Carbon Capture and Storage

David Duguid Excerpts

Wednesday 20th October 2021 Westminster Hall

[David Duguid (Banff and Buchan) (Con)]

rose—

[Alan Brown]

It is illogical not to progress the Scottish cluster at this stage. The shipping and infrastructure proposals for Peterhead port, for example, were intended to facilitate the importing of carbon dioxide from outside Scotland, so the Scottish cluster can actually help other areas of the UK to decarbonise. Will the Minister advise why that aspect alone did not ensure that the Scottish cluster was given priority status?

Is the Minister aware that the Scottish cluster also includes Project Cavendish, which allows for hydrogen production in the south-east of England, not far from London? That London connection should be enough to make this UK Government think again on that decision. It is obvious, looking at what the Scottish cluster will achieve, that it should be given support now. Scotland has a world-leading target of net zero by 2020 and of cutting cut emissions by 75% by 2030. That interim target is now at risk because of the UK Government’s decision.

For the avoidance of doubt, the Scottish cluster will, if progressed, do the following. It will capture 25 megatonnes of carbon dioxide by 2030. It will tackle Scotland’s biggest two carbon dioxide emitters—Ineos at Grangemouth and the Peterhead gas station. And it will facilitate the production of blue hydrogen, as part of the clear pathway to green hydrogen. The UK Government talk glibly of leading the world on hydrogen, but they are quickly falling behind. If given the go-ahead, the Scottish cluster could deliver 1.3GW of hydrogen by 2030, which is more than a quarter of the UK and Scottish Governments’ 5GW production target.

The Scottish cluster also incorporates Storegga’s direct air capture proposals—technology that the UK could lead the world on and use as an effective offsetting methodology. The Scottish cluster also unlocks—again, on its own—30% of the UK’s carbon dioxide storage resource. That statistic should be sufficient for the cluster to be a No. 1 priority. Of course, it also best placed because it utilises existing oil and gas infrastructure. It could create more than 20,000 jobs by 2030—jobs that will facilitate a just transition and utilise the expertise built up in the north-east of Scotland.

When those factors are considered, it is obvious that the UK Government should be prioritising and backing the Scottish cluster now. Can the Minister explain if the decision was made solely by the Department for Business, Energy and Industrial Strategy, and if so, why is it not proceeding as a track 1 project? Or is this like the 2015 decision, when the Treasury intervened and pulled the plug in Peterhead? Bizarrely, yesterday, the Minister kept bragging about having visited Aberdeen last week and being well received. Has he spoken to industry following yesterday’s decision, and if so, what was their feedback, and did he apologise to them for not progressing Acorn?

As we have heard, the Committee on Climate Change and the International Energy Agency both state that carbon capture, utilisation and storage is practical for achieving net zero. The Committee on Climate Change says that progress in the UK will help lead the way elsewhere. That is why multiple projects need to be progressed in the here and now. It is the only way the Government can get on track for net zero and decarbonisation in the electricity system by 2035.

On net zero, the Minister needs to listen to the calls for a ring-fenced pot of money for the contracts for difference auction round 4 for wave and tidal to allow this industry to scale up and continue leading the world. I conclude by saying that the Scottish north-east Tories should hang their heads in shame at the Scottish cluster being overlooked. The Minister should apologise. I look forward to him hopefully admitting that he will reverse the decision and progress the Scottish cluster as a priority.

--- Later in debate ---

[The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)]

Let me start by congratulating my hon. Friend the Member for South Cambridgeshire (Anthony Browne) on securing this important debate, and I thank all Members who have spoken.

We have already made huge progress in this country on decarbonising the electricity sector. In 2019, greenhouse gas emissions from electricity generation were down 13% on 2018 levels and were 72% lower than 1990 levels. Earlier this month, the plan to decarbonise the UK’s electricity system in its entirety by 2035 was confirmed by the Prime Minister and the Secretary of State, to help boost the country’s efforts to achieve its net zero ambitions.

Carbon capture, usage and storage has a key role to play in decarbonising the electricity system, but its role in supporting our ambitions to reach net zero by 2050 goes further than that. The industrial decarbonisation strategy, which we have already launched, marks the beginning of a process that will see wide deployment of key abatement technologies across industry. CCUS is, obviously, one of those key abatement technologies. It will be vital as we make this transition—something that is already acknowledged in our world-leading North sea transition deal, signed earlier this year.

The Climate Change Committee has described CCUS as a necessity, not an option, for the transition to net zero. We agree, and that is why in the Prime Minister’s 10-point plan for a green industrial revolution we set out to establish CCUS in at least two industrial sites by the mid-2020s and a further two by 2030 at the latest. CCUS is vital to transforming sectors such as steel—as was ably demonstrated by my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates)—cement, chemicals and other energy-intensive industries that lack viable alternatives to achieve decarbonisation. This summer we published the UK’s first ever hydrogen strategy, and we are moving forward quickly.

The net zero strategy, which was published yesterday, confirmed that the Government will set up a new revenue mechanism called the industrial decarbonisation and hydrogen revenue support scheme to fund industrial carbon capture and hydrogen projects, and to provide long-term certainty for private sector investment. The scheme will initially commit to awarding up to £100 million of contracts in 2023, and we will announce a funding envelope in 2022 that will enable us to award the first contracts to CCUS-enabled hydrogen. That was one of the key questions asked by my hon. Friend the Member for South Cambridgeshire. It will provide the certainty required to deploy CCUS at pace and at scale and will form part of a package of Government support, which will include the industrial decarbonisation and hydrogen revenue support fund and the £240 million net zero hydrogen fund.

To deliver our ambitions, we launched the phase 1 CCUS cluster sequencing process in May this year. Its aim was to provisionally sequence those clusters that are most suited to deployment in the mid-2020s. As we announced yesterday, following the phase 1 assessment, we have identified HyNet and the east coast cluster as track 1 clusters for the mid-2020s, with the Scottish Acorn cluster as a reserve cluster—I will explain what that means in a moment. This puts those places—Teesside, the Humber, Merseyside, north Wales and the north-east of Scotland—among the potential early super-places that will be transformed over the next decade. The track 1 clusters will be taken forward into negotiations, as the start of a process to determine their support under the Government’s CCUS programme. Those negotiations will allow us to confirm whether the clusters are affordable for Government, as well as whether they represent value for money for both the energy consumer and the taxpayer, prior to making final funding decisions.

For the Acorn Project—the Scottish cluster—we will continue our engagement to ensure that it can continue its development and planning. This means that if the Government choose to discontinue engagement with a cluster in track 1, we will engage with this reserve cluster instead. That decision was made following a transparent, objective and expert-led assessment process.

[David Duguid]

I repeat my thanks to the Minister for his commitment yesterday to meet with me later this week to discuss the evaluation criteria in more detail, particularly as they refer to the Acorn Project. As he referred to earlier, the Prime Minister said in his written statement yesterday that

“The UK Prime Minister’s 10 Point Plan established a commitment to deploy CCUS in a minimum of two industrial clusters by the mid-2020s, and four by 2030 at the latest.”

The Scottish cluster is a reserve cluster that met the eligibility criteria and, we are told, performed well against the evaluation criteria. Will my right hon. Friend the Minister confirm that that status puts the Scottish cluster in a prime position to benefit from any acceleration of the programme that might be considered?

[Greg Hands]

I thank my hon. Friend for that intervention. We have been absolutely clear that the Acorn Scottish cluster is a reserve cluster, and we also have the existing commitment to have four clusters by the year 2030. Being a reserve in track 1 in no way prejudices a cluster’s position in track 2—in fact, it rather enhances it—so I will leave my hon. Friend to draw a conclusion from what I am saying without prejudicing proper process. I think that cluster is well placed.