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Online Special - CCS: Opportunity Lost

In the wake of the UK Government's decision to pull the plug on CCS piots, Professor Stuart Haszeldine* discusses carbon capture, energy policy and atmosphere protection

art6ia6On 25 November the UK announced cancellation of a £1 Billion capital grant offer to support development of carbon capture and storage (CCS). That is both a large amount of funding, and a subject of interest to members of the Society – having been the focus of debates over many years on the evidence for or against Climate Change caused by human activity, and CCS as geological remediation was the subject of a series of Society meetings in March 2010, Jan 2013, and April 2014.

The cancellation was quiet. CCS had not featured in the Chancellor’s Autumn Statement of finances on the same day. Some two hours after the Chancellor had finished speaking, a brief public statement was released by UK Government1. That stated “the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available. This decision means that the CCS Competition cannot proceed on its current basis.”

Just one week before Secretary of State for Energy Amber Rudd had stated in her 18 November “Energy Reset” speech2 that “We are on track for our next two carbon budgets.”  And “ transformative technologies …. , such as CCS, point to the creation of new industries and new jobs in the UK”.  And on 14 April 2015 during the UK General Election, the Conservative Manifesto had stated "We have been the greenest government ever, … and committing £1Bn for CCS”.   

To say that the cancellation of CCS capital funding was a surprise, then, is extremely mild. That “ring-fenced” Billion pounds had been a commitment between serial governments from Labour, to Coalition, to Conservative.


The results were immediate, and strong. Commentary and criticism rippled inwards from around the world – USA, Canada, Australia and Europe. The UK had set itself up as a CCS global leader, with an impressive package of climate analysis, legislation, regulation and finances to reward a winning project with capital and operational funding. For a global leader to falter in the week before CoP21 5-year climate conference in Paris, was a distinctly unwelcome surprise.

In the UK, two full-scale industrial projects were within days of completing 40 months of design work in partnership with UK DECC. Representatives were summoned for a polite yet short meeting to terminate the projects. These groups will still submit their comprehensive documentation, being bound by the original contract. These are “White Rose”, a consortium led by Alstom, designing a new oxy-combustion coal and biomass fuelled power plant adjacent to Drax, with a new pipeline transporting CO2 to the coast and offshore to the Bunter Sand “Endurance” salt cored antiform beneath the southern North Sea, where a new borehole had been drilled and cored to investigate the storage capacity. The second project was operated by Shell, with SSE, and planned post-combustion capture at the existing Peterhead gas-fuelled power plant, sending 100km CO2 offshore through an existing pipeline, to inject into the Goldeneye depleted gasfield.

CCS projects have been integral to UK planning of decarbonised electricity delivery, and subsequently to enable electrification of transport, and reduced emissions from large process industries. CCS was first been proposed in the UK, by BP in 2005, and then in a Competition process centring on ScottishPower and Longannet. These latest efforts commenced in 2012, after eight applicants were whittled to just four, and then to two. The companies have put in substantial funds – maybe £50M, and the Government claims to have input a further £100M plus a whole sub-department within Department of Energy. Since 2005, more than 15 different projects have been suggested, evaluated and rejected, it is possible that £400M has been dissipated. Ironically, that would fund the construction of a first CCS project.

What went wrong?

Did something go wrong, and if so, what? Both projects were proceeding extremely well. In technology and engineering, both could be delivered. Both had very credible geological storage sites. And both could form the nucleus of a future CCS gathering hub from onshore industry, and distribution networks outwards to many decades of geological storage.

Peterhead links Tees and Grangemouth, gas-import sites, and new power plant propositions to diverse storage sites re-using hydrocarbon pipelines, boreholes and platforms; and opening the door to CO2-Enhanced Oil Recovery, with £3bn of Chinese investment, and the deepwater import of CO2 shipping from European States paying the UK to dispose of their unpopular CO2. Drax and East Yorkshire have a hinterland of legacy coal-fuelled power plants and industry, set for re-construction to gas plant within the “Northern Powerhouse” political vision. The storage provision is from several very large single antiforms – suggesting financial economies of scale.  All good. So what is wrong?

The problem, as ever in the UK, is perception of money and value. Both Chancellor and Prime Minister have subsequently explained that “CCS does not work”, followed by “CCS is not regarded as affordable”. By contrast, CCS in Canada is now producing coal-fuelled electricity at £105 /MWhr – cheaper than offshore wind, and the Global CCS Institute estimates gas-fuelled CCS in the USA will deliver electricity at £95, against the present UK unabated price around £70.

In contrast, the PM quoted £170 /MWhr in his Liason Committee questioning on 12 Jan 2016. This is misleading. The sting is in onshore versus offshore, and the notorious high costs of UK operations. During the course of these two project designs, it was clear that Government wanted extra: more safety, more backup systems, more duplication of equipment. Not just a hand built Rolls Royce, but a unique gilded car. Its simple arithmetic to show that, by adding 15% to each layer of a project, compound interest can almost double the final price. And, then, the pipes. Offshore facilities do already exist, but conversion doesn’t come cheaply. So it is likely that this charge to develop the System Cost infrastructure is one cause of the much larger costs than North America – but Government would have known that.


Is it fair or reasonable to lay the costs of a future pipeline network and injection system onto the first projects? Many other energy projects have their infrastructure provided from other sources and socialized – spread across the network and customers – be it grid network cables for renewables, disposal sites for nuclear wastes, or pumped storage to infill between intermittent wind power.

And let us recall the fact that CCS is uniquely valuable in its qualities of being able to release the value from fossil fuels, produce low-carbon power or heat, on demand, and ease a transition from the established fossil fuel energy system. The IPCC and the UK Energy Technologies Institute both conclude that “no CCS” means paying two-and-a-half times more to decarbonise across the UK economy. The European Zero Emission Platform estimates that “no CCS” costs two to four trillions of Euros by 2050. UK, Europe, and the world are stuck in a classic market dilemma of “can’t afford to do it, but can’t afford to do without it”.

Hydrocarbon companies take note – after CoP21 the world has signed up for a 2°C limit on warming in perpetuity. That means a balance of fossil carbon extraction and fossil carbon disposal from 2050. CCS is directly able to achieve that. Not having CCS means meeting the UK carbon targets by closure of coal power in the 2020s, then closure of gas power in the 2030s. No CCS means emissions penalty payments, by large chemical and refining industries, into the EU – making their global relocation out of the UK probable. And no CCS means no protection of the atmosphere and ocean from receiving continued gigatonnes of CO2, dumped annually into those commons.

The floods of 2015 may be just a start of tangible climate damage. Quoting the PM on 12 January, “London is a flood plain, and we need to build there”.  What price can we place on the climate ecosystem services upon which we all rely? Where to now for oil, gas and UK carbon policy?

*Professor Stuart Haszeldine FGS CGeol., University of Edinburgh.


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