3 April 2012
Energy and Climate Change Secretary Edward Davey today launched a new competition for Carbon Capture and Storage (CCS), a key technology in the Government’s drive to ensure our future energy security and reduce emissions.
The Department of Energy and Climate Change also published today the first UK CCS Roadmap. This sets out the steps that the Government is taking to develop a new world-leading CCS industry in the 2020s, including:
- the competition, the ‘CCS Commercialisation Programme’, to drive down costs by supporting practical experience in the design, construction and operation of commercial scale CCS with £1bn capital funding, and additional support, subject to affordability, through low carbon Contracts for Difference;
- £125m funding for Research and Development, including a new £13m UK CCS Research Centre;
- planned long term Contracts for Difference through Electricity Market Reforms to drive investment in commercial scale CCS in the 2020s and beyond;
- commitments to working with industry to address other important areas including developing skills and the supply chain, storage and assisting the development of CCS infrastructure; and
- a focus on international engagement, in particular on learning from other projects around the world to help accelerate cost reduction in the UK, and sharing the knowledge we have generated through our programme.
This CCS package is a clear illustration of the Government’s global leadership on CCS and firm commitment to working with industry to enable cost competitive CCS in the 2020s. It reflects the major long term opportunity for green jobs and green growth on the journey to a low carbon economy, potentially supporting around 100,000 jobs in the sector by the end of the next decade.
Edward Davey, Secretary of State for Energy and Climate Change said:
“The potential rewards from Carbon Capture and Storage are immense: a technology that can de-carbonise coal and gas-fired power stations and large industrial emitters, allowing them to play a crucial part in the UK’s low carbon future.
“What we are looking to achieve, in partnership with industry, is a new world-leading CCS industry, rather than just simply projects in isolation - an industry that can compete with other low-carbon sources to ensure security and diversity of our electricity supply, an industry that can make our energy intensive industries cleaner and an industry that can bring jobs and wealth to our shores. The CCS industry could be worth £6.5bn a year to the UK economy by late next decade as we export UK expertise and products.
“This is a really exciting time for the fledgling CCS industry. Our offer is one of the best anywhere in the world. We have £1bn available to support the upfront costs of early projects along with a commitment to further funding through low carbon Contracts for Difference, we have £125m to support research and development including a new UK CCS Research Centre, and we have the long term incentives in place through our Electricity Market Reforms.”
Jeff Chapman, CEO of the Carbon Capture and Storage Association said:
“We welcome this announcement; it creates an opportunity for the UK to take a leading role in world markets whilst cost-effectively reducing emissions, creating employment and generating prosperity. We are looking forward to working with Government to enable industry to capitalise on today’s announcement to ensure extensive investment in CCS over the coming decades.”
Notes to editors
- The CCS Commercialisation Programme will, subject to State Aid clearance, support commercial scale CCS with the £1bn in capital funding that we have made available. Further details and a description of the CCS Commercialisation Programme can be found on the Commercialisation Programme section of the DECC website
- DECC recently published a notice about the CCS Commercialisation Programme in the Official Journal of the European Union inviting organisations to register an interest. Prime (or lead) contractors or consortium members are invited to register, with one registration required per proposed bid/consortium by 13th April 2012. To register a bid, interested parties should email firstname.lastname@example.org
- In order to qualify for the competition, projects must:
- Be CCS Full Chain, or part chain capable of demonstrating the prospect of being part of a Full Chain Project in the future;
- Have the Power Plant and capture facility located in GB and the storage site located offshore;
- Be operational by 2016-2020, though earlier is desirable;
- Abate CO2 at commercial scale (or be a substantive step toward that objective) whilst meeting all relevant environmental requirements; and
- Be an electricity generator, or an Industrial [CO2] Emitter where it is part of a Cluster Project.
- Further details of the wider package of measures can be found in the CCS Roadmap at on the CCS section of the DECC website
- The cross-Government £125M CCS R&D and Innovation Programme covers the current spending period from financial year (FY) 2011/12 until FY2014/15. This investment will fund:
- Fundamental research at our world class universities, and develop greater understanding of CCS;
- Development of better, cheaper components to reduce the cost of CCS;
- Pilot-scale capture projects, to test these components and systems before they are incorporated into commercial-scale projects.
- Worldwide up to $40bn has been committed by governments to support CCS projects. If the UK is able to seize the current opportunity for leadership, export opportunities for UK based firms have been estimated to be between £3bn to £6.5bn per year by the late 2020s
- The Electricity Market Reform (EMR) programme, which represents a significant opportunity for developers of CCS power projects, offering a unique set of incentives. These include:
- the prospect of long-term contracts that reflect the value of low-carbon generation to the electricity market;
- financial support for early stage CCS projects that will help overcome the additional demonstration risks associated with these projects whilst ensuring that this support remains affordable for consumers;
- an Emission Performance Standard (EPS) set at a level to limit the emissions of new unabated coal fired power stations, but with exemptions for plants that install CCS;
- a Carbon Price Floor that, together with the EU-Emissions Trading System, will penalise the combustion of fossil fuels. Again there are exemptions for CCS;
- a requirement for all new fossil fuel power stations to be Carbon Capture Ready, to ensure that newly constructed unabated fossil fuel power stations are able to fit CCS.
- Detailed information on how CCS works can be found on the OCCS section of the DECC website