Pulling the plug on carbon capture competition throws emissions targets into question, industry experts warn
By Megan Darby
The UK government’s decision to scrap support for carbon capture and storage jeopardises its entire climate policy.
What is more, it thwarts Brussels’ strategy to develop the clean technology in Europe.
That was the message from industry experts to lawmakers at a parliamentary committee hearing in London on Wednesday.
“There is a strategic risk for the UK in not developing capability in this area,” warned Luke Warren, head of the CCS Association.
Reeling from the unexpected cancellation of a £1 billion (US$1.4bn) competition in November’s spending review, he pleaded for coherent policy.
That money had been destined to develop up to two projects at commercial scale. In the running were a coal-fired and a gas-fired plant, known as White Rose and Peterhead respectively.
White Rose had also won €300 million (US$330m) from the European Commission’s NER300 programme, which has repeatedly tried to back CCS without success. That money will be returned to the pot now UK funding has collapsed, according to finance director Richard Simon-Lewis.
While the demonstration projects were undeniably expensive, it was argued they were essential to bring costs down and meet climate goals in the long run.
The UK has a legally binding target to cut greenhouse gas emissions at least 80% from 1990 levels by 2050.
Prime minister David Cameron previously described the technology as “absolutely crucial” to meet that target. Earlier this month, he defended the U-turn, saying: “The economics at the moment really aren’t working.”
In a tight budget, CCS was judged to represent poor value compared to other infrastructure plans.
“There seems to be a view in government that we can afford to wait and buy CCS from other countries,” said Chris Littlecott of think tank E3G. “It misses the point completely, of CCS as strategic infrastructure.”
The UK could buy in technology to capture CO2, he said, but the pipeline network to pump it under the North Sea required national planning.
On top of the £1bn upfront cash, the axed projects were in line for power generation subsidies. Known as “contracts for difference”, these were set up to support a range of low carbon technologies, including nuclear and renewables.
As a significant market intervention, it needed “state aid” approval from Brussels. This was duly awarded in 2014, on the basis that different technologies would be competing for cash, minimising market distortions.
Since then, however, the Conservative government has barred onshore windfarms and solar power from the mix, on the grounds of consumer cost.
Now CCS is also out of the picture, Littlecott told Climate Home “there are big questions” over the validity of that state aid clearance.
Controversially, Hinkley Point new nuclear plant is still in line for 35 years of subsidy. French state-owned company EDF is expected to make a final investment decision next week, Reuters reports.
Along with offshore wind, nuclear has enjoyed the most consistent support from Conservative ministers of any power source. Even so, the flagship atomic venture has been repeatedly delayed and is not certain to go ahead.
Accused of double standards in parliament earlier this week, energy minister Andrea Leadsom pinned the blame for high consumer bills squarely on renewables.
She said: “I find it extraordinary that Labour Members seem to equate the deployment of renewables with decarbonisation. That is simply not the case.
“They fail to recognise that fuel poverty and endless renewables subsidies go hand in hand.”
The argument met with weary frustration from the renewables sector, which is facing job losses under the hostile policy shift.
Maf Smith, deputy chief executive of industry group RenewableUK, said: “Onshore wind is now one of the cheapest of all sources of power, which means that not supporting wind means higher bills for consumers.
“The government’s own advisors, the Committee on Climate Change, says onshore wind is cost competitive with new gas and subsidy-free, and that offshore wind will become cheaper than gas during the next decade.”