Tom Greatrex: Reflections on a powerful argument for CCS

Unless the government is willing to act, our expertise in carbon capture technology may be lost forever, writes Tom Greatrex

The potential for the development of Carbon Capture and Storage (CCS) technology will be a vital step in the UK’s transition to a low-carbon economy. That potential is both well known and frequently trumpeted – the frustration remains that CCS has yet to be demonstrated on a commercial basis.

Last autumn, when Ibedrola (the Spanish owners of Scottish Power) and the Treasury decided to cease work on the project at Longannet in Fife, confidence in the likelihood of CCS becoming a commercial reality took a knock. The decision highlighted the complexity inherent in moving from demonstrating a technology in prototype to a commercial-scale project – but that does not mean, as some have argued, that CCS should be abandoned as a nice idea that is never going to happen. It is far too important to give up on.

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As well as the prize of reducing our own emissions and ensuring the longevity of a broad mix of energy sources in the medium term, the benefits of making CCS work have a wider commercial opportunity for the UK. The competitive advantage and considerable academic expertise that we already have, much of it in Scotland, means we are on the verge of what could also be a valuable exportable technology.

The project led by Scottish & Southern Energy (SSE) and Shell to demonstrate CCS at the gas-fired plant at Peterhead (different from the earlier project there that BP pulled out of in 2007) is one of the frontrunners in Europe. There are other possibilities mooted in Ayrshire and Grangemouth, although as projects associated with proposed new power stations yet to receive planning consent, they are not without controversy.

Since the autumn announcement about Longannet, I have been pressing the UK government to put in place a process to encourage alternative CCS projects. After much delay, in a written statement last week the government signalled that they will publish a CCS road map and competition in the coming days, possibly today.

This is not before time. If we are to maintain our lead in CCS expertise then potential projects need to see both commitment and clarity from the government so that progress can be made. Vague statements about the potential prize with precious little detail will no longer do – the very real danger is that we will lose our competitive edge to other countries who have the same need as we do to reduce carbon emissions from large scale power stations and heavy industry.

So we need four things from the government’s proposals when they are set out in the next few days:

First, there must be a clear outline on the budget for CCS projects. It is insufficient for the government to repeat its mantra that there is a £1 billion fund for the development of CCS on a commercial scale, without saying when that is available.

When the Longannet project stalled, the then energy and climate change secretary Chris Huhne was clear that the £1bn allocated to CCS was safe and there would be no Treasury backsliding. It was only days later that Treasury chief secretary Danny Alexander admitted in his autumn statement he had raided the CCS budget to pay for infrastructure projects. Since then, each time the question has been asked about how much of that money is now available the responses have been vague and evasive.

At a recent industry day on CCS, the government apparently conceded that funding would also come from the complex Feed-in Tariff Contracts for Difference (FiT CfD) envisaged in the electricity market reform (EMR) proposals.

Given that EMR is currently mired in confusion, with uncertainty that the proposals as outlined in the white paper can meet the government’s stated energy objectives, there is understandable concern. The road map and competition proposals really have to address this uncertainty.

The second thing we need is a clear commitment from the government on the number of CCS projects to be developed.

The energy minister Charles Hendry recently said that the coalition agreement commitment to four projects by 2020 still stands. Yet almost in the same breath he backtracked, by adding the caveat that the number of proposals to be supported would be dependent on the number of proposals submitted.

Given the strong likelihood that only one project could be fully funded from the £1bn the coalition has set aside, how will the government make its paper commitment a reality?

Thirdly, the government’s proposals must meet the timetable demanded by the European Commission’s NER 300 programme. There is the very real and almost immediate risk that any further UK government delays, projects here could be out of time to benefit from this important potential source of additional funding.

A decision by the European Commission cannot be taken until the individual member state has made its own choice. That places the onus on he UK government to ensure this process is as timeous as possible to maximise the potential for additional sources of funding.

Finally, the government must come forward with a detailed set of proposals on storage infrastructure and capacity.

There is real potential in various parts of the country, for example in Humberside or the West of Scotland, for CCS clusters to develop. The location of significant carbon emitters within a small geographical space, for example a power station and a large steel plant, provides an opportunity to safely store these pollutants in a cost effective manner.

The Department of Energy and Climate Change has said it is supporting studies into the development of CCS clusters. What we now need to see is the conclusion of these studies and a clear path to how these can be set up across the country.

The government’s approach to CCS has been marked by dither and delay, but time is now running out. We don’t have the luxury of accommodating more procrastination.

CCS has the potential to significantly lower our carbon emissions and create jobs and skills here in the UK, and to export that expertise around the world. The announcement they have signalled could well be the government’s last chance to come forward with detailed and serious proposals on how to make this potential a reality, or risk losing it forever.

• Tom Greatrex is MP for Rutherglen and Hamilton West, and Labour shadow energy minister