Energy MPs in the House of Commons have warned the UK government that its ‘last-minute’ decision to drop its support for the £1 billion carbon-capture project at Peterhead will delay the development of the technology in the UK and could make it challenging for Britain to meet climate-change commitments agreed at the Paris global environment summit.
Shell and Perth-based power company SSE had been collaborating on a plan to capture carbon and store it at Peterhead before Chancellor George Osborne cut funding in his spending review in November last year.
Announcing his committee’s report,** Angus MacNeil MP, Chairman of the Commons’ Energy Committee (and MP for Western Isles) said:
“If we don’t invest in the infrastructure needed for carbon capture and storage technology now, it could be much more expensive to meet our climate change targets in the future.
“Gas-fired power stations pump out less carbon dioxide than ones burning coal, but they are still too polluting.
“If the Government is committed to the climate change pledges made in Paris, it cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed. Getting the infrastructure in place takes time and the Government needs to ensure that we can start fitting gas fired power stations with carbon capture and storage technology in the 2020s.”
The report adds: “CCS technology is ready to pilot on power stations at a large scale, but the transportation and storage infrastructure needed to carry the carbon dioxide requires large upfront investments.
“The Government’s sudden decision to cancel its £1 billion commercialisation competition has led to the White Rose and the Peterhead projects being cancelled. As a result the opportunity to develop CCS infrastructure in the UK in the early 2020s is likely to have been missed. The momentum that had built up over recent years has suddenly come to a halt and the industry and investors are losing confidence.”
Angus MacNeil added: “The manner in which the Government pulled the plug on the CCS commercialisation competition was hugely disappointing.
“UK companies had been working towards this for years and were only weeks away from final proposals. The first hint one company had about the decision was when they read a news report the night before. This is the latest in a series of snap decisions that have damaged confidence in the Government’s energy policy.”
The report also warns that the Government may have ‘lost an opportunity’ to exploit existing oil and gas assets in the North Sea, which could have generated additional revenues. The inquiry was told that empty North Sea oil fields could potentially store European industrial emissions for the next 100 years.
The MPs are calling on the Department for Energy and Climate Change (DECC) to assess the financial and other benefits of using our existing North Sea oil and gas infrastructure to facilitate carbon capture and storage on a commercial scale.
A new carbon capture and storage strategy
The Department must devise a new strategy for CCS in conjunction with a new gas strategy, the report recommends. The challenging infrastructure surrounding the transport and storage of carbon needs to be considered far in advance of it being utilised and investors need the confidence that the UK is committed to a domestic CCS market.
The Department should engage with the National Infrastructure Commission to explore options for the development of CO2 transport and storage. The Commission should consult on whether developing CCS infrastructure should be one if its priority areas.
Angus MacNeil MP concluded: “The Department must devise a strategy to ensure carbon capture and storage technology can start delivering carbon savings by the 2020s. Only last week Ministers rejected the need for such a strategy, but the industry and investors are crying out for this certainty. Ministers must set out exactly how much of their planned new gas capacity is to be retrofitted with CCS and by when.
“And the Government must let investors know when CCS projects will be able to apply for guaranteed-price contracts alongside other low-carbon energy schemes.”
In response, a spokesman for the Dept of Energy (DECC) said: “We haven’t closed the door to CCS technology in the UK, but as part of our ongoing work to get Britain’s finances back on track, we have had to take difficult decisions to control Government spending.
Energy experts call for a Scottish CO2 Hub to kick-start new UK and EU carbon-capture industry – See Scottish Energy News 20 Jan 2016
“CCS should come down in cost and we are considering the role that it could play in the long-term decarbonisation of the UK.
“We are committed to meeting our climate change targets in a way that is affordable and provides secure energy to our families and businesses.”
** View the full report here: http://goo.gl/vl9Yir