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UTILITY Week 15th January 2015

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UTILITY WEEK | 15Th - 21sT JanUarY 2016 | 15 Policy & Regulation about the future of the White Rose CCS Pro- ject. However, it is difficult to imagine its continuation in the absence of crucial gov- ernment support." Nonetheless, there is still hope for the technology and its development in the UK. Responding to a question from SNP energy spokesperson Callum McCaig, energy secretary Amber Rudd said the govern- ment does not rule our CCS in the future and added: "We recognise that CCS will still have an important future in the low carbon economy." Shell and SSE, the two companies behind the Peterhead project, have also said they remain committed to it and will honour the contract entered into with the government as part of the competition. This includes the sharing of all key knowledge gathered dur- ing this phase. The government, as recently as October, was still awarding cash grants to CCS pro- jects. In this instance it was £1.7 million to three companies as part of the energy entre- preneurs fund, which supports the develop- ment and demonstration of CCS technologies with the aim of reducing costs. The need for CCS, which was the origi- nal reason why the UK government set aside the £1 billion to help its development, still stands. The need is to decarbonise an econ- omy and a generation fleet that is still heav- ily reliant on fossil fuels. Without it, the costs of halving carbon emissions by 2050 are pre- dicted to be 70 per cent higher. The need to decarbonise, especially with the UK's legally binding commitment con- tained in the 2008 Climate change Act, could once again drive interest in CCS. As could the potential to claim a stake in the still embry- onic CCS market, one that Decc predicts could be worth between £3 billion and £6.5 billion a year to UK firms by the late 2020s. With these big incentives still in play, the final nail is not yet in the CCS coffin. The bottom line Excluding CCS would double the cost of mitigation •  Without CCS, the cost of achieving 450  parts per million (ppm) CO2-eq concentra- tions by 2100 could be 138 per cent more  costly (compared with scenarios that include CCS). •  Only a minority of climate models could  successfully produce a 450ppm scenario in  the absence of CCS. Source: The Intergovernmental Panel on Climate Change Then vs Now Then: "The govern- ment remains steadfast in its commitment. We will work with the in- dustry to make CCS a reality." Energy secretary Ed Davey in April 2012: Now: "The £1 billion ring-fenced capital budget for the CCS competition is no longer available." Decc statement to the stock exchange in November 2015: Opinion CCS can have a future The government's unexpected move has floored the CCS industry – it must act quickly to restore confidence and get the UK back on track. I n case anyone needs reminding, the government had been run- ning a CCS competition since 2012 and was due to make a final decision on the two preferred bidders (White Rose and Peterhead) in Q1 2016. However, on 25 November, it announced the £1 billion ring-fenced budget for the CCS competition was no longer available, meaning the competition could not continue on its current basis. To say this came as a complete shock to the CCS industry would be a gross understatement, particularly as it was so close to com- pletion, but also because the government had committed to the £1 billion in its manifesto with several affirmations in the months following. The immediate and probably most significant impact has been loss of industry confidence. This was felt extremely quickly – in terms of job losses, loss of supply chain and companies moving away from CCS and the UK. Unless concrete action is taken to rebuild this confidence, there is a real danger CCS could be delayed in the UK by a decade or more. This would have profound implications for the ability of the UK to meet its statutory climate change target at least cost. The Energy Technologies Institute calculated that including CCS in the mix of low-carbon technologies could reduce the cost of tackling climate change by £32 billion a year in 2050. So while cutting the £1 billion could be seen as a short-term saving, this must be weighed against the risk of much greater costs that if CCS is not developed. The case for CCS remains as strong as ever. At COP21 in Paris, a historical agreement was reached to "pursue efforts to limit the temperature increase to 1.5C above pre-industrial levels". It is hard to see how this goal can be met without CCS – both in the UK and glob- ally. As the IPCC concluded in its fih assessment report, the costs of meeting global climate change targets without CCS could increase by 138 per cent. So while other countries are pushing ahead with CCS projects, the UK must now decide whether or not it wishes to do the same. If it does want CCS, it will need to work with CCS developers to once again create mutual trust between industry and government and implement the policies that will deliver operational projects. First and foremost, we must ensure key lessons are learnt from the competition projects and that these lessons are shared with other potential CCS projects. It is vital the government keeps the dialogue open with these other projects to understand the appropri- ate funding mechanisms and route to market. Finally, a key challenge is the business model for transport and storage infrastructure. Large-scale development of common infra- structure that can seed the creation of CCS clusters is required. Crea- tive thinking is needed to ensure such infrastructure is developed. Interesting times are ahead of CCS. We must pick ourselves up and move forward. There is an overwhelming body of evidence on the importance of CCS and it is therefore crucial CCS has a future in the UK. Judith Shapiro, policy and communications manager, CCSA

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