CCUS: A key factor in North West decarbonisation

As the Business, Energy and Industrial Strategy (BEIS) Committee publishes a report[1] urging Government to back Carbon Capture Usage & Storage (CCUS), Dr Tony Smith from Peel Environmental looks at how the technology could be a game changer in the North West’s decarbonisation journey.

Recent public protests have highlighted the climate change challenge and the need for Government to introduce effective and timely policy.  In fact, the UK already has an Act of Law; the 2008 Climate Change Act, which requires reduction in UK greenhouse gas emissions to 20% of their 1990 levels by 2050. The Committee for Climate Change has stated that the cost of meeting this target is approximately twice as high without CCUS. Carbon budgets are in place to monitor progress. The UK has met the first two of these targets, is on line to meet the third but there are significant policy gaps in meeting further carbon budgets. To add to the challenge, the Committee may, within weeks, propose a UK net zero carbon target by 2050. This will require radical changes to energy markets in terms of generation, distribution and consumption.

The UK produces 361 million tonnes per annum (MTe pa) of CO2, representing around 1% of global emissions. Although a small proportion of the global sum, there is a huge opportunity to become world leaders in CCUS technology, exporting our expertise to a global market as well as delivering early wins for the UK decarbonisation.

“The UK’s storage and supply chain resource strengths mean that we have a unique opportunity to lead the world in the development of a new CCUS industry. The Government should not allow the UK to pass this opportunity up.” (BEIS Committee, April 2019)

The North West opportunity

In the North West, we produce 40 MTe of CO2 from heat, transport, power and industry every year[2]. Plans are underway to assess capture, transport and store of over 1 MTe pa from existing manufacturing processes by the mid 2020’s. The East Irish Sea Hamilton Field is a potential underground store for CO2 as it nears the end of its gas production life. The proposal encompasses ‘reverse flow’ of an existing pipeline infrastructure and connection to a new build section offering significant cost savings versus alternatives. The creation of this new CCUS network could then be utilised to encompass Cadent’s HyNet project, capturing, transporting and storing an additional 1 MTe pa CO2 as well as offering further CCUS regional opportunity.

The North West has a significant ‘cost of carbon abated’ advantage in developing a decarbonised industrial cluster and is seeking to attract Government funding through the £170m Industrial Strategy Challenge Fund (ISCF). This fund requires that an industrial cluster should achieve net zero carbon by 2040 with a 60% reduction in CO2 by 2030. Government and the Committee on Climate Change see such a cluster approach as essential to prove industrial scale CCUS by the mid 2020’s with the opportunity for substantial roll out and development from 2030.

A 2016 study by the Energy Technologies Institute (ETI) demonstrated that the North West has the lowest cost UK scale (>100MTe storage capacity) CCUS opportunity in the East Irish Sea, underpinning the opportunity for the North West to deliver something that’s groundbreaking. The Hamilton Field could store 125 MTe CO2 at up to 5 MTe pa.

While further assessment is needed on feasibility, the signs are encouraging. The North West can utilise existing onshore pipelines and other infrastructure. It also benefits from the potential offshore store being in closer proximity to the coast, at 26km, than other UK options. The study highlights the huge opportunity for significant industrial decarbonisation in the North West which in turn could be a catalyst for further and deeper regional CO2 reductions.

Meeting the challenge

Many challenges lay ahead in terms of creating regulatory stability and the right mix of ‘carrot and stick’ from Government. Long term price signals are critical to creating investable projects and this must include the development of ‘cost of carbon’ policies.

“We recommend that the forthcoming Comprehensive Spending Review take account not only of CCUS’ costs, but also its wider benefits-notably to extend the lifetime of heavy industries which will otherwise need to close under the requirements of the Climate Change Act”. (BEIS Committee, April 2019)

The ISCF is a starting point to underpin the development of a net zero carbon industrial cluster, but this policy, and indeed the government funding behind it, needs to do more. Perhaps the development of three industrial clusters (North West, Grangemouth and the North East) is the pragmatic and scale base route to success.  Meanwhile a Government/Industry task force is currently assessing viable carbon cost mechanisms including tax credits, carbon taxes and Contracts for Difference opportunities.

2019 may prove to be a seminal year for CCUS and the development of large-scale projects which could make a difference. The North West is ready to meet the challenge.