Out-Law News | 22 May 2014 | 2:50 pm | 2 min. read
In their latest report, MPs on the Energy and Climate Change Committee urged the government to "fast-track" final funding decisions on two pilot CCS projects so that they would be ready to reduce emissions from connected power stations by the 2020s. It should also commit to ensuring that future viable CCS projects would be able to apply for guaranteed fixed-price power generation contracts under the government's forthcoming contracts for difference (CfDs) programme for low-carbon energy schemes.
"The UK is incredibly well placed in regards to CCS with the engineering and academic expertise, suitable geological sites and cross-party commitment to cut CO2," said committee chair Tim Yeo. "With the right support the UK could become a world leader in this technology, which will be needed across the world when a global deal on tackling climate change is reached."
CCS is a technology used to prevent CO2 from being released into the atmosphere from the use of fossil fuels in power generation. A CCS project captures the carbon dioxide produced by a power plant before storing it in such a way that it does not enter the atmosphere. Projects can be 'full chain', meaning that they are capable of carrying out all steps in the process, or 'part chain'.
The UK government published its 'CCS Roadmap' in April 2012; which set out its plans to encourage the development of CCS technology in the UK through funding packages and investment incentives. It has made £1 billion in capital funding available through its CCS Commercialisation Programme for full chain projects, or part chain projects capable of being part of a full chain project in the future.
In its report, the committee was critical of delays to government funding to the two pilot CCS projects, which it said had effectively "pushed back" the expected start date of the technology in the UK from 2014 to 2020. It also noted that the government had not yet published the guaranteed price tariffs that would be available for CCS projects under the CfD programme, or committed to providing support beyond the levy control framework (LCF) end date of 2021. It said that developers needed more certainty about available support, given the long lead times for these projects and the higher costs associated with fitting and running CCS.
"CfDs will be essential for CCS projects as they will provide operational support as well as a route to market for non-competition projects," the committee said in its report.
"We were pleased that the [energy] minister agreed ... that 'the design of the [CCS] CfD will inevitably be somewhat bespoke' and could not be considered in the same way as more mature renewable technologies ... The government should set out immediately in what ways CCS CfDs will differ from the more generic CfDs. We recommend that CfDs be tailored to individual CCS projects because of the unique characteristics of CCS (compared to other low carbon and renewable technologies)," the report said.
The report suggested that early deployment of CCS technology in the UK could provide alternative jobs within the country's coal and energy intensive industries, as well as benefiting the wider economy, by opening up a potential carbon 'storage market' within disused offshore geological sites within the North Sea. These sites had the potential to hold up to 70 billion tonnes of CO2, or over a century of UK emissions, the report said.