A UK low-carbon industrial strategy with CCS

The 25th November 2016 may have passed many people by. However, for the CCS industry it marked the one-year anniversary of the UK’s decision to cancel the competition to build the first commercial-scale carbon capture and storage (CCS) projects in the UK.

It is hard to argue with the evidence regarding the importance of CCS – the IPCC has estimated that the costs of meeting global climate change targets without CCS could increase by 138%. Similarly, the Committee on Climate Change found that CCS could almost halve the cost of meeting the UK’s 2050 emissions reduction target.

When all the evidence points to CCS as being a crucial part of the cost-effective solution to climate change, why has an operational project so far eluded the UK? And how do we now move forward?

The answer to the first question is slightly complicated and explains the benefits of CCS as well as some of the challenges. CCS is a vital decarbonisation tool across a broad range of sectors; let’s take each of them in turn.

In a world with increasingly stringent climate change targets, industrial sectors such as steel, cement, chemicals and refining will be very dependent on CCS to achieve significant emissions reductions. This is because these sectors produce carbon dioxide as part of the process (for example to make steel in a blast furnace, you need to use coking coal and carbon dioxide is a by-product of this process). So CCS will be vital to ensuring a long-term, sustainable future for these industries.

To say CCS in the power sector has been on a bit of a rollercoaster ride would be an understatement. The UK’s low-carbon energy policy is focussed around the trilemma of affordability, energy security and sustainability. The options that the Government has pursued to meet this trilemma are focussed on renewables, nuclear and (at the moment) gas. The latter is particularly important because it provides vital flexibility in a system with intermittent renewables and inflexible nuclear, so gas is needed to balance the mix. However we must concede that over-reliance on gas will cause us to significantly miss our climate change targets and CCS is therefore vital to ensuring that gas can continue to provide a low-carbon source of flexible electricity.

CCS also has significant potential to decarbonise heat via hydrogen. There is increasing interest around the potential to use hydrogen for domestic and industrial heat and for transport. Steam methane reforming of natural gas with CCS is at present the best way to produce large-scale, low-cost, green hydrogen – the Leeds H21 report, published a few months ago, proposes to convert the Leeds gas grid into a hydrogen network using this method.

So the above applications show that CCS has cross-sectoral benefits. However this also presents a challenge for the UK as policies have historically tended to focus on specific sectors in isolation, missing the big picture.

So how do we now move forward? There are signs that the tide is turning – the new Department for Business, Energy and Industrial Strategy (BEIS) seems to be a step in the right direction, bringing together energy, industry and climate change policies. Theresa May has put industrial strategy at the heart of the new Government and regional/place-based development at the core of this strategy.

This could actually be very positive for CCS. The cross-sectoral benefits of CCS are best realised by developing clusters or networks of carbon dioxide pipelines and storage sites in a specific region – such as Teesside, the Humber or Scotland. This infrastructure enables the cost-effective decarbonisation of both industry and power in any given region and can also link up to a hydrogen network, thereby decarbonising heat at the same time.

We are very fortunate in the UK that many of our industrial and power facilities are already closely located together – the development of CCS clusters would actually be a fairly simple task. However, time is not on our side. We are losing many of our key industries and the availability of CCS infrastructure has a significant role to play in ensuring a sustainable long-term future for these industries, as well as the jobs and contribution to economic output that they support.

The decision to decarbonise heat via hydrogen has to be taken in the early 2020s (otherwise other – more expensive – options will need to be pursued instead) and this means that there needs to be a clear pathway to developing CCS transport and storage infrastructure ahead of this decision being taken. The UK’s oil and gas industry is heading towards a cliff edge in the 2020s when many fields come to the end of their life. Repurposing oil and gas infrastructure for CCS would delay decommissioning and could even provide an additional revenue stream via enhanced oil recovery.

This is why the Government must urgently come forward with a new approach to CCS. Whilst the specific policies are not yet fully formed, we are arguably in a better place to make the right decision. Industrial strategy, regional development, infrastructure and economic growth – CCS is vital to achieving all of these. Let’s hope the UK makes the right decision very soon.

Judith Shapiro is Policy and Communications Manager at the Carbon Capture and Storage Association

The views expressed in this article are those of the article, and do not necessarily represent those of Bright Blue