The government's decision to quietly drop the UK’s £1 billion Carbon Capture & Storage (CCS) competition is a devastating blow to the technology, and throws the UK’s plans for decarbonisation into disarray. In the Fourth Carbon Budget, the Committee on Climate Change showed that without CCS, costs would almost double to reach the target of 80% greenhouse gas reductions by 2050. With the Fifth Carbon Budget released tomorrow likely to rely heavily on CCS, it is essential that the government comes up with an alternative plan to get the UK on track for decarbonising our economy.
The government’s energy policy foresees a heavy reliance on gas in the coming years, following their cuts to support for solar PV and offshore wind. Without CCS, this gas generation could blow through the UK’s carbon budgets. The government should look again at OPEX support for CCS gas power projects, even if they are unable to provide the cash for CAPEX. They should also consider whether transportation and storage of greenhouse gases could be funded in a different way as part of the regulated asset base of the National Grid for example.
Industrial CCS, as well as industrial Carbon Capture and Utilisation, remains an area where government support could focus. Projects such as the Teesside Collective, a cluster of energy intensive industries looking to capture their emissions, should be supported. Sandbag and others have previously suggested that a Contract For Difference or CFD, set against the EU carbon price, could be a sustainable way to ensure energy-intensive industries clean up and stay in the UK.
Phil MacDonald, Policy Analyst at Sandbag, commented:
“Today, the government has pulled the rug from under yet another fledgling low-carbon industry in the UK, which has scope for massive international growth and offers potential re-use of infrastructure in the North Sea.
This will add to the general sense of disquiet amongst investors in UK energy infrastructure, and is unfortunately symptomatic of the Treasury’s short term outlook, with no coherent guiding strategy for climate change or the future economy.”