CCS decision will add billions to cost of UK decarbonisation, says ETI
The Government's controversial decision to scrap carbon capture and storage (CCS) funding in the UK could add £1bn-2bn a year to the cost of decarbonisation throughout the 2020's, new analysis from the Energy Technologies Institute (ETI) has warned.
In a briefing letter to the Energy and Climate Change Committee ahead of a hearing about the future of CCS in the UK, the ETI said there was a critical need for a new plan to support the technology, after the Department of Energy & Climate Change (DECC) axed a £1bn fund to commercialise CCS in the UK back in November.
The ETI said that delaying CCS deployment by 10 years - to 2030 rather than 2020 - would add an estimated £1bn-2bn per year throughout the 2020s to cost of decarbonisation.
This would rise to an estimated £4bn–5bn per year in 2040 as the Government would be forced to increase the roll-out of renewables, new nuclear and the early decarbonisation of heating to hit carbon targets, the letter adds.
“ETI modelling evidence suggests that both costs and risks to the UK’s decarbonisation pathway could be reduced by bringing forward, rather than delaying, the deployment of CCS,” the ETI said.
The ETI said the key to reducing the cost of CCS is delivering a small number of large plants sequentially (at least three).
It said: “Our analysis strongly suggests that risk reduction through sequential deployments of existing technology in the UK can drive output energy costs down by as much as 45% through a combination of learning by doing, infrastructure sharing and reductions in financing costs."
The ETI letter concluded that there is a “critical need to develop a new, alternative strategy to support CCS deployment during the 2020s and avoid a situation where the availability of CCS is effectively denied to the UK permanently”.
The ETI is still examining range of strategy options for how best to encourage CCS, but it said that any policy should aim to attract private sector investment to develop and build early projects, with clear rewards for first movers.
At the Energy and Climate Change Committee hearing, which took place yesterday (20 January), the Government received further criticism, with industry experts slamming “shabby” policy-making.
Chris Littlecott, the CCS lead at climate policy experts E3G, said: “It reflects very badly on the UK Government’s relationship with business and their ability to drive long-term investment. This was a fundamental change in government policy masquerading as a spending decision. The government appears now to not believe in its own energy policy.
Callum McCaig, the SNP’s energy and climate change spokesman in the House of Commons, noted that CCS was an important tool in meeting carbon targets in the Climate Change Act, and claimed the DECC's decision “hugely undermined” investor confidence.
A DECC spokesman responded: “Our priority is to ensure that hardworking families and businesses have access to secure, affordable and clean energy supplies they can rely on.
“It remains the case that CCS has a potential role in the long-term decarbonisation of the UK.”