BLOG INSTALMENT (C) in a three-part ‘Long Read’ looking at Government policy as we prepare for COP26 in Glasgow at the end of the year
4. Carbon Capture, Utilisation and Storage
Both the Ten Point Plan and the Energy White Paper wax lyrical about the potential for CCUS (Carbon Capture, Utilisation and Storage), using pretty much the same kind of language as Ministers and fossil fuel companies have been using since the mid-1990s when the technology was first deemed to be viable.
There are differences of opinion here. According to Friends of the Earth and Global Witness, after 25 years of over-promising, there are 26 CCUS plants currently in operation globally, with the combined capacity to prevent around 40 million tonnes of CO2 being released into the atmosphere. That’s around 0.1% of annual global emissions. According to the Global Carbon Capture and Storage Institute, there are now 65 commercial CCS facilities ‘in operation or development’, including ‘pilot and demonstration facilities’, capable of sequestering 116 million tonnes of CO2 per annum. That’s 0.3% of annual global emissions. Either way, 25 years on, it’s still negligible.
The costs are considerable – up to $100 a tonne captured – and the economics of this only works because oil and gas companies have found a commercial use (for 80% of the total amount captured to date) in what is called Enhanced Oil Recovery (EOR) – with the CO2 injected back into oil reservoirs to help squeeze out more oil. Hardly a priority in a Net Zero world. Without EOR, both the capture and the storage elements (converting the CO2 gas into a liquid for transport by tanker or pipeline) are pure cost.
The UK is a serial offender when it comes to CCUS hype, with two previous £1bn competitions designed to establish demonstration projects, which produced precisely nothing. No surprise then that the Energy White Paper settled on another £1bn, to be invested in four CCUS clusters around the country, with an expectation of capturing 10 million tonnes a year by 2030. From a standing start to the equivalent of 25% of total global emissions abated through CCS today is, of course, pure fantasy.
The bugbear in this whole CCUS controversy is muddled objectives – and a failure to distinguish between CCUS for power plants, and CCUS for carbon-intensive sectors such as steel, cement and chemicals.
For instance, the Energy White Paper talks of one of these new demonstrators being installed on an existing power plant – presumably a gas-fired power station, as there will be no coal-fired plants in operation after 2024. But you really do have to wonder about this, given how carbon-intensive the whole process remains.
According to the British Geological Society: ‘Capturing and compressing CO2 requires a lot of energy, and increases the fuel needs of a coal-fired electricity plant by 25%-40%. These and other costs are estimated to increase the cost of electricity from a new power plant with CCS by 21%-91%. Applying the technology to pre-existing plants will be more expensive.’
It’s true, of course, that costs may well fall in the future, as some economies of scale kick in. But the CO2 balance of any such energy-intensive operations are equally daunting. Use any fossil fuel to provide the extra 25% of power required, and there’s a correspondingly significant impact on the overall CO2 intensity of the grid. According to a recent paper by June Sekera and Andreas Lichtenberger (in Biophysical Economics and Sustainability) politicians have completely failed to understand the carbon intensity of CCUS technologies. Their calculation is that CCUS on coal- or gas-fired power stations emits between 1.4 and 4.7 tonnes of CO2 for every tonne of CO2 removed. The conclusion is simple: the only way of getting a net positive carbon balance from CCUS will be to use renewably-generated power – but why do that when those renewable electrons could be used so much more cost-effectively to produce electricity directly!
It would therefore make a lot of sense just to rule out CCUS for fossil fuel power plants altogether – everywhere in the world, including India and China.
Beyond that, it still makes sense to do further work on the possibility of capturing emissions from CO2-intensive industrial facilities (steel plants, cement kilns, chemical plants) as well as in the production of ‘blue hydrogen’ (see above), or even for Bioenergy (BECCS). For instance, UK Concrete (the trade body representing the UK’s concrete and cement industry) has argued that ‘CCUS is virtually the only technological solution for deep emissions reductions from cement production’, theoretically capable of reducing total emissions from the sector by 60% by 2050. In the same vein, a consortium of big tech companies in the US are investing millions of dollars in CarbonCure technologies, working with around 300 concrete producers to ‘close the loop’ by capturing emissions from cement production and then injecting that CO2 into the concrete process itself in the hope of ‘reducing emissions by 500 million tonnes by the end of the decade’. Usual absurd hype – but there may be something in it in due course.
And the same applies to capturing emissions from the production of blue hydrogen (see above) or even for Bioenergy. But there are significant challenges in both these alternatives, both in terms of the economics and any resulting carbon balance. Whatever the source of energy used, CCUS is always going to be an energy-intensive process, with a correspondingly limited contribution to make in any Net Zero economy.
And nobody seems to want to talk about the ongoing costs (in terms of monitoring and regulation) of ensuring that all those sequestered billions of tonnes of CO2 stay sequestered!
There may therefore be a case to make for some limited, targeted CCUS within the 2050 timeframe. By 2030, however, that contribution will be very limited indeed, with no prospect of the technology becoming either economically or technologically viable at scale before then.
5. Nuclear power
Both the Ten Point Plan and the Energy White Paper are breathless in their excitement about the prospects for nuclear power on our journey to a Net Zero economy by 2050. Government Ministers (and, to be fair, both Labour and the Liberal Democrats) are persuaded that it’s not going to be possible to achieve that Net Zero target without a significant contribution from nuclear power.
Most of the UK’s remaining AGR reactors will be closing down within the next decade, leaving only the PWR at Sizewell B feeding low-carbon electrons into the grid. Beyond that, it is hoped that Hinkley Point C (comprising EDF’s two EPR reactors now under construction) will come online by 2028, according to the latest information from EDF. Between them, Sizewell B and Hinckley Point C will provide around 10% of the UK’s electricity by 2030 – with the caveat that Hinkley Point C may well not be generating any electricity at all before 2030 given EDF’s appalling record in this regard.
Its power station at Flamanville (also an EPR) began construction in 2007, with plans to be online by 2012. It now seems that 2022 is the earliest possible start date. Costs have risen from a projected €3.3bn to at least €20bn. And its power station at Olkiluoto in Finland began construction even earlier, in 2005. It now seems unlikely it will be generating any electricity until 2023. The cost overruns are mind-boggling.
Beyond that 10% from those two power stations, the Government is now talking about the potential for a further contribution from another two EPRs at Sizewell C, and a new generation of what are called Small Modular Reactors.
Interestingly, there was no specific reference to Sizewell C in the Prime Minister’s Ten Point Plan, which promised a sum of £525m for support for the nuclear industry. This will sound odd, but that is actually small beer for an industry that has so successfully managed to live off multiple sources of taxpayers’ money to keep itself alive over the years. The Energy White Paper was much more explicit in confirming that the Government will now push forward with plans for Sizewell C, using a funding mechanism that will make consumers pay upfront for much of the projected £20bn cost.
On top of that, the Energy White Paper committed £215m (through the Advanced Nuclear Fund) to develop a new design for a Small Modular Reactor with Rolls-Royce, £40m for ‘developing the regulatory frameworks and nuclear supply chains’, and up to £170m on a research programme for Advanced Modular Reactors, all on top of the £400m already committed to the development of a new fusion programme.
This is an astonishing amount of public money for an industry that has such a poor track record on delivering anything on time or on budget, all the while claiming to represent cutting-edge innovation in the energy sector.
For all the turbocharged rhetoric and boosterish projections, there’s little on offer that’s genuinely new and innovative in the Energy White Paper. EDF’s reactor design for Hinkley Point C and Sizewell C, the EPR, was first approved back in 1994, and has only been upgraded since then to take account either of excessive cost issues or new safety features required by regulators after the Fukushima disaster in 2011. For all the new-found excitement about SMRs, there is as yet no new design for regulators to approve, even after 65 years of deploying Small Modular Reactors in nuclear submarines. Even fusion is back in the mix, recycling the same promises and unsubstantiated claims that were first minted back in the 1970s.
There are so many arguments against this nuclear strategy that it’s hard to know where to start – which is why I will shortly be publishing a much more comprehensive analysis both of the ‘true cost’ of persisting with these nuclear fantasies, and of the security risks involved in terms of nuclear proliferation and the vulnerability of nuclear sites in an age of increasingly sophisticated cyber-terrorism.
Worldwide, the whole nuclear industry is in pretty poor shape. According to the annual World Nuclear Industry Status Report, there were 400 nuclear reactors online in July 2020, nine fewer than in July 2019, and exactly the same number as in 1988. Even in China, where nuclear power is still very much part of the overall generation mix, wind energy in 2019 provided more power than nuclear (406 TWh versus 330 TWh), with solar power (at 224 TWh) now growing much faster than nuclear. Both wind and solar provide more electricity in India than nuclear. Nuclear capacity in the USA is rapidly shrinking. In the EU, wind power increased by 14% and solar by 7% in 2019, while nuclear declined by 1%. And EDF’s continuing fiasco with its EPR reactors at Flamanville makes it extremely unlikely that any new reactors will be commissioned in France for a long time to come – if ever.
6. Financing the transition
Over and above the technology choices made in the Ten Point Plan and the Energy White Paper, there’s the whole question of how to finance this transition to Net Zero.
Some of the investment for this will come from the Government’s £1bn Net Zero Innovation Portfolio, covering some of the commitments referred to above, but also stuff like floating wind turbines (which could be huge for the UK – literally!), heat pump trials, breakthrough storage technologies, industrial fuel switching and so on. But a lot more will need to come from investors and the private sector.
In the Chancellor’s Spending Review in November last year, he announced a new Infrastructure Bank (to be based somewhere in the North of England), backed by a £4bn Levelling Up Fund. The National Infrastructure Strategy has indicated £100bn will need to be spent on infrastructure over the next decade. At the moment, however, less than 2% of that is committed for sustainable infrastructure solutions – dwarfed by deeply unsustainable projects like HS2 and the £27bn roads programme.
It may help that there is now updated guidance in the Treasury’s Green Book, emphasising that all new projects will need to be judged on their contribution to the UK’s Net Zero target, including an assessment of whether or not they pose a ‘relevant constraint’ on meeting that target.
Most of the UK’s financial bodies remain almost completely out of touch with the meaning of Net Zero. For instance, a recent report from the Environmental Audit Committee has just ripped into Andrew Bailey, Governor of the Bank of England, for doing practically nothing to ensure that its Quantitative Easing programme (including £20bn buying up corporate bonds) supports the transition to Net Zero economy. Suggesting that the Bank’s current positioning is actively undermining the UK’s work as President of COP26, it accuses the Bank of England of being ‘at risk of creating a moral hazard by purchasing high-carbon bonds and providing finance to companies in high-carbon sectors without placing any conditions on them to make a transition to Net Zero’.
Conclusion
Time after time, there is a chronic failure to join up the dots when it comes to more integrated approaches. And the Government remains obstinately committed to preferring interventions that always turn out to deliver too little, too late – which doesn’t work well in the midst of a Climate Emergency.
For all the hype about the Ten Point Plan and its promise of £12bn of Government investment (only £4bn of which can make any claim at all to being ‘new money’), and for all the laboured rhetoric in the Energy White Paper about the UK being ‘on the cusp of a Green Industrial Revolution’, it just doesn’t add up.
Marks out of ten for the combined effect of the Ten Point Plan and the Energy White Paper? Three out of ten. Four if you’re feeling charitable.