The UK government has spent years pledging to develop a carbon capture and storage (CCS) sector and chivvied some of the world’s biggest energy companies to get involved, with the aim of cutting emissions and building an industrial economy for the 21st century.
After almost 20 years of false starts, companies like BP finally believe there is a real chance projects will be operational by the end of this decade to serve as a cornerstone of the green economy.
Earlier this month, BP took a stake in its second UK CCS project, Viking, which is led by Harbour Energy, the biggest oil and gas producer in the UK North Sea.
But as industry gears up, it has a clear message for the government: it must hurry if it wants to maintain the momentum.
At stake is what one CCS project manager described as the “big prize” for the UK: a homegrown industry that not only helps reduce domestic emissions but can ensure its profitability by storing carbon shipped in from other countries.
“We are ready,” said Graeme Davies, director of Viking. “We need to see from the government a clear commitment and a framework that will give everyone the confidence to accelerate the rollout of these projects so we can meet their 2030 targets,” referring to plans to capture 20mn to 30mn tonnes of CO₂ annually by the end of this decade.
Lewis Gillies, who spearheaded BP’s attempt to get a carbon capture and storage project off the ground at a power plant in Peterhead 15 years ago, before government funding fell through, agrees the time is right.
His old project has been revived by SSE and Equinor, who aim to tie into the Acorn cluster — one of two alongside Viking that are expected to gain approval this year. Acorn, on the Scottish coast, has backing from Storegga, Shell and Harbour.
“The industry has, at times, actually moved ahead of government on this — only to have the rug pulled out from underneath them,” Gillies said. “But this time I believe the political signal is clear.”
The government’s plans hinge on these four industrial clusters and in March it pledged £20bn support the development of CCS. But the industry has called for more detail and certainty to meet the 2030 targets.
Alongside state funding, the projects also need private capital to get off the ground. Building industrial clusters with CCS successfully also requires a huge degree of co-operation between companies that often operate as rivals, making the sequencing of the projects challenging.
To win government support project leaders need to show they have enough companies interested in utilising the CCS facilities. But to sign up companies also require certainty the facility will get built — something that is only really feasible once it has state backing.
The industry wants the government to fast-track the approval of projects, with clarity over which emitters will get backing to tie into the CCS networks to ensure they can work it into their capital expenditure plans.
Prashant Ruia, non-executive chair of Essar, which is heavily involved in the HyNet north-west industrial cluster — one of the only two projects approved so far in the UK — said ministers needed to move fast to realise the potential of geographic advantages such as the large number of depleted North Sea fields well-suited to storing carbon.
“The UK has a massive competitive advantage in CCS with a third of all the current carbon storage capacity in Europe,” Ruia said.
“If the UK is to meet its objective of becoming the global leader in CCS, it’s incumbent to set up the right policy and financial framework to encourage the huge private investment that is required. Essar stands ready to go much further.”
The government said the UK was “leading the world in developing carbon capture technology” and was moving “towards delivering first-of-a-kind carbon capture projects in the UK”.
The four industrial clusters identified centre on areas of the country where heavy industry accounts for a large proportion of total emissions.
Carbon capture works by extracting the CO₂ at source and diverting it by pipeline to be stored offshore, normally in depleted gasfields. Some executives argue the captured CO₂ could also be used in industrial processes.
The projects look to integrate old and new facilities. The BP-led East Coast cluster will have a new gas-fired power station with carbon capture to provide “clean” power to industry within the area.
In turn it will capture the industrial emissions, funnelling the CO₂ into old North Sea fields. It also wants to produce low-carbon “blue” hydrogen — made from natural gas with the emissions captured.
The nearby Viking project will centre on the port of Immingham, which BP and Harbour have flagged as “a future CO₂ shipping destination”.
Essar is also keen to develop Ellesmere Port as part of HyNet as companies look to a merchant model to ultimately make the sector self-sustaining.
It is the prospect of establishing a potential world-leading, profitable sector in the UK that is pushing energy companies to move faster as the cost of emitting carbon rises.
Large polluters in the UK and EU already have to pay for the CO₂ they release under their closely linked emission trading system. Carbon prices have jumped roughly fivefold in the last half decade, reaching £64 a tonne in the UK last week and a record of €100 a tonne in the EU earlier this year. These prices are expected to rise further as the number of free carbon allowances given to industry is set to shrink over time.
“There is a clear path to profitability on these projects,” said Davies. “It’s one of the reasons we want to move ahead as quickly as is feasible to show the full potential of this sector.”
Yet CCS remains controversial among some environmentalists who believe industry wants to prolong the life of its gas assets. They argue funding would be better spent on low-carbon power sources like offshore wind and solar, rather than abating fossil fuel emissions.
But bodies like the UK’s Climate Change Committee and the International Energy Agency have said CCS will be necessary to meet net zero targets by 2050.
Gillies, who now works in renewable infrastructure in the UK, said the government had to accelerate support for CCS if it wants to build a new industry and meet its net zero targets. “They don’t just want to do it. They have to do it,” he said. “They just need to do it faster.”
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