'Crunch time' for carbon capture technology
by Chris Davies
The UK and the whole of Europe could lose out on the chance to be world leaders in developing carbon capture and storage, an essential tool in the fight against global warming, writes MEP
A crucial meeting on Wednesday is likely to determine whether the United Kingdom will proceed with the development of carbon capture and storage technology. Prime Minister David Cameron is expected to chair a meeting of the Quad – also comprising the deputy prime minister, chancellor, and financial secretary – that will consider whether to provide the hefty subsidies necessary to proceed with CCS demonstration projects.
If no such commitment is made the UK will miss a deadline set by the European Commission to qualify for European Union financial support worth in total up to €1bn. The decision could prove crucial not just for CCS in Britain but for the whole of Europe, with the development of projects in many other countries postponed or dropped entirely.
The development of CCS is widely regarded as an essential tool in the fight against global warming and has the support of all political parties. It enables fossil fuel power plants, as well as industrial installations, to avoid releasing CO2 into the atmosphere by pumping it instead into rock deep underground for permanent storage. The International Energy Agency argues that application of the technology is essential if hopes of reducing greenhouse gas emissions by the extent necessary to avoid a dangerous rise in temperatures are to be realised.
Supporters believe that CCS will eventually enable CO2-free electricity to be provided at similar costs to onshore wind and at much less expense than offshore wind or solar. However, the first full scale demonstration projects will require very considerable subsidy.
The prospects looked good in 2007 when EU prime ministers agreed that up to 12 CCS demonstration plants should be in operation across Europe by 2015, but the proposals have encountered a raft of problems. The collapse in the price of CO2 has greatly weakened the immediate financial justification for CCS and increased the requirement for subsidy. Promising projects in Germany, Poland, Italy and Spain have all encountered technical or political difficulties.
In the UK, CCS projects have benefitted from the fact that all plans assume that CO2 will be piped for injection into geological strata beneath the North Sea rather than below populated areas. Public objections to the proposals have therefore been minimal, and there is cross-party support for development of the technology.
The Coalition Agreement optimistically calls for construction of four CCS projects but currently only three power station projects are thought to have reached a stage that puts them in the running: Don Valley coal at Hatfield near Doncaster, White Rose coal at the existing Drax power station site, and Peterhead gas in Scotland.
Although the Netherlands and Romania each have one project still under consideration, European hopes of taking the technology forward rest primarily with the three UK schemes that are ready to go. Energy Secretary Ed Davey is thought to be taking a pragmatic or, give current financial circumstances, realistic approach in arguing that his cabinet colleagues should at least give a positive commitment to proceed with two schemes.
A maximum of £337m per project could be available from the EU's NER300 fund for CCS and innovative renewable energy projects. I have a strong personal interest in seeing the UK benefit from this resource, which is derived from the sale of 'surplus' carbon allowances, because its creation stemmed from proposals that I introduced to the European Parliament back in 2008, with strong backing from the UK government of the time.
The commission spelt out to Ministers on October 1 that to qualify for the money they had until the end of the month to give guarantees that they will provide the additional financial support needed to ensure completion of qualifying projects. This will be no small commitment. Although £1bn has been allocated by the government towards the capital costs of CCS projects in the UK, developers will also require subsidy towards the operating costs for at least 10 years.
Some believe the Treasury will prevaricate rather than approve the funding under the Contracts-for-Difference scheme, even at the cost of losing out on EU money. This is crunch time for CCS. If no decision to proceed is made than we will, at best, lose out on a large pot of EU funds that Britain was itself responsible for putting into place. At worst, the UK and the whole of Europe will lose out on the chance to be global leaders in developing CCS technology. In which case, the world's prospects of fighting climate change will be much reduced.
Chris Davies MEP is the Liberal Democrat environment spokesman in the European Parliament
"CCS is widely regarded as an essential tool in the fight against global warming" - by whom? No one. Most people regard CCS a dead end.
New coal plants are barely competitive, and there is a substantial risk they won't be able to stay online and competetive for their full expected life span of 50 years. In fact it is almost certain they wont. Add CCS to that and efficiency drops below break even.
Coal is a dinosaur, it belongs to the past. CCS won't remedy that, it is just throwing good money after bad. Building new coal plants today, in 2012, is economic - and environmental - madness. Forget about coal and move on.
Per S - Sweden