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After years of inaction, the Tories need to go much further on carbon capture

Cameron has been squandering the UK’s lead in a technology with a large and growing global market.

Cameron has been squandering the UK’s lead.
David Cameron tours the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea earlier today. Photograph: Getty Images.

This morning marked an important milestone on the road to the UK’s low-carbon future. In Peterhead, in the north east of Scotland, the government finally announced the funding for a detailed study to support Carbon Capture and Storage (CCS) on a gas-fired power station. The idea behind Carbon Capture and Storage is simple; CO2 is plucked from the emissions of a fossil-fuel burning power station, liquefied and then buried underground. By the end of the decade, it is thought that the Peterhead CCS project will capture 10 million tonnes of CO2 a year and bury it 2km beneath the floor of the North Sea. It will be the first gas-fired CCS plant in the world.

Earlier this month, the TUC – in conjunction with the Carbon Capture and Storage Association – published a report examining the potential benefits to the UK of this technology. The results are stark: 30,000 construction jobs, the widespread decarbonisation of Britain’s industrial sector and £82 knocked off the cost of decarbonisation on consumer bills. After three years of inaction, there are now tentative and welcome signs that the government is taking the potential of CCS seriously. But there is a serious risk that the government will fail to provide the necessary support for the technology, with the result that the Peterhead project and its coal-fired cousin in Yorkshire become engineering curiosities, rather than pioneers of a new industry.

The basics of Carbon Capture and Storage are sufficiently easy to understand that they can often generate “too good to be true”-style responses. Carbon capture devices are installed in large-scale emitters such as power plants and industrial facilities. The captured carbon is then sent down a pipeline into deep subsurface rock formations, where it is permanently stored. CCS plants continue to burn fossil fuels, but with 90 per cent fewer emissions, and the technology can be fitted to existing infrastructure.

As ambitious as it sounds, it is not the technology that is holding back the development of CCS in the UK. The science and the engineering are largely proven – the first-full scale CCS plant is due to open in Canada later this year, with a capacity of 110 MW. Instead, the key brake on this technology in the UK has been stalling government policy. Under the last Labour government, Britain led the world in CCS. Seven out of the 13 projects up for European grant funding were British and it was understood that a handful of pioneer projects would pave the way for wide-scale roll out.

But within two years of the coalition coming to power, the Institute of Mechanical Engineers warned that Britain was becoming an “also ran”. Support for the first wave of pioneer projects was cut from four sites to two. The government failed to leverage funding from the EU and promises of £1bn of capital funding support disappeared as the Treasury took the money back once an earlier CCS project at Longannet in Fife was shelved by Scottish Power. CCS projects were left to wither on the vine. By contrast, Labour have continued to champion the technology since moving into opposition, with MPs such as Ian Lavery leading a vigorous campaign and shadow secretary of state Caroline Flint making clear that CCS has a vital role to play in our future energy mix.

The issue for the UK is that to decarbonise power supply and keep energy intensive industries here, CCS is a necessity, not an option. Decarbonising without CCS is likely to cost the UK 1 per cent of GDP and, as the TUC and industry study made clear, add about 15 per cent to the wholesale price of electricity. CCS also allows us to retain a role for fossil fuels, whose qualities complement other technologies and contribute to a balanced and varied energy mix.

In addition, CCS offers perhaps the only means of decarbonising large emitters in the industrial sector,  which is currently responsible for 10 per cent of all UK emissions. But in order to reach 10-20GW of CCS by 2030 we will need 15-25 installations. By contrast, an optimistic estimate would suggest that, under the current government’s policies, we have a grand total of two installations by 2020.

This is now the challenge for the government – to develop the next wave of CCS projects that will follow Peterhead and the White Rose project in Yorkshire. These should be the vanguard for a new industry, not a pair of engineering oddities. That is why getting the long-term energy support arrangements, known as contract for difference, appropriate to CCS as well as other low carbon sources (nuclear and renewable power) is so important.

So far there has been little sign that the government see any urgency in this pressing agenda. As ever, the penalty to moving slowly is that you fall behind. The global demand for CCS dwarfs our own, with the International Energy Agency forecasting 946GW of capacity by 2050. Establishing the UK as a European hub for CCS will dramatically increase the chances that this 946GW is built using UK expertise and supply chains. David Cameron is fond of talking about our participation in a global race, but seems less interested in actually running it.

By stalling on CCS over the last two years, the Tories have put our climate change targets, jobs and the affordability of our energy bills under pressure. Meanwhile, they are squandering the UK’s lead in a technology for which there is a large and growing global market. Today’s announcement highlights the potential benefits of CCS, but also makes plain just how much we stand to lose if the industrial potential is not properly nurtured. It is going to take much more than an announcement to coincide with a cabinet meeting in Aberdeen to maximise the UK's opportunities to fulfil our potential in CCS. It needs the government to take a sustained and real lead, or the risk is that CCS will remain the neglected element of our lower carbon future.