U.K. Seen Missing Out on 80% Plunge in Cost of Carbon Capture
U.K. Seen Missing Out on 80% Plunge in Cost of Carbon Capture
(Bloomberg) -- Britain is failing to take advantage of the falling cost of carbon capture technology for power plants, which has plummeted 80 percent this decade to well below 500 million pounds ($645 million) per project.
Capital expenditure for the technology has dropped from as much as 2.5 billion pounds as new projects come online and the know-how is applied in other industrial settings. That’s what experts told a group of lawmakers looking at how Britain can encourage carbon capture, usage and storage, or CCUS, seen as crucial in the fight against global warming.
But the Business, Energy and Industrial Strategy Select Committee criticized current U.K. policy on CCUS as being too “vague and ambiguous” and the country is failing to capitalize on one of the most favorable markets for employing the technology. Britain canceled two competitions demonstrating CCUS in 2007 and 2012 over cost concerns.
“CCUS is crucial to meeting the U.K.’s climate change targets and will be vital to achieving a ‘net zero’ target,” said Anna Turley, a Labour party lawmaker on the committee. “Government support is needed to make CCUS a reality. The Treasury needs to shake off the blinkers in its attitude to CCUS, take a more nuanced approach to the costs but also recognize the benefits. CCUS is the best and most cost-effective way to reduce our carbon emissions.”
The U.K. government is behind a push to attract investment and encourage development in the carbon capture and storage sector with the aim of having an operational plant by the middle of the next decade. The technology involves trapping carbon dioxide from coal and gas power plants and burying it.
Under the initiative, Drax Group Plc began a pilot project at its power plant in Yorkshire. Also, a group of energy companies known as the Oil & Gas Climate Initiative joined with BP Plc, Royal Dutch Shell Plc, Equinor ASA, Total SA, Eni SpA and Occidental Petroleum Corp. to develop CCUS at a new gas-fired power station to be built in the northeast of England.
In the 2012 auction, the projected cost to implement carbon capture was thought to be 170 pounds a megawatt-hour, some 80 pounds higher than the Hinkley Point C nuclear reactor being built in southwest England, the committee said.
Current estimates of the guaranteed price of electricity with carbon capture fall to between 80 pounds a megawatt-hour and 90 pounds a megawatt-hour at power stations. Offshore wind was priced at 57.50 pounds a megawatt-hour in the most recent contract-for-difference auctions in 2017.
The U.K. government should view carbon capture and storage as a tool to remove carbon dioxide from energy sources rather than an extra cost on the production of power, the committee said. While it costs as much as 160 pounds per ton of carbon dioxide stored to install CCUS at power stations, other industrial applications are far cheaper. Fertilizer production and natural gas processing would come in at about 30 pounds a ton.
To contact the reporter on this story: Jeremy Hodges in London at jhodges17@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson, Jonathan Tirone
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