Abby L. Harvey
GHG Monitor
12/4/2015
In response to the United Kingdom’s decision to ax a £1 billion carbon capture and storage commercialization competition, Royal Dutch Shell has announced that it will not proceed with its Peterhead carbon capture and storage project. The project, one of two that remained in the competition, would have been the world’s first full-scale gas CCS project.
“Government funding to support this world-first demonstration project, through the competition, was important to achieving the aim of making the technology commercially viable in the shortest possible time,” the company said in a statement following the government’s announcement. “Without that funding, we no longer see a future for the Peterhead project in the near term.”
The U.K. announced on Nov. 25 the official cancellation of the funding competition. “Today, following the Chancellor’s Autumn Statement, [Her Majesty’s] Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available,” the government said in a statement to the London Stock Exchange. “This decision means that the CCS Competition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them.” The government has not expanding on their reasoning for scrapping the competition.
The competition was launched in 2012, and a funding decision was expected in coming months. Two projects remained in the running for the award: the Peterhead project in Aberdeenshire, Scotland; and the White Rose CCS Project in Yorkshire, managed by the Capture Power consortium, which would be a new-build coal-fired power plant with CCS. A week before the CCS competition announcement, the U.K. government announced plans to close all unabated coal-fired power plants by 2025, signaling a move to lower-carbon forms of energy.
Capture Power responded to the funding cancellation immediately. “It is too early to make any definitive decisions about the future of the White Rose CCS Project, however, it is difficult to imagine its continuation in the absence of crucial Government support,” Capture Power CEO Leigh Hackett said of the announcement in a statement released the same day. White Rose has run into difficulty recently with the announcement that a key stakeholder, power producer Drax, intends to pull out of the project following the completion of the Front End Engineering and Design (FEED) study.
Industrial CCS Takes Center Stage
A third CCS project, independent from the commercialization competition, the Teesside Collective, a planned industrial CCS network in the U.K.’s most carbon emissions-intensive area, said it would move forward following the government announcement. “Teesside Collective is working with the Government, with other local energy intensives and is supporting partner clusters up and down the east coast,” Neil Kenley, director of business investment at Tees Valley Unlimited, said in a prepared statement. The collective continues to prepare plans for remediation of energy-intensive industries in the United Kingdom, along sustaining and establishing tens of thousands of jobs, and cost-effectively reducing carbon emissions by tens of millions of metric tons annually, he said.
Following the announcement, several organizations with interests in CCS emphasized the importance of the technology on industry. “We have frequently stressed that CCS is as crucial for industry as it is for power generation, and for the key process industries it remains the only viable option for significant cuts in carbon emissions,” a spokesperson for Scottish Carbon Capture & Storage told GHG Monitor by email this week.
However, the loss of the knowledge that would have been gained through the Peterhead and White Rose projects will be felt in future efforts to deploy CCS in the UK, the spokesperson said. “The two power projects, Peterhead and White Rose, would have provided learning and cost reductions for next-phase projects. It is a huge loss that the Government will come to regret when the true cost of axing the CCS competition becomes apparent.”
In a Nov. 26 statement, Global CCS Institute CEO Brad Page noted the potential for progress to be made in industrial CCS regardless of the loss of funding in the power sector. “It’s also important to realise that CCS is not just about power generation emissions. CCS is the only technology that can achieve large reductions in emissions from industrial processes such as manufacturing iron and steel, chemicals and cement.”
