CCS Progress in the UK
Ecoal, June 2010, Vol 71
The formation of the Conservative-Liberal Democrat Coalition Government in the UK has seen a series of announcements made regarding the future of energy policy in Britain, including plans for CCS and coal-fired power.
As part of the new Coalition, Liberal Democrat MP Chris Huhne has been appointed as the head of the Department for Energy and Climate Change (DECC), responsible for overseeing power generation policy.
The new Government quickly outlined its intention to commit to public funding for CCS demonstration projects in the UK, a pledge previously made by the former Labour government. Additionally, the Government will introduce an 'Emissions Performance Standard' on all new coal-power plants, requiring them to incorporate CCS elements in order to avoid breaching emissions limits. These policies were confirmed as part of a new Energy Bill during the Queen's Speech at the State Opening of Parliament.
CCS Competition Developments
The measures outlined by the Coalition followed significant developments in CCS policy during the final weeks of the previous Labour Government. In March, DECC announced initial funding for two projects as part of its CCS competition. The projects, E.On's Kingsnorth and Scottish Power's Longannet, will both receive funding to support Front End Engineering and Design (FEED) studies. No exact figures have been specified by DECC but the funding is currently set to be drawn from a pot of £90 million announced in the 2009 budget.
The winning project will be selected for the competition following the completion of the FEED studies. The winning project is set to receive total funding of £1 billion and will be included as part of an overall target of publicly funding four coal-fired CCS demonstration projects across the UK. The three additional projects will be supported by a proposed levy on electricity, with a competitive process for selection due to be announced by the end of 2010.
CCS Industrial Strategy
The announcement of progress in the CCS competition process was timely, with the UK's CCS Industrial Strategy also having been released in March.
As part of the strategy, a new 'Office of Carbon Capture and Storage (OCCS)' has been created and will initially be tasked with developing a UK CCS roadmap designed to pave the way forward for CCS to 2030.
The strategy document estimated that the proposed levy on electricity will need to raise £7.2-9.5 billion in funding for the three CCS demonstration projects planned in addition to the competition winner. This is estimated to add 2-3% to average annual electricity bills in 2020, falling to 0-2% in 2030. The competitive process for the three additional projects will be developed by the OCCS. Additionally, the OCCS will hold consultations over 2010 on draft regulations to implement the levy mechanism.
Overall, it is estimated that the CCS industry in the UK could by worth £3-6.5 billion a year to the UK economy by 2030. In addition, it is also estimated that the industry could sustain 70,000-100,000 jobs, many of which will be created in proposed 'CCS Low Carbon Economic Areas (LCEAs)'. These are areas the government has identified as economically and geographically suitable for the creation of CCS "hubs", with Yorkshire and Humberside being announced as the first CCS LCEAs.
Future Progress
Although these measures for the CCS Competition and Industrial Strategy were all announced by DECC under the Labour Government, early indications are that the coalition will continue to take forward this strategy for CCS demonstration and long-term deployment.
Questions still remain over the exact details of public funding for the four coal-fired CCS demonstration projects. However, the budget announced on 22 June included plans to push forward the release of proposals for a new Green Investment Bank. This is seen as a vital part of the strategy to accelerate investment in key low-carbon technologies including CCS. Although no specific CCS funding is noted in the budget, the Government has previously indicated Labour's plans to publicly fund four CCS demonstration projects (one via the CCS competition) will remain in place.
