DECC urged to make U-turn on 'disappointing and damaging' CCS cancellation
The Department of Energy & Climate Change's (DECC) decision to cancel the £1bn funding competition for carbon capture and storage (CCS) initiatives could make it 'challenging' for the UK to meet climate change commitments, the Energy and Climate Change Committee has warned.
The ‘Future of carbon capture and storage in the UK’ report – released today (10 February) – warned that DECC’s lack of communication prior to - and in the aftermath of - the CCS cancellation has damaged investor confidence and muddied the waters in the wake of the historic Paris climate agreement.
Angus MacNeil MP, Energy and Climate Change Committee Chair: “If we don’t invest in the infrastructure needed for carbon capture and storage technology now, it could be much more expensive to meet our climate change targets in the future. Gas-fired power stations pump out less carbon dioxide than ones burning coal, but they are still too polluting.
“If the Government is committed to the climate change pledges made in Paris, it cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed. Getting the infrastructure in place takes time and the Government needs to ensure that we can start fitting gas fired power stations with carbon capture and storage technology in the 2020s.
“This is the latest in a series of snap decisions that have damaged confidence in the Government’s energy policy.”
The report states that CCS technology is ready to be piloted on large scale power station adaptions. Yet cancellations to the White Rose and Peterhead projects have left investor confidence at an all-time low.
The momentum in the industry, including in-roads into training, infrastructure and investment has come to an abrupt halt. The report urges the Government to proactively engage with industry to rescue the crumbling CCS industry.
The report recommends that the lessons arising from the cancelation of the White Rose and Peterhead projects should be documented as valuable information when making future decisions.
DECC has also been encouraged to engage with the National Infrastructure Commission to explore options on the transportation and storage of CO2. Infrastructure in this regard was labelled as a top priority.
The report also warns that the Government may have lost an opportunity to exploit existing oil and gas assets in the North Sea – which could store European industrial emissions for the next 100 years and create huge revenue increases.
The report also states that pulling the plug at the last minute has resulted in significant losses of foreign investment.
New analysis has warned that the decision to scrap the CCS project fund could add £1bn-2bn a year to the cost of decarbonisation throughout the 2020's.
The decision to cancel the £1bn competition was announced despite research showing that 15 CCS projects worldwide would capture 28 million tonnes of carbon this year alone.
Claire Jakobsson, the head of energy and climate policy at manufacturers organisation EEF said the Committee findings higlighted the short-sightedness of the Government’s decision to withdraw funding for the CCS competition.
"Indeed, the Government’s own plans for decarbonising the economy had long included the growth of CCS technology and it is difficult to see how we can meet existing targets for decarbonising industry, and at a reasonable cost, without such technology in place," she said.
“For many sectors, such as steel and cement, there are simply no other options available for cutting emissions. No Government support for CCS locks many industrial sectors into a carbon intensive future paying increasing amount in carbon taxes and puts them at a competitive disadvantage. We are running short of time if we are to have any chance of an industrial CCS programme in the UK and the Government needs to come up with a strategy fast.”
The government’s decision to withdraw funding for carbon capture and storage and renewables sent a 'chill wind through the industry', energy union Prospect said today.
Prospect deputy general secretary Garry Graham said: “This report reflects the views of many in the industry that the government does not understand the energy challenges facing the UK and the need to provide confidence for companies to invest for the long term.
“Unless industry has confidence and stability, our ability to meet our climate change obligations and keep the lights on is in jeopardy.
"The UK should be a world leader in low-carbon energy technology. But government statements are long on rhetoric and short on substance in setting out a strategy that will meet our future energy needs and sustain high-quality jobs.