The UK Government’s CCUS strategy is based on optimistic techno-economic assumptions that are now outdated and unrealistic, warns a report from the financial think tank Carbon Tracker released today.
This strategy risks locking consumers into a high-cost, fossil-based future, despite cleaner and cheaper alternatives being available.
In December 2023 the UK outlined an ambitious CCUS strategy, aiming to capture 20-30 million tonnes of C02 per annum by 2030, backed by £20 billion in taxpayer funding. This strategy was based on the recommendations of the Climate Change Committee, published in The Sixth Carbon Budget in December 2020.
However Carbon Tracker has found that, since then, cost estimates for deploying CCUS have more than doubled, while the need for carbon capture could be much smaller. For example it estimated that the need for gas plants with CCUS could be one-third of earlier estimates due to the growth of renewables, battery storage and flexible technologies.
The think tank found that the UK is targeting applications where CCUS could lock consumers into a high-cost and fossil-based future, despite the existence of cleaner and cheaper alternatives.
Lorenzo Sani, Carbon Tracker Associate Analyst and report author, said, “CCUS technology has proven to be much more complex and expensive than thought, while renewables cost reductions have dramatically changed the landscape. While the government is playing an important role in de-risking new projects it urgently needs to revisit its targets and focus its resources on high-value applications such as cement and hydrogen.”
Carbon Tracker argued that plans to use CCUS to decarbonise steel production and gas-fired power plants should be abandoned, with both applications likely to be out-competed by cleaner alternatives. Tata Steel and British Steel are already moving away from plans to install CCUS at their UK facilities in favour of a move towards Electric Arc Furnaces, while hydrogen turbines are likely to be cheaper sources of flexible power generation than gas-CCS plants by 2030.
Similarly, it warned that the government’s plans to use CCUS to decarbonise biomass-based power generation face major risks of technical challenges, stranded assets and cost premiums.
The UK’s BECCS strategy is heavily exposed to one single, very large and costly project – converting the giant Drax power station in North Yorkshire. Carbon Tracker cautioned that BECCS is unproven at this scale: the largest current project (a 50MW biomass power plant in Japan) is dwarfed by the 2,600 MW Drax plant.
The Drax conversion – the largest carbon capture project in the UK pipeline – would require a complex subsidy scheme together with a government-provided bridging mechanism that could lock taxpayers’ money into a long (15-25 years) and costly (£26-43 billion) contract, while the resulting electricity would be up to three times more expensive for consumers than offshore wind power.
In January, Drax Group unveiled plans to develop an independent unit, which will oversee the development and construction of Drax’s new-build BECCS plants in the US and internationally, as it aims to become ‘a leader’ in carbon removal.
The research also highlighted the importance of fixing the UK’s carbon market in order to make the CCUS sector profitable.
It found that most applications require a stable carbon price of at least £100 per tonne to compete with unabated technologies. By contrast the UK Emissions Trading Scheme has experienced severe volatility due to low liquidity and market saturation since decoupling from the European market and recently fell to a record low of £31 per tonne in February.
“Fixing the UK’s carbon market – either by establishing a rising price floor or, preferably, linking it back to the EU scheme – is the single most important action needed to deliver the government’s vision of a self-sustaining and competitive CCUS sector”, Sani added.
Yesterday (March 12), the UK Government unveiled plans to build new ‘unabated’ gas-fired power plants. Unabated refers to the burning of fossil fuels where resulting carbon dioxide (CO2) or other greenhouse gas emissions are released directly into the atmosphere, adding to global warming.
Prime Minister Rishi Sunak said, “Ultimately we will meet this demand with renewables and with new, cleaner gas technologies to abate emissions … in the short term, we will need more unabated gas power capacity.”
Ruth Herbert, Chief Executive of the Carbon Capture and Storage Association (CCSA) said the recent spring budget was “a missed opportunity” to put in place long-term revenue support for the next wave of projects. In January, the British Chamber of Commerce called for CCUS to be ‘a national priority’.
source: gasworld.com (Dominic Ellis)
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