Last October, the U.K. government decided to discontinue the construction phase of its carbon capture and storage (CCS) competition. At that stage, thanks largely to the economics involved, the four-year competition had been reduced to one consortium from the original nine.[pullquote]
The final consortium was made up of ScottishPower, National Grid and Shell. They had just completed £20 million ($32 million) worth of extensive design work for a potential commercial-scale CCS project at ScottishPower's Longannet power station in Fife, Scotland.
Speaking on behalf of the consortium, ScottishPower's generation director Hugh Finlay said, "Our combined efforts have seen this potentially world-changing technology develop from being a concept in a laboratory to a definitive blueprint that could be implemented. As a result of the study, we now understand how the CCS process works from power station to storage site. This gives us great insight into the physical infrastructure that we need to support it, the regulatory framework it fits within and the organizational model of a CCS business. All of this information will be made available through the U.K. Department for Energy and Climate Change (DECC) knowledge transfer program and will be of enormous benefit to other CCS developers and stakeholders."
The U.K. government is now attempting to flush out such developers and stakeholders with another competition to develop CCS strategies.
"The potential rewards from carbon capture and storage are immense: a technology that can de-carbonize coal and gas-fired power stations and large industrial emitters, allowing them to play a crucial part in the UK's low-carbon future," said Edward Davey, secretary of state for energy and climate change, speaking at the launch of a £1-billion ($1.6-billion) CCS commercialization program in London in April.
The new program includes £125-million ($200-million) funding for R&D; including a new £13-million ($21-million) U.K. CCS research center; planned long-term contracts to drive investment in commercial scale CCS in the 2020s and beyond; commitments to working with industry to address other important areas, including developing skills and the supply chain, storage and assisting the development of CCS infrastructure; and a focus on international engagement, in particular learning from other projects around the world to help reduce costs in the U.K.
The government believes such targeted support will overcome the earlier economic challenges by bringing the investment risks of CCS projects within commercial norms and so enable further private sector investment. It has also set out a number of eligibility criteria for entry into the competition. For example, projects may be full-chain or part-chain that can demonstrate the prospect of being part of a full-chain project in the future; comprise a power plant and capture facility located in Great Britain and a storage site offshore; must be operational by 2016–2020, though earlier is desirable; must abate carbon dioxide at commercial scale (or be a substantive step towards that objective) while meeting all relevant environmental requirements; and may contain an electricity generator or an industrial emitter that is part of a cluster project.
Developers also must have relevant expertise and experience managing complex projects in this or a closely associated field, and the backing of at least one parent company with a significant balance sheet.
The U.K. government maintains that this CCS package is a clear illustration of its global leadership on CCS and firm commitment to working with industry to enable cost competitive CCS in the 2020s. "It reflects the major long-term opportunity for green jobs and green growth on the journey to a low carbon economy, potentially supporting around 100,000 jobs in the sector by the end of the next decade," added Davey.
However, the CCS resurrection attempt comes at an interesting time for U.K. energy policy as just five days before the program was launched, major power generator EON announced that it cancelled plans to develop its 50/50 joint-venture Horizon Nuclear Power. The other partner in Horizon, RWE npower, made a simultaneous announcement to the same effect.
"EON has decided to focus its investment in the UK on other strategic projects that will allow us to deliver earlier benefit for customers and our company, rather than the very long term and large investment new nuclear power calls for," said Tony Cocker, chief executive of EON UK.