), in order that there is a clear path and timeline to achieving the targets laid out in the draft strategy (similar comments also apply to electricity and transport) Support from Government and certainty in policy / timelines will allow Scottish business to invest, recruit and be set up to deliver the technologies and people required in delivering the carbon reduction targets Poor air quality in our urban areas, and the resultant negative health impacts, should be addressed in the Scottish Energy Strategy The role of Fuel Cell in a Distributed, Whole Energy System Approach Doosan Babcock believes in the role of hydrogen fuel cells in the future, decarbonised energy system Hydrogen must play a role decarbonising heat and transport and to support the intermittency of renewables Stationary fuel cells represents a ‘no risk’ investment being the most efficient and reliable option to generate electricity and / or CHP locally using natural gas and/or biogas with the option to retrofit for hydrogen fuel In addition to the decarbonisation benefits, a stationary fuel cell is the ideal dependable generation for urban locations due to its negligible NOx and particulates emissions To derive competitive advantage, Scotland needs to assess the strategic opportunity presented by fuel cells and consider reflecting their benefits as it develops policy initiatives. UK energy policy makers have not appropriately considered the benefits of fuel cells and we propose that Scotland should take the policy lead in this respect Initial policy support in Scotland and corresponding fuel cell deployment would not only deliver benefits for the Scottish energy system but also, through economies of scale, render fuel cells cost effective creating significant manufacturing and export opportunities for Scottish business in an evolving global fuel cell market The Role of Thermal Generation Being a large employer in the sector, Doosan Babcock has felt the impact of thermal plant closure in Scotland. We recognise the need for the energy mix, and our business, to evolve into a low carbon, whole system approach in the future The Role of Nuclear Generation Doosan Babcock is a large employer in the Nuclear sector with significant presence at the existing operational plant (Torness and Hunterston) and is active in the decommissioning of life expired plants We encourage continued life extension of the existing plant to support decarbonisation of the electricity mix Doosan Babcock sees significant opportunity in nuclear new build, and recognises the current Scottish Government policy in this respect. With the ongoing UK government support for a new generation of SMR’s © Doosan Babcock Page 1 May 2017 Doosan Babcock Response to Scotland Energy Strategy Consultation: May 2017 (Small Modular Reactors) perhaps it is the time now to have a fresh independent look at what role this technology could play in Scotland’s energy system The Role of North Sea Oil and Gas As a significant employer in the Scottish Oil and Gas sector, Doosan Babcock applaud the drive for continued recovery of our natural resource for Scotland to receive the positive economic impact it brings As highlighted above, we believe fuel cell technology represents a clean and efficient way to generate heat and electricity from our natural gas before transitioning to zero emission hydrogen The Role of CCS We are somewhat sceptical of the need for a large CCS infrastructure to capture Scotland’s industrial CO2 emissions. We believe that this could end up a stranded asset if a review of the 2050 industrial landscape is not enacted before any CCS implementation decision. We recognise that hydrogen production technology is an integral part of the Strategy. We believe that a renewables based hydrogen production system is more aligned with Scotland’s energy aspirations; ultimately hydrogen production scale and economics may drive the requirement for a CCS infrastructure © Doosan Babcock Page 2 May 2017 Doosan Babcock Response to Scotland Energy Strategy Consultation: May 2017 Response to questions 1. What are your views on the priorities presented in Chapter 3 for energy supply over the coming decades? In answering, please consider whether the priorities are the right ones for delivering our vision. 1.1 Continuing to Support the Recovery of North Sea Oil and Gas as a Highly-Regulated Source of Hydrocarbon fuels As a significant employer in the Scottish oil and gas sector, Doosan Babcock supports the drive for continued recovery of our natural resource for Scotland to receive the positive economic impact it brings. Considering the very aggressive carbon reduction targets, and the necessary transition from fossil fuels, it is necessary to recognise how we can make most efficient and clean use of our resource. 1.2 Supporting the Demonstration and Commercialization of Carbon Capture and Storage and CO2 Utilization Introduction Over the past ten years, Doosan Babcock have invested over £35m in the development and proving of carbon capture technology, culminating in the design and construction of the then largest carbon capture plant (capable of capturing 100te/day, equivalent to around 5MWe, or 0.25% of plant total output at full load) at Ferrybridge. With the decline of new build coal plant across the UK, and the unavailability of any Government support to enable technology demonstration at any reasonable industrial / utility scale, the Ferrybridge plant was decommissioned in 2014. In the interim period, Doosan Babcock redeployed the bulk of the Carbon Capture team into other technology areas, and has wound down internal activity on this technology, to the level of a watching brief as far as the UK market is concerned. The Renfrew personnel employed in CCS activity currently mainly provide technical and R&D support to our parent company Doosan Heavy Industries and Construction, who are involved in the global coal new build market in areas where there is still an interest in utility scale carbon capture. Industrial Carbon Capture Recently, and as outlined in the Energy Strategy document, the CCS technology application in the UK has shifted from utility to industrial scale application, with growing support for the establishment of an industrial CCS infrastructure. As illustrated in the attached in house Doosan Babcock document (Appendix 2) we estimate that, at best, around 33% of UK industrial CO2 emissions can be captured; the remaining 67% are either too diverse for capture or will be avoided by technology change (driven by cost considerations). The analysis is based on 2015 data on the installed industrial capacity in the UK at that time. In the intervening period there has been closures in the steel industry which reduce the bulk of CO2 emissions from that industry, there is a move by steel producing organisations like Liberty to produce a GreenSteel strategy which will reduce/eliminate CO2 emissions from that industry1, and as we move towards transport decarbonisation one has to question if all the current six refineries in the UK have a future in their current form. Similar comments apply to all the industrial sectors involved; it seems that the approach is to accept that industrial processes have to be carbon intensive, so let’s build an infrastructure to capture and store the emitted carbon. In Doosan Babcock view, this approach has the potential for the CCS infrastructure developed around the current industry base and technology to become a stranded asset in the not too distant future, as the industry it would have been built to serve changes and develops in a low carbon world. From an industrial future perspective, and to aid understanding of the potential demand for a CCS infrastructure, Doosan Babcock believe that now is the time to answer a different set of questions based around building a low carbon industrial future for Scotland i.e. what is the industrial pathway for Scotland?, what industrial processes have a long term future?, how can those processes be made carbon independent? (a philosophy of rather than 1Liberty House Group about section (2017) http://www.libertyhousegroup.com/company/vision/ © Doosan Babcock Page 3