Pilot schemes could capture, transport and store carbon dioxide at a cost of just £58 per tonne, making them more cost-effective at reducing emissions than both offshore wind (£200/tCO2) and nuclear (£128/tCO2).
The report set out a funding mechanism to support the development of pilot projects which would see a government-owned CCS Delivery Company (CCSDC) split the capital costs down the middle with energy intensive industries (EIIs).
Private sector investment would then be refunded by the CCSDC over the course of a 15-year contract, with more being repaid in the early years.
Operational costs, including for transportation and storage, would also be covered by the CCSDC for the duration of the contract, although it would in return receive a share of the carbon allowance costs avoided by the EIIs.
Transport and storage would be undertaken by another government-owned company as was suggested in Lord Oxburgh’s report in September.
Proposed business model for industrial carbon capture and storage
Source:Pöyry
The Pöyry study was funded by the Department for Business, Energy and Industrial Strategy (BEIS) and commissioned by the Teesside Collective.
The report said three prospective carbon capture projects at Teesside could be designed pre-final investment decision for £17 million, built for £110 million and operated for £16 million each year, excluding transport and storage costs. They would be able to cut carbon dioxide emissions by 11 million tonnes annually at a total cost of £58/tCO2 over the course of a 15-year contract.
Commenting on the report’s findings, Lord Oxburgh said: “Applying CCS to industry represents some of the cheapest available carbon abatement in the UK economy.
“The Teesside Collective proposals offer a triple win – the greening of energy-intensive industry, meeting national carbon reduction targets and local industrial rejuvenation. I strongly recommend that government commits to helping finance the project as a cornerstone of its emerging industrial strategy.”
Speaking at an event in London yesterday (8 February), Statoil vice-president for CCS Olav Skalmeraas, said small-scale industrial pilots are the way forward for CCS following the cancellation of the government’s commercialisation competition in late 2015.
Technology and innovation manager at the Tees Valley Combined Authority, Sarah Tennison, told delegates that industrial investors are not willing to part with their cash until the transportation and storage infrastructure is in place. She said the Teesside Collective could achieve this at a “relatively low cost”.