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Carbon capture could reduce UK energy costs by £45bn says Government report


Innovation in the development of carbon capture and storage (CCS) technology could save the UK as much as £45 billion by 2050, according to Government-commissioned research.

A Technology Innovation Needs Assessment (TINA) report (21-page / 1MB PDF) considers the potential of the technology, which combines the flexibility and energy security benefits of fossil fuel combustion with considerably reduced greenhouse gas emissions. However, the report indicates that innovation remains "particularly critical" to CCS viability - particularly to ensure secure long-term storage of carbon emissions.

The TINAs were produced by the Low Carbon Innovation Coordination Group (LCICG), made up of a range of different government and environmental bodies including the Department of Energy and Climate Change (DECC), the Department for Business, Innovation and Skills (BIS), the Carbon Trust, the Energy Technologies Institute (ETI) and the Scottish Government. The new reports consider the potential for innovation and economic benefits to the UK of a range of low-carbon technologies, with marine energy and electricity networks and storage also considered. The findings of the reports are used to underpin the work of DECC and other member agencies in the covered technology areas.

CCS is a technology used to prevent CO2 from being released into the atmosphere from the use of fossil fuel in power generation. A CCS project captures the carbon dioxide produced by a power plant before storing it in such a way that it does not enter the atmosphere.

In April this year DECC published a CCS Roadmap (50-page / 1.5MB PDF) outlining its plans to encourage the development of CCS technology in the UK through funding packages and investment incentives. It intends to make £1bn capital funding available, subject to state aid clearance, for CCS full chain projects, or part chain projects capable of being part of a full chain project in the future. Full chain projects comprise those capable of carrying out all steps in the process including capture, transport and storage. A further £125 million funding will be made available for research and development up until financial year 2014/14, including a new £13m UK CCS Research Centre.

According to the TINA, although the key technological components of carbon capture, transport and injection have already been demonstrated at commercial scale the cost of components and efficiency penalties remain high and uncertain. However, if additional challenges related to full integration are tackled through innovation, a new CCS industry could be worth £3-16bn to the UK economy by 2050, the report said.

"Full-scale, source-to-sink demonstration is particularly urgent to prove scalability of CCS, and its long-run availability to the system," the report concluded. "Moreover, it is necessary to drive cost-reduction opportunities related to full plant integration, and to identify the most important component technology innovations. Critically, the assurance of very long-term CO2 storage with a very high degree of certainty is still unproven. This constitutes a significant risk to the viability of CCS and its rapid roll-out in the near to mid term."

There was a strong case, the report said, for public sector support to encourage private sector investment in the technology, particularly in "areas of niche UK strength or distinct UK need" such as deep sub-sea storage and measuring, monitoring and verification (MMV) technologies. In some areas, however, the UK may be able to rely on other countries to drive innovation, it added.

Energy expert Chris McGarvey of Pinsent Masons, the law firm behind Out-Law.com, said that the report's "significantly wide estimate" of the benefits CCS could bring to the UK economy showed that early Government support for the technology was crucial.

"The TINA further emphasises the potential for the UK to secure a leading role in CCS technology, particularly building on its existing strengths in offshore storage capacity and world class expertise in offshore oil and gas engineering services," he said. "It rightly points out that Government support for early demonstration of fully integrated source-to-sink CCS chains will be critical to realising this potential. This, combined with uncertainty over the long-term policy framework for pricing carbon dioxide emissions, goes some way to explaining the TINA's significantly wide estimate of £3-16bn net contribution which CCS could make to the UK economy by 2050."

The LCICG published a TINA on offshore wind in February this year. Further reports on bioenergy, industrial energy efficient, heat, domestic buildings, nuclear fission and hydrogen are due shortly.

In its companion TINA reports, the LCICG said that advanced electricity networks and storage technologies could play a more effective role in the future energy system than traditional methods of grid reinforcement and fossil-fuel-powered system balancing capacity. "Significant innovation" was, it said, necessary before marine energy could be competitive with other technologies but the UK's "large natural resources" could make a meaningful contribution to the UK energy mix from 2025 if developed sufficiently.  

Energy Minister Greg Barker said that innovation was "key" to the continued growth of the UK's low-carbon economy.

"This new analysis will help us better understand the value of these technologies to our growing green economy as well as the barriers to commercialisation, helping us put our available investment in the right place to spur on further innovation," he added.

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