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UTILITY Week 27th May 2016

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UTILITY WEEK | 27TH MAY - 2ND JUNE 2016 | 21 Finance & Investment Market view T here's no doubt that the government's eleventh-hour decision at the end of last year to cancel the £1 billion com- petition to help develop carbon capture and storage (CCS) technology commercially was huge blow. However, there are still reasons for opti- mism, and these are the top five: 1. CCS is needed A number of bodies have said the UK will be unable to effectively meet its target of reduc- ing greenhouse gas emissions to 20 per cent of 1990 levels by 2050 without the deploy- ment of CCS. Both the Energy Technologies Institute (ETI) and the Climate Change Committee (CCC) have said the deployment of CCS could halve the cost of meeting that target. "In 2050, what [the CCC] has estimated is that the saving could be in the order £30 billion a year," says Carbon Capture and Storage Association chief executive Luke Warren. Oxford professor Myles Allen warns that renewables and nuclear power cannot be relied on as a substitute for CCS without "truly heroic levels of self-sacrifice" by future generations. CCS can also help to decarbonise other activities, for example heating and industrial processes such as concrete and steel pro- duction. "There's no alternative for some of these at the moment," says professor Stuart Haszeldine, a lecturer at Edinburgh Univer- sity and director of Scottish Carbon Capture and Storage (SCCS). 2. We have the technology and it won't break the bank The technology is already proven. The Boundary Dam project in Canada uses CCS technology on a 115MW coal-fired plant and has been generating since autumn 2014. At that project, the CO2 is not injected undersea but instead used for enhanced oil recovery. In a recent report, the ETI said there were "no technical barriers" to storing CO2 off the coast of Britain, while a study funded by the Department of Energy and Climate Change looking in detail at five of the most promis- ing potential storage sites concluded that the first could be up and running by 2021 and that all of them could be operational by the early 2030s. Justifying the decision to cancel the CCS competition in January, prime minister David Cameron cited cost, at around £170/MWh. However, Haszeldine disagrees because this would apply only to a first-of-a-kind pro- ject. He says £100/MWh would be nearer the mark for electricity generated alongside CCS. That cost is comparable with Hinkley Point C and offshore wind – both of which the gov- ernment is backing. 3. Britain has plenty of storage scope A number of studies have demonstrated that the UK has some of the world's best resources when it comes to storage sites, mainly in the North Sea. They could not only fulfil the needs of the Britain but much of continen- tal Europe, meaning the technology could potential be a money earner for the UK. A report published by the Global CCS Institute in March estimated the UK's poten- tial storage capacity at 78 billion tonnes of CO2. By comparison, Britain's total carbon dioxide emissions from all sources totalled 422 million tonnes in 2014, with 166 mil- lion tonnes coming from the energy sector. According to a study by SCCS, sites in the central and northern North Sea are among "the best understood in Europe" and, with 54 billion tonnes of potential storage, could meet the requirements of the whole of the continent for several decades. 4. There's crossover with the oil and gas industry With North Sea oil and gas production in decline, there are plenty of opportunities to repurpose resources for CCS. It is not just pipelines and storage sites, but skills and expertise. Speaking before the CCC in January, Cap- ture Power financing director Richard Simon- Lewis said Britain has "incredible knowledge and intellectual property". "To me the logic of combining the two and taking advantage of the storage capacity in the North Sea and the oil and gas capabil- ity that we have, with CCS as the enabling technology, makes an enormous amount of sense," he said. Captured CO2 could also be used to extend the life of the North Sea oil fields through the enhanced oil recovery process. Lewis told the committee the process could enable the production of a million additional barrels of oil, bringing in around as much as £5 billion of tax receipts for the treasury. 5. Sharing the burden With many of the same advantages as the UK, Norway is pressing ahead with plans to deploy the technology off its North Sea coast. In January, the Norwegian government contracted oil company Statoil to conduct a feasibility study at three potential storage sites with a view to building a full-scale pro- ject in the not too distant future. Shadow energy minister Alan Whitehead tells Utility Week he recently met with the company to discuss the possibility of devel- oping "a full-scale project in tandem with Norway". This vision would see the "vast bulk of sequestration" taking place in the UK, before the CO2 was shipped overseas and injected into Norwegian storage sites. It would mean Britain would have to invest only in the "easy part" of the process. CCS: still signs of life The government's cancellation of a £1bn competition to demonstrate CCS technology was a blow, but there are good reasons to believe this is just a setback, says Tom Grimwood. Key points CCS is necessary if the UK is to meet its climate change targets. The technology has already been proven elsewhere in the world – and its financial viability. The UK has plenty of storage sites. Existing British expertise in oil and gas could be leveraged. Projects could be undertaken in partner- ship with other countries.

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