Carbon Capture and Storage

Anna Turley Excerpts

Thursday 19th October 2017 Westminster Hall

[Anna Turley (Redcar) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship as always, Sir David. I thank the hon. Member for Middlesbrough South and East Cleveland (Mr Clarke) for securing this debate and for his powerful contribution.

Carbon capture and storage is a technology with huge importance for our industry, energy and our climate challenges. It has huge potential to bring investment and jobs to Teesside, which is why I am so pleased to be joined today by so many colleagues from the Tees valley area. I welcome the shared cross-party ambition to see the UK leading the way by introducing CCS into our national infrastructure.

Following the clean growth strategy, which the Government published recently, I hope that this debate will help to reinforce the case for making progress. Earlier this year, I pressed the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd)—the then industry Minister—on the need for some clear Government leadership to help to get the technology off the ground, and I am delighted to see the process reignited in the clean growth strategy and the promise of a CCS demonstration project. I sincerely hope to see that responsibility granted to the Teesside Collective in my constituency—a project ready and waiting to start decarbonising UK industry.

Meeting our commitments to reduce emissions under the Climate Change Act 2008 and the Paris agreement while protecting and expanding British industry is a serious challenge. The fifth carbon budget commits to a 57% reduction from 1990 levels by 2030. The easiest and most cost-effective solution to this challenge is, without doubt, CCS.

Research by the Committee on Climate Change has shown that CCS could virtually halve the costs for the UK of meeting emissions targets. The UK is especially well placed to be a leader in the industry, not least because of storage space in our depleted oilfields just off our coasts, but the clock is ticking. The UK has fallen down the Global CCS Institute’s readiness index in the past two years, due to a

“lack of clear CCS policy”.

The Committee on Climate Change has also been clear that we must develop this technology in the coming years so that we are ready for a full-scale operation in the 2030s.

There is also an urgent need to stay competitive with our continental partners, which is particularly important post-Brexit. In fact, getting ahead on CCS could be the competitive edge that we need to attract inward investment. If we delay, we will see that investment lost to other countries who get ahead. For example, this year Norway announced the award of contracts for full-scale carbon capture at cement, ammonia and waste-to-energy plants. In 2016, Toshiba completed construction of a carbon capture facility at a waste incineration plant in Saga city, and the world’s first large-scale carbon capture facility in the steel industry was launched in Abu Dhabi. The Dutch Government have committed to CCS and handling 20 million tonnes by 2030 from industrial sites. Rotterdam is one of the biggest industrial zone competitors, so it is vital for Teesside to get ahead.

The difficulties we have experienced in the steel industry, where energy cost pressures are higher than those faced by our European competitors, are a warning of what is to come if we do not get serious about industry decarbonisation. As my neighbour, the hon. Member for Middlesbrough South and East Cleveland, has mentioned, our region has huge CCS potential. The Teesside Collective project could become one of Europe’s first clean industrial zones.

Yesterday, I attended the launch of the South Tees mayoral development corporation’s strategic masterplan for the future of the former SSI steel site. At 2,000 acres, we have a once-in-a-generation opportunity to attract global investment and to become a hub for new industries and technologies. We could genuinely create a world-renowned site for clean industry with CCS at its heart.

Teesside is home to nearly 60% of the UK’s major energy users in the process and chemical sectors. The internationally renowned North East of England Process Industry Cluster—NEPIC—represents chemical-based industries in the region, but particularly those concentrated in Teesside. The sector generates £26 billion of annual sales, £12 billion of exports and is the north-east’s largest industrial sector. BOC, one of the Teesside Collective partners, operates the UK’s largest hydrogen plant, which produces over half the UK’s hydrogen. If we are to convert our gas grids to hydrogen—as Leeds is currently exploring—CCS on Teesside would need to be a key part of that decarbonisation strategy. Another Teesside Collective partner, Lotte Chemical, produces plastic for the soft drinks industry. CCS could capture over 90% of its carbon output, essentially decarbonising the soft drinks materials supply chain.

The density of our industry makes us a heavy emitter of carbon dioxide—it is three times the national average and accounts for more than a fifth of all UK industrial emissions. That makes us especially vulnerable to uncompetitive energy prices and carbon price pressures relative to other countries, but it also makes us a prime candidate for CCS, because the technology could drastically cut a very significant proportion of UK emissions. If we combine that with our close proximity to the North sea industry and potential storage sites in depleted oil fields, it means that Teesside would be one of the most efficient and cost-effective locations for a test case. The technology would help us to maintain and even enhance the comparative advantage we already have in chemicals and process industries. Or, to put it another way, without support to decarbonise our industry, we risk seeing the problems at the SSI steelworks happen in our other sectors.

NEPIC estimates that the use of CCS could create and safeguard almost 250,000 jobs by 2060, and 7,000 new jobs could be created in Teesside for the building and operating of facilities alone. The House of Commons Library estimates that CCS could sustain up to 60,000 jobs and deliver a £160 billion economic boost by 2050 if it is delivered along the east coast. Teesside is ready and waiting to face the carbon reduction challenge and could be capturing and storing CO₂ within six years.

The Teesside Collective has costed engineering for three industrial plants and presented to Government the business case for an initial CCS hub in Tees valley. Its proposals are for a cost-effective introduction strategy, with companies capturing and storing 11 million tonnes of carbon dioxide over 15 years. That would then expand to include power stations and more industrial companies as the network demonstrates its worth. It estimates that a pilot could repay up to £31 million a year to the Government in carbon savings.

The Government have understandably been concerned about cost and value for money for the taxpayer, which unfortunately led to the disappointing decision in 2015 to cancel the £1 billion CCS competition. I am glad that the Government have changed their view and recognised that CCS is a technology where, for relatively small up-front investment, greater savings in reducing carbon can be made down the line.

The Oxburgh review noted that investing in CCS now would deliver the lowest cost to the consumer and that heavy costs would follow if it kept being delayed. I truly welcome the Government’s commitment of £100 million in the strategy, and I hope that some of that will support the £15 million FEED—front-end engineering design—study requested by the Teesside Collective. The Oxburgh review suggests that CCS on a power station could be constructed at a cost of £85 per megawatt-hour under state ownership, which is lower than Hinkley Point’s £92.5 per megawatt-hour. Those costs would be even lower for industrial clusters. Analysis by Green Alliance, for instance, suggests that costs in that context could be cut by two thirds, making it comparable to wind and solar power. The Teesside Collective already has two industrial plants producing pure CO₂ and therefore requiring no additional capture facilities at all.

The important thing is that business and Government work together to devise a sustainable funding model that does not place unsustainable costs or risks on the partner business or consumers. One crucial element missing from the clean growth strategy is the lynchpin for starting any major CCS project in the UK: work on transportation and storage. The report of the parliamentary advisory group on CCS stated:

“The lowest cost CO₂ storage solution for the UK at the scale required will be offshore geological storage in UK territorial waters.”

The group also cautioned:

“The state will need to take an enhanced role in managing storage risk if costs are to be minimised.”

Teesside is well placed for that, given its location and links with the oil industry, but work needs to start on developing the infrastructure soon, so that a cost-effective model can be found.

As the Government acknowledge in the clean growth strategy, the success of the offshore wind cost reduction taskforce provides a good model for the cost challenge taskforce on CCS. However, as NEPIC has argued, that success was based on Government investment through a clear marketplace and a funding model that provided the certainty that investors need. Both the Oxburgh review and the Green Alliance report recommend contracts for difference or similar for financing the storage infrastructure to achieve that.

The strongest message that I want to send to the Government is: let us get moving on this as soon as possible. The Public Accounts Committee cautions that the UK has already missed opportunities, and we cannot afford to lose any more. It is crucial for our energy and climate strategy, but it is also a chance for Britain to take a world lead in a cutting-edge industry, future-proof our industries, protect jobs and create new ones. Teesside stands ready and willing to get to work and make it happen.