Carbon Capture Utilisation and Storage – an evolving but challenging industry opportunity?
Carbon Capture Utilisation and Storage (CCUS) is considered by the Climate Change Committee and the UK and Scottish Governments to be a key tool in decarbonising the economy towards net zero emissions. Current policy development is focused on how to deliver sustainable business models for developing CCUS infrastructure that inevitably comes with new additional costs.
But what opportunities does CCUS create for the economy? What role can CCUS play in sustaining economic activity, contributing to a sustainable and equitable transition and facilitating emission reduction?
This was the focus of our recent Energy Conversation where the online audience was joined by David Holman, Business Development Executive, Pale Blue Dot Energy, Dr Graeme Sweeney, Chairman, Zero Emissions Platform and Professor Karen Turner, Director, Centre for Energy Policy.
Our researchers reflect on the key issues that emerged during the discussion:
Dr Christian Calvillo Munoz
To tackle climate change, the growing consensus is that all possible interventions, in smaller or greater degree, will be needed. So the question of CCUS is not ‘if’ but ‘where’ and ‘how’?
The UK - and Scotland in particular - are placed in an advantageous position to become leaders in CCUS technology and skills development. Moreover, the benefits can go beyond the domestic economy, allowing for other countries in Europe to manage their CO2 emissions in a sustainable and responsible way. These new opportunities could help offset some of the costs to those groups and industries that use to rely on fossil fuels, such as those working in the oil and gas sector. However, it is key that CCUS solutions are implemented only when and where it is absolutely necessary and not as an ‘allowance’ to keep the status quo, extracting and using fossil fuels.
We also need to ensure that Government policies intended to support CCUS deployment do not incentivise actions which have a negative impact on the environment. For example, there is an unfortunate image in some parts of the world, where the farmer or landowner chops down forests just to clear land to plant new trees, in order to take advantage of Government grants.
Dr Oluwafisayo Alabi
CCUS as an evolving industry has the potential to play a critical role in supporting the trajectory of sustained prosperity in Scotland and the UK. However, there remain questions, concerns, and challenges around the extent to which this may be achieved and/or can materialise in the context of fully exploiting the transnational market opportunities that CCUS presents.
For example, there is a need for better understanding around the tangible economic opportunities of developing CO2 transport and storage infrastructure in the UK. Ultimately, there is a need for policy levers and wider actions targeted at capitalising on the new and existing resources and infrastructural capacity (onshore and offshore) that may drive various economic advantages. At the same time considering what type of offsetting measures may be put in place to address the potential competitiveness and leakage challenges that may emerge on the CCUS pathway.
Dr Antonios Katris
CCUS is considered one of the key technologies that the UK will need to deploy in order to achieve its climate change goals. However, over the years there have been changes in terms of how exactly CCUS will be implemented. The initial focus on using CCUS for power generation emissions has somewhat diminished and the current view is that CCUS should be used in any area where it could make meaningful contributions towards achieving the climate change targets.
However, especially when CCUS is applied to existing industry, there are significant associated costs, which our research has highlighted, that increase the production costs and could reduce their competitiveness in international markets. In principle, CCUS would enable these industries to produce so called ‘green products’ that are generally considered as a good option, but, in practice, users may not be prepared or able, at least at the moment, to pay greater prices for. During the conversation it was suggested that funds raised through border tax adjustments, for example, could be used to support the competitiveness of decarbonising industries. Alternatively, integrating climate consideration in bilateral trade agreements could help restore competitiveness on the basis that industries in the participating parties would have to meet certain environmental standards, hence removing competitiveness inequalities due to differences in environmental regulations and obligations.
Even if competitiveness issues are restored, there are still outstanding questions in relation to the wider operation of CCUS in the UK. A point that was raised during the conversation was whether CCUS is actually a proven and technically viable option to remove CO2 emissions. In terms of the ability to capture and store CO2 the technology is indeed proven. And lessons could be learned from the development of CCUS in Norway, in terms of what a viable business model may look like.
However, there are some areas requiring further consideration. For instance, is it possible to start with a limited CCUS infrastructure and gradually expand it as more demand comes in play? Early indications from government departments like the Department of Business, Energy and Industrial Strategy (BEIS) show that this may not be the case. It may be necessary to introduce oversized CCUS infrastructure and ensure its operation until a sufficiently high level of demand, domestic or exports, is in play. Crucially though, it is key to identify what the role of CCUS will be over time. Do we envisage CCUS as a standalone solution or will it complement other decarbonisation actions? And as the time progresses, will CCUS be gradually phased out, or will its role evolve over time and sustained in the longer term? These questions require further attention.