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UTILITY Week 15th January 2015

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14 | 15Th - 21sT JanUarY 2016 | UTILITY WEEK Policy & Regulation Analysis I t's April 2012 and energy secretary Ed Davey has proudly proclaimed that the government's latest carbon capture and storage (CCS) competition will ensure the UK develops a "new world-leading CCS industry in the 2020s". Fast forward to 25 November 2015, and that dream finally died when the Depart- ment of Energy and Climate Change (Decc) scrapped its £1 billion competition to help develop the technology. What changed in the 43 intervening months? What led the government to aban- don a technology once deemed "crucial" to meeting the UK's climate change goals? The answer is simple: money. The money required to develop the tech- nology into a full-scale demonstration plant, and then to lead it down a path to commer- cial competitiveness, was deemed to be too much. In a world where the Conservatives are aiming to close the £69 billion annual deficit, ring-fencing £1 billion for the tech- nology seemed too big a luxury. In a statement to the London Stock Exchange, Decc said: "Following the chan- cellor's autumn statement, the government confirms that the £1 billion ring-fenced capital budget for the CCS competition is no longer available. "This decision means that the CCS com- petition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them." Following up this statement at prime min- ister's questions on 16 December, David Cam- eron said: "In government you have to make tough choices. You have to make decisions about technology that works and technology that is not working." He added that the gov- ernment was putting money into innovation, small nuclear reactors and heat networks, projects that "will make a difference". This appeared to have put the CCS agenda to bed. Three different governments – Labour in 2007, the coalition government, and now the Conservative administration – have all tried to back CCS with two £1 billion compe- titions. All have seen the money earmarked to support it taken away before the Holy Grail of a fully functioning demonstration plant has been developed. Even before the news that the govern- ment was withdrawing the funding, Drax, a major partner in the White Rose CCS project, announced it was pulling out of the scheme. In September last year, the generating giant said it would not continue with plans to develop the project beyond the initial development phase, blaming the govern- ment's shi in energy policy. Drax operations director Pete Emery said at the time: "The decision is based purely on a drastically different financial and regula- tory environment. We must put the interests of the business and our shareholders first." Leigh Hackett, chief executive of Capture Power – a company formed by GE, Drax and BOC to be responsible for the development, implementation and operation of the pro- posed White Rose CCS Project – said: "It is too early to make any definitive decisions RIP CCS Successive governments lauded the potential of CCS, then this government pulled the cash. Mathew Beech reports. Opinion What about heavy industry? It is not just generators that have banked on government-backed CCS. W ith industry responsible for 30 per cent of UK emissions and a hand- ful of sectors accounting for most of this, a major decarbonisation transforma- tion is required for the UK to reach its interim 2050 climate targets. The government's 2050 decarbonisation roadmap, as well as the Committee on Cli- mate Change's (CCC) proposed fih carbon budget, made one thing abundantly clear. The foremost technology needed to help decarbonise energy-intensive industries and meet our legally binding targets is industrial carbon capture and storage (ICCS). Evidence continues to grow that ICCS has the greatest decarbonisation potential for many of the most energy-intensive sites in the UK. For example, the industrial roadmap stated for steel the maximum 60 per cent emissions reduction between 2013 and 2050 would not be possible without ICCS. Industry and government collabora- tion, including finding ways to stimulate investment, is paramount to ensure we not only decarbonise at the lowest cost, but that our energy-intensive industries are best equipped to take advantage of the opportu- nities a low carbon economy brings rather than becoming a victim of it. The government's decision to pull the £1 billion in CCS funding in last year's spending review sent all the wrong signals. Industry alone cannot make CCS happen. Costs are too high for any one company or industry to bear and any potential payback too uncertain. It is inconceivable ICCS would be finan- cially viable without the infrastructure in place that early CCS projects would provide. The withdrawal of competition funding very much returns us to the drawing board. Government needs to make clear its posi- tion on CCS. If this is that CCS has no place in the energy mix, then it must demonstrate what the cost-effective alternative is – and this includes questioning the taxing of un- abatable emissions via the EU ETS. Claire Jakobsson, head of climate, energy and environment policy at EEF, the manufacturers' organisation What is CCS? Shaft mine Open cast coal mine Unmineable coal seams Saline aquifers Depleted oil and gas fields 1 Mining of fuel 2 Coal or gas-fired power station with CO2 capture plant 3 CO2 transport by pipeline 4 CO2 injection 5 CO2 storage sites Gas field Supercritical CO2 plume Dissolved CO2 plume Source: UKCCS Research Centre

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