The UK will struggle to meet its climate change commitments following the government’s decision to scrap a £1 billion fund for carbon capture and storage (CCS) according to a report out today.
The Energy and Climate Change (ECC) select committee launched an inquiry after it was announced in November 2015’s Spending Review that the competition fund would be scrapped, just months before it was due to be awarded.
It has concluded that in light of the recent ‘energy policy reset’, in which energy secretary Amber Rudd outlined the UK’s plans to move to gas-fired power generation, “a push for gas cannot get the UK to its 2030 and 2050 targets without CCS.”
The UK is committed to reducing its emissions by 80% by 2050 through the Climate Change Act, with a commitment to halving UK emissions in the fourth carbon budget period between 2023 and 2027. The government’s advisers, the Committee on Climate Change (CCC), have recently proposed a target of 57% for the period between 2028 and 2032.
The ECC committee report maintains that meeting the UK’s targets will be “challenging” unless CCS is applied to new gas-fired power stations and to energy intensive industries.
“Without CCS it may be necessary to find large and potentially more expensive carbon savings to meet the legally binding targets set out in the Climate Change Act as well as the more recent challenging ambitions set out at the Paris climate summit,” it adds.
In its recent fifth carbon budget disclosure, the CCC noted that to achieve the necessary carbon intensity of power generation of 100g of CO2 per kWh, 75% of electricity would have to be derived from the combination of nuclear, renewables and CCS. Should one or more of those fail to meet expected generation targets, the others would have to make up the shortfall/
The select commitee meanwhile has called on the Department of Energy and Climate Change (DECC) to publish a new strategy for CCS in conjunction with its plan for gas by this summer. This should include the lessons learned up to now and address the need for the development of infrastructure for transport and storage of carbon, which the report says need to be considered far in advance of it being required.
The report has also called for clarity on the use of contracts for difference for CCS and recommends DECC engage with the National Infrastructure Commission to develop the necessary structures for delivery.
“If government is committed to its climate change targets, it cannot afford to sit back and simply wait and see if CCS will be deployed at the moment when it is needed,” the report says.
This conclusion falls in line with the judgements of both the CCC and the European Commission, who have both claimed CCS is a crucial technology in meeting international climate change targets.
The report also slams the government for its decision-making process after the cancellation of the CCS fund, which had been launched in 2012. Following an evidence session with experts in CCS last month, the committee claims in its report that the decision is “but one of a number of recent policy announcements that are damaging investor confidence in the UK energy sector.”
DECC failed to inform companies already invested in the development of CCS in the UK, who only found out on the day of the announcement. Both the Peterhead and White Rose CCS projects have since been shelved as a result.
The new report claims: “Pulling the plug at the last minute is likely to have led to the loss of significant amounts of foreign investment, which could have been retained if developers had had more warning of the decision.
“The lack of engagement by DECC prior to, and since, the announcement has damaged Government’s relationship with the very stakeholders it will depend upon to develop CCS technologies.”
The ECC committee recommends that DECC must now “mend bridges” with the CCS industry and provide investors with the confidence that the UK is committed to a domestic CCS market.
“Extremely negative impact”
The findings of the report have been welcomed by figures within the CCS industry, which has campaigned against the government’s decision since November.
Dr Luke Warren, chief executive of the CCSA and quoted in the report, said: “The Spending Review decision to withdraw funding for CCS has had an extremely negative impact on the industry. What may have seemed like a good short-term saving risks loading significant costs onto the UK economy in the longer-term as the cost of meeting decarbonisation goals will increase substantially if CCS is not available.
“We very much welcome the Energy and Climate Change Committee’s call for the UK Government to urgently come forward with a clear strategy for CCS. As today’s report has emphasised, such a strategy needs to clearly set out the Government’s ambitions for CCS in the near-term and address the challenge of providing transport and storage infrastructure.”
Professor Jon Gibbins, director of the UKCCS Research Centre, added: "The prompt response by the ECC committee shows the importance of CCS for a cost-effective UK energy system in the 21st century.
"DECC now needs to act quickly and come up with a new CCS strategy that will ensure that large-scale CO2 transport and storage infrastructure gets built and that industry and the research community work together effectively on cost reduction."
DECC had yet to respond to the report at the time of publication.