member state perspective - uk - latest energy, metals & steel news
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Member State Perspective -
UK
Ashley Ibbett
Chief Executive, Office of Carbon Capture and Storage
Department of Energy and Climate Change, UK
UK Energy Policy
Climate change goals: • 80% emissions reduction (from 1990) by 2050
• 5 year carbon budgets,
• 15% renewable energy by 2020
Security of supply goals: • Keeping the lights on (short and long term)
• Diversity of supply
• Resilience
Affordability goals: • Costs to taxpayer (short and long term)
• Keeping bills down in short and long term
• Fuel Poverty
Ensuring secure
supplies
Maintaining affordability
Tackling climate change
Overall objectives
• CCS allows fossil fuels to compete in a low-
carbon electricity mix, providing flexible low-
carbon generation to balance intermittent wind
and baseload nuclear
• Will maintain competition in low carbon
electricity market, keeping costs down
• UK ideally placed for offshore storage
• Can also reduce emissions from industrial
sources (another major source of emissions)
Why UK Government supports CCS…
Outcome sought by UK CCS policy intervention:
“As a result of the intervention, private sector electricity
companies can take investment decisions to build CCS equipped
fossil fuel power stations, in the early 2020s, without Government
capital subsidy, at an agreed CfD strike price that is competitive
with the strike prices for other low carbon generation
technologies”
Energy Mix Snapshot –
Data from 22/1/2013
…helps us achieve our objectives
• Collectively delivering full-chain CCS projects on electricity
generation so we can assess the real advantages of CCS over
other low carbon technologies.
• Creating market frameworks that encourage investment in low
carbon technology
• Developing the next generation of capture and sequestration
technologies
• Reducing the costs of CCS to the level needed to compete
against other low carbon technologies.
• Building confidence in the development and reliability of
storage sites.
CCS is still a new industry
Some challenges to overcome
Ferrybridge has completed a year of
operation:
• 1,000 hrs of running time recorded to
date
• 100t/day CO2 capture achieved at 90%
capture efficiency
Aberthaw is operational:
• First tonne of CO2 captured from the coal
burning power station at Aberthaw Power
Station in South Wales.
• Post-combustion carbon capture process,
part of a two-year pilot program designed
to test the technology.
But reasons to be optimistic
Things are happening on the ground right now
• Our overall objective is cost
competitive CCS in the 2020s –
CCS playing a key role in a low
carbon energy mix
• Findings of the CCS Cost
Reduction Task Force interim
report show this is possible
• DECC’s CCS Roadmap contains
5 key interventions to help
deliver cost-competitive CCS in
the 2020s
We are focussed on our objective:
To bring about cost competitive CCS
The £1bn UK Competition aims to support practical experience in
the design, construction & operation of commercial scale CCS.
Projects: • Plan to support portfolio of commercial-scale projects.
Funding: • £1bn to contribute to capital cost.
• Uniquely, Contracts for Difference (CfDs) to recoup
investment and operational costs.
Scope: • Point to point full chain projects, and possibly also clusters
Progress: • Four promising projects shortlisted Oct 2012.
• All four shortlisted projects submitted revised bids on 14 Jan.
• Revised bids are now being evaluated, using the evaluation
criteria set out in our published competition documentation.
Commercialisation Programme
Good progress in £1bn competition
Timing
3 April 2012 Competition launched
3 July 2012 Competition closed –
8 bids received
30 Oct 2012 4 bids shortlisted & bid
improvement phase
14 Jan 2012 Revised bids submitted
Spring 2013 Decision on which
projects to support further
2016-2020 Start operation
• Alstom-Drax – Oxyfuel, coal
• SSE Peterhead – Post-combustion, gas
• Progressive Energy Teesside – Pre-combustion,
coal
• Summit Power – Grangemouth - IGCC, coal
Competition shortlisted bidders
• Energy Bill introduced to Parliament on
29 Nov
• EMR Programme includes:
– Long-term contracts that reflect the value
of low carbon generation to the electricity
market
– Feed-in Tariff Contract for Difference
– An Emissions Performance Standard to
provide a regulatory backstop for the
Government’s policy of no new coal
without CCS
– A Carbon Price Floor that, together with
the EU Emissions Trading System, will
penalise the combustion of fossil fuels
Supportive regulatory environment
Good progress on Electricity Market Reform
Providing long term price security
Lowering costs to investors and to consumers
Supporting investment in low carbon generation
Lowering the cost of investing in low-carbon Generation
CfD Removes Long-term Price Risk
from Investors
Support payments
backed by a contract, and
a robust payment scheme
Clear set of roles and
responsibility between
Government, Delivery Body and Developer
Earlier allocation of
CfDs, reducing risk to
developers
CfDs to provide greater certainty to investors
Carbon Price Floor
Carbon Price Support Rates
Source HM Treasury 2011
Carbon Price Floor Illustration (in real 2009 prices and calendar years)
•Budget 2012 set 2014–15 carbon price support rates equivalent to £9.55/tCO2 (nominal) in
line with the Carbon Price Floor set out at Budget 2011
•Budget 2011 set 2013-14 carbon price support rates equivalent to £4.94/tCO2 (nominal)
£125m UK CCS R&D Programme
c£40m Fundamental Research and Understanding • £4m UK CO2 storage atlas
• £13m UK CCS Research Centre
c£30m Component development and applied
research • DECC £20m CCS Innovation Competition
• £5m MMV technologies
c£55m Pilot scale demonstration (c5-10MWe) • Carbon capture pilot at Ferrybridge coal-fired power station
• c£25m Next-Generation CCS on IGCC
• c£20m Next-Generation CCS on CCGT
2011 - 2015
£55m
£30m
£40m
UK CCS R&D Showcase event: London, 20-21 Feb www.apgtf-uk.com
• Established Cost Reduction Task Force to
advise Government and Industry on reducing
the cost of CCS.
• Interim report (Nov 2012) found that UK gas
and coal power stations equipped with CCS
have clear potential to be cost competitive
with other forms of low-carbon power
generation.
• Final report with agreed actions to be
published in the Spring.
CCS Cost Reduction Task Force
Pathways to cost reduction identified
• Our collaboration is focussed on sharing knowledge
generated through the UK programme and learning from other
projects around the world to help accelerate cost reduction.
• UK supports a range of bilateral, multilateral and regional
workstreams to share knowledge and address both practical
and political challenges.
• The UK Government has also allocated £60m to the
International Climate Fund (ICF) to support capacity building
in developing countries.
• Through the first UK CCS Competition, the UK supported FEED
studies at Longannet and Kingsnorth. The government made
the complete engineering designs for the end to end chain of
capture, transport and storage freely available to support the
worldwide development of the technology.
• Commitment to knowledge sharing embedded in current UK
CCS competition.
International Collaboration
UK driving knowledge transfer
UK FEED studies accessed
across the world
• Continuing our wider work on developing
a CCS industry in the UK, beyond the
competition
• Keen to start engaging supply chain on
future opportunities
• Working with the Cost Reduction Task
Force to take forward the actions required
to get costs down
• Working with industry to develop a
Storage Strategy
• Working with the European Commission
on funding for NER Round 2
• July 2013 further detail on the CfDs
published
What next?
Beyond the competition
• Fundamental objectives - ensuring secure energy supplies,
tackling climate change and maintaining affordability.
• Undertaking the greatest reform of the electricity market in
a generation to bring forward investment in low carbon energy
• CCS can play a critical role in this low carbon energy mix
• The CCS Industry has had some challenging times but many
reasons to be optimistic – renewed momentum
• Comprehensive UK CCS Programme designed to deliver
cost competitive CCS in the 2020s
• Significant package agreed for financial support for
operational expenditure through CfDs
• Engaging internationally to share knowledge and learning
• All parties must work together to get costs down
Final thoughts