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NETWORK / 12 / OCTOBER 2016 Analysis carried out by the engineering consultancy Mott MacDonald and quoted in Lord Oxburgh's recent CCS report shows how the cost of CCS for power generation applications is expected to decline out to the end of the 2020s as economies of scale take hold as well as improved financing, engineering and design factors. The chart below shows this analysis with added information on the relative cost of deploying CCS for hydrogen and methane production for injection into the gas grid. G e t t i n G t h e b e s t f r o m C C s The most commercially viable CCS deployments will be those that are cost competitive with other energy technologies. Source: Low Carbon Gas Ltd (based on original analysis by Mott MacDonald) also has a variety of potential uses in the energy system. First and foremost, Day suggests that the methane should be mixed with conven- tional natural gas in the "public access gas grid" which would continue to serve 80% of UK gas demand. The proposal to maintain 60% fossil- based natural gas in the network might strike some as a non-starter for a decarboni- sation solution. But Day is confident that by injecting 40% synthetic methane, produced with CCS and from partially biogenic fuels, the UK would take a significant stride towards its CO2 reduction targets. A further boost to decarbonisation would be enabled by a second use of BECCS-based synthetic methane. Day says that it could be used "as a base from which to produce deeply decarbonised hydrogen with CCS". Rather than using this very carbon negative hydrogen in the public access gas grid, Days says it would be better applied in private networks to supply about half of industrial gas demand. This would cut a significant swathe through the carbon emissions of the UK's dirtiest but still eco- nomically important sectors. Day is keen to stress that he is not anti- hydrogen, but supports methane because "it can be decarbonised more cheaply than any other energy vector, it supplies 40% of total UK energy demand and supports UK winter heat demand". The BECCS proposal is convoluted and difficult for decarbonisation-focused policy makers to get on board with because it re- tains elements of "dirty" fuels like coal – in methane production – and natural gas. Even some of the energy system's lead- ing lights find it difficult to grasp how the BECCS approach delivers a better cost and carbon emissions reduction scenario than other options – like hydrogen. However, they are swi" to add that the complexity of the model should not lead to its dismissal. Generally, there is a feeling that more applications of CCS, leading to a mature understanding of its potential whole system costs and benefits, should be explored – especially if they seem to enable quicker routes to the large-scale deployment of CCS that would lead to big economies of scale and technology cost reduction for all. The future remains unclear for CCS poli- cy in the UK. Despite continued criticism of its decision to withdraw CCS support, the government has given no official sign that it will consider a new subsidy mechanism or competition for the technology. If and when a new strategy does arise, however, it must be acknowledged that there is an opportunity to re-set CCS policy so it is less focused on applications for generation and more appreciative of the full range of decarbonisation opportunities it represents. As MacLean concludes: "We should be assessing CCS for its overall system value and the flexibility that it gives rather than coming up with a 'killer application' which will be a silver bullet for everything. That's a mistake we keep making." N 0 20 40 60 80 100 120 140 160 180 Cost estimate (£/MWh) CRTF FID 2013 (ave) CRTF FID 2020 (ave) CRTF FID 2028 (ave) CRTF FID 2028 (low tech) Cost reduction Cost reduction PAG assumption update PAG revised estimate CCC/Poyry 2015 (CCS) CCC/Poyry 2016 (CCS) Poyry 2016 (CCGT unab ated) NEG LEEDS H21 HYDROGEN LOW CARBON GAS LTD SYNTHETIC METHANE PAG Further savings Select lowest cost tech £85/MWh proposed CfD cap £92.5/MWh Hinkley CfD POWER + CCS =90% CO2 REDUCTION H2 + CCS =60% CO2 REDUCTION CH4 + BECCS =115% CO2 REDUCTION 2016 GAS PRICE Cost Reduction Task Force (2013) PAG analysis Comparables Low-carbon synthetic gases 161 114 94 86 83 88 90 82 43 130 63 50 17 £65/MWh Decc long- term power price forecast 2016 ELECTRICITY PRICE Comparative costs of deploying CCS via electricity or low-carbon gases