The carbon magic trick

When, seven years ago, a project at Peterhead Power Station led by BP was brought forward, it confirmed that Scotland was at the very forefront of a new energy revolution.
Carbon Capture and Storage (CCS) had already been trialled elsewhere, but these plans would have seen the first project on an industrial-scale coming to Scotland.

Using hydrogen manufactured fromNorth Sea gas to create a decarbonised fuel, it was estimated that it would reduce carbon dioxide emissions by 90 per cent and permanently remove an estimated 1.8m tonnes of CO2 from the atmosphere.

The project did not go ahead. The UK Government, when it was approached, eventually decided to run a nationwide competition instead and the project fell by the wayside as the competition's timescale did not match BP's timetable for decommissioning the Miller field, which was to be the storage site for the gas.

Despite that first proposal on Scottish soil in 2005, no scheme has come to fruition. A Scottish Power-backed plan at Longannet went right the way through to a Front End Engineering and Design (FEED) study - but the electricity costs were deemed too expensive for the Government to back.

Meanwhile projects in the US, Canada and Norway are moving on apace, which has led to accusations that CCS has been "kicked into the long grass" and could miss out on more funding from the European Union.

Four projects have been shortlisted by theUKGovernment for a £1bn fund set aside for CCS after another competition was launched by the Department of Energy and Climate Change, with any funding announcements having to wait until the new year.

Speaking to Holyrood, Energy Minister John Hayes said his government was still committed to seeing the technology developed.

"Carbon Capture and Storage is an important part of our plans to build an energy system which is low carbon. This is not just a matter of obligation, not something we are just committed to, it is something we want to do. We want to deliver energy security, but in as sustainable a way as possible."

He insisted thatScotlandwas still at the forefront of efforts, with two of the four shortlisted bids based north of the border, a project from Howden Group in Renfrew to develop new technology that could lead to £20m in government grants and a £13m UK CCS research centre, which is based inEdinburgh.

He said there was no cause for concern over the length of time it was taking to get CCS up and running.

He added: "We have shortlisted four bids for the next phase of the £1bn competition. This is indicative of the momentum that we seek to inject into the process. Whilst we need to move ahead with speed, we need to do it on the basis of the best possible technology and the best possible development.

"This is about getting it right and not resting until we do."

Hayes is not concerned that other countries look likely to have stolen a march on theUKin developing the technology. He said: "Inevitably with technologies of this kind, things happen in different parts of the world, butBritaincan be proud of what it's achieved and what it is achieving.

"£1bn is no mean amount of money - we are putting significant amounts of money into this; we're doing so in a structured and considered way that we believe will allow us to focus on the best of what's available."

As with other energy matters, DECC does not always see eye-to-eye with the Treasury, which is more in favour of further investment in gas extraction.

But Hayes said: "Government departments work together in different ways. This is a new technology, new technologies by their nature blaze trails. To that end, we want to back a range of options that will lead to the development of this technology to the point where it is of a scale where it is commercially viable.

"This is a case that needs to be made, an argument that needs to be won and that's always the case with new technologies and new parts of the economy."

Scotlandand theUKare aiming to move towards a low carbon electricity sector by 2030. The Committee on Climate Change wants to see the carbon intensity of the industry reduced from 500 grams of CO2 per kw hour to about 50 in that time.

This is a dramatic reduction and althoughScotlandin particular is pushing for more renewable energy, experts such as Stuart Haszeldine, professor of CCS atEdinburghUniversity, say fossil fuels are still needed to "fill in the gaps".

Of the four shortlisted projects, two are based inScotland. The first, again at Peterhead, is a joint proposal from Shell and SSE, using the Goldeneye field in theNorth Seaand - with the exception of six miles of pipeline between Peterhead and St Fergus - uses much of the infrastructure that has already been assessed for the Longannet scheme.

The second at Grangemouth, from Summit Power, is a new coal-powered plant and will be based on technology already being developed inTexas.

But Haszeldine said that all four projects should receive funding to some degree.

"If theUKis serious about really developing a new technology, what we have to do is enable the first one or two projects to go ahead to show everybody that it can be done.

"We have to help follow on projects to get through - enable them to get built. My advice is all four of those projects should be awarded government subsidy for the FEED studies, which is usually about £30m, then all four can go through next year to become ready to develop.

"The lesson from building nuclear and wind power is that if you want to create a new industry, you've got to have a series of projects which enable the supply chain, the suppliers, and all the other ancillary industries to tool up and train their staff - not just for a flash in the pan project, but a series of projects which are worth their while building for."

Under his proposals, even those projects that do not gain the big government grant or that have floundered, like Longannet, have a benefit to the technology of the future, he said.

"You're effectively getting all the costings so that everything is ready. It's not wasted, it's an investment.

"The risk is that what DECC or especially the Treasury might see is the cost, but not the long-term value. There's a big difference between the cost now and value later."

Hayes says his department is looking to the future, beyond simply funding test projects, but creating a new industry for the UK and has asked his officials to look at models for when this might happen - adding that the new Energy Bill will include more details on its plans for CCS.

"I think it's important we do have a timetable for how we see CCS playing its part, he said.

"Over time it will allow us to develop the energy mix we need to ensure sustainability through resilience in a way which is entirely consistent with our ambitions on emissions."