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Fast-track final funding decisions on pilot carbon capture and storage (CCS) projects to make up for years of delay, MPs urged government in a report published on Wednesday.
Front-end engineering design (Feed) studies are under way for CCS trials at Peterhead and Drax, backed by a share of £1 billion set aside by government to support commercial development of the technology.
The Energy and Climate Change Select Committee said government must make sure the projects reach final investment decisions in early 2015 so they can start delivering carbon savings by 2020.
Committee chair Tim Yeo said: “Fitting power stations with technology to capture and store carbon is absolutely vital if we are to avoid dangerously destabilizing the climate.”
Government is not expecting the participants to have finished their Feed studies and be ready to take a decision until late 2015, however. Energy minister Michael Fallon said: “It’s important we take the time to get our decisions right and follow a robust process.”
Ministers should make sure CCS projects not in the £1 billion competition are eligible to apply for subsidy under the contracts for difference (CfD) regime, the committee recommended. Peterhead and Drax alone “will not be enough to kick-start the industry or have a significant impact on our carbon budgets”, said Yeo.
Fallon confirmed there would be support through CfDs, adding: “Our vision for CCS in the UK does not stop at these first projects. We want to see a strong and successful CCS industry able to compete on cost with other low carbon technologies in the 2020s”
The previous administration launched a CCS competition in 2007 but it failed to identify suitable projects, leading to a rerun in 2012. Yeo said it was “a model example of how not to support a fledgling industry”.
The committee said the UK could benefit economically from CCS by opening up a “storage market”, with other countries paying to store their emissions in disused North Sea oil wells.
Research partnership Scottish CCS said developing five projects now would cost each UK household around £30 a year, but failure to develop the sector would lead to higher costs down the line. Professor Stuart Haszeldine said: “That is a good insurance premium against the 100% certainty of future carbon taxes and future global change. Avoiding CCS investment may look cheap today, but is storing up high-cost trouble for later.”
Haszeldine added that three projects at Grangemouth, Don Valley and Teesside were “withering due to a lack of government attention” but could pay for themselves by using the carbon dioxide for enhanced oil recovery.
The CCS Association welcomed the report. Chief executive Luke Warren said: “We very much share [the MPs’] concerns and frustrations on the substantial delay to the development of CCS in the UK…
“As well as highlighting the importance of successfully concluding the current competition we are extremely pleased to see that the Committee has identified the need for clarity surrounding the availability of CfDs for non-competition projects. There is a very real risk that, without a strong signal that these projects can access a CfD in parallel with the competition, these projects will be shelved.
“There is no credible scenario for cost-effectively tackling climate change without CCS. The sooner we build the first projects, the sooner we will be on the path towards meeting this goal whilst delivering the significant benefits that a mature CCS industry can offer”.
Labour shadow energy minister Tom Greatrex said: “The Government attitude towards CCS has been one of damaging neglect. This report is just the latest of several high profile warnings to a government that appears to be uninterested in the enormous potential for CCS in the UK. In our efforts to decarbonise, CCS is not an option but a necessity.”
The Intergovernmental Panel on Climate Change estimates global carbon emissions must be kept below 1,000 gigatonnes to keep temperature rises below 2 degrees Celsius. Of that, some 515 gigatonnes has already been emitted. Potential emissions from known fossil fuel reserves amount to 780 gigatonnes. Geological storage sites are believed to have capacity for at least 545 gigatonnes worth of emissions.
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