Carbon Capture and Use

Lord Barker of Battle Excerpts

Tuesday 21st January 2014 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on not only securing but leading this debate on green issues and the climate agenda. As usual, she is absolutely bursting with provocative, interesting and thoughtful ideas. I am pleased to have the opportunity to discuss the important issues she has raised today, and join her in raising the profile of carbon capture and use—or, as she said, reutilisation, re-engineering and remanufacturing.

I agree with my hon. Friend that carbon capture and use is an interesting, albeit nascent, approach and one that we are already investigating in the coalition as part of our broader CCS programme. CCU refers to technologies that can capture and then convert waste CO₂ into commercial products of value—for example, construction materials, biofuels, fertilisers, polymers or even the fizz in a Coca-Cola. CCU can be seen as a subset of and complement to carbon capture and storage, which is the focus of our current long-term approach. Many people, particularly in China and the US, also use CCU to refer to enhanced oil recovery, where waste CO₂ is used to increase the amount of oil recovered from a field, although I do not think that is what my hon. Friend was getting at.

Let me first remind my hon. Friend about why we are pursuing CCS, including CCU. Coal and gas currently provide the majority of our electricity in the UK—still, I am afraid, nearly 70% in 2012. They also represent a key source of our carbon emissions. The energy supply sector remains the single largest source of UK emissions today. We must reduce those emissions if we are to meet our climate change ambitions. CCS and CCU can help us do that, and let us continue to enjoy the benefits of flexible fossil fuels without emissions. That is particularly important for global efforts to reduce emissions, allowing countries to make use of indigenous resources while they transition to a low-carbon model.

That approach can also help us meet our emissions targets in a cost-effective way. The Energy Technologies Institute estimates that successfully deploying CCS could cut the annual cost of meeting our carbon targets by £32 billion, or up to 1% of GDP, by 2050. CCU has the potential to add even further value to that. For those reasons the Government see CCS as an important part of our energy policy and a core element of our approach. We are taking forward a comprehensive package of measures, with significant funding, to build the first commercial scale CCS projects and establish conditions that encourage the development of a wider industry.

We are looking not just at storing the CO₂ we capture, but at how it can be used positively—an area of particular interest to my hon. Friend. CCU covers a broad and diverse range of technologies. It offers the potential for a new revenue stream to contribute to the business case for carbon capture. It also presents a possible alternative to transportation and storage, particularly in more remote locations where it may not be economically sensible to invest in such infrastructure.

We envisage CCU having a flexible role in addressing the UK’s CO₂ emissions. There is a wide range of possible approaches and some will be better suited to certain regions than others. For that reason, we are investing in research and development projects now. That will help us to assess the viability of CCU and what role it could play in the future, and to develop promising new technologies.

Let me provide some more detail on our support for CCU. As part of our four-year carbon capture and storage research, development and innovation programme, the coalition is investing over £10 million in new CCU projects. My hon. Friend highlighted three particular CCU technologies: polymers, photosynthetic bacteria and mineralisation. I am pleased to say that, with our partners, we are involved in innovative research in all those areas.

On polymers, we are supporting Econic Technologies, an innovative spin-out from Imperial college, to develop polymers using CO₂ rather than hydrocarbons. With support from the Department of Energy and Climate Change, Econic has already tested its idea, using CO₂ captured from the DECC-funded CCS pilot at Ferrybridge, a power station in Yorkshire.

On photosynthetic bacteria, we are providing funding to a Sheffield-based SME, Carbon Sequestration Ltd, which is working with Sheffield university to develop high-value chemicals from CO₂ using novel algae and bioreactor technology. On mineralisation, the Technology Strategy Board has funded Carbon8, an award-winning SME that is developing a technology to mineralise CO₂ from waste incineration. I understand it has also recently secured funding from Europe to work with the university of Greenwich on further research.

Mineralisation technologies are also a good example of some of the challenges CCU faces. Although Carbon8 is forging ahead, the Energy Technologies Institute invested £1 million looking at other mineralisation processes. Working with Caterpillar, the British Geological Survey and the university of Nottingham, it concluded that at this time certain technologies might not be economically viable. But, as we have seen, CCU covers a broad range of different technologies.

Our approach shows that, despite austerity and the huge cuts that we have had to make to public spending to correct the deficit, the coalition continues to prioritise science and innovation, knowing that research and development and such innovation are critical, right across the board, to our future prosperity. It is part of our long-term economic plan. The Engineering and Physical Sciences Research Council is supporting five British universities to undertake novel research into CCU, working with major companies such as Johnson Matthey. That research includes projects to develop catalysts for the conversion of CO₂ into chemical feed stocks and fuels, and projects to use methane to convert CO₂ into fuel.

CCU also forms an important element of the current techno-economic study into industrial CCS, which was commissioned by the coalition Government in October 2013. That was recommended by the CCS cost reduction taskforce, which the coalition set up. We expect a final report to be published this spring. Those work streams, led in the coalition by DECC and our partners, will help us to assess which CCU technologies are viable and what role they could play in the future. CCU covers a broad range of technologies and each needs to be evaluated individually.

To help to answer these questions and to encourage academics to share ideas, the Engineering and Physical Sciences Research Council has funded the CO₂Chem network, which I understand could be the largest CCU network in the world, with more than 800 global members. My officials attended its meeting in October 2013 to hear the latest news and innovative ideas direct from the CCU community.

One of the biggest considerations for DECC is that CCU should permanently reduce emissions. That is another great example of the UK now leading innovation in a global way. We fully support the work of the CO₂Chem network, which has made carbon lifecycle analysis of CCU technologies a key priority across its research areas. Through the international Carbon Sequestration Leadership Forum, of which the UK is a co-chair with Australia, we also engage with the carbon capture utilisation and storage action group.

Back in the UK, if some of the CCU projects prove to have significant potential, they will need a constant supply of CO₂. This is where our wider work on CCS comes in: getting the first commercial-scale projects built and laying down the UK’s first CO₂ transportation infrastructure. We also need to prove our CO₂ stores in the North sea, which will be needed even if CCU takes off. As my hon. Friend noted, given the huge scale involved, few scientists can envisage full utilisation of CO₂ from generation.

We have introduced a comprehensive package of measures to develop CCS in the UK, as set out in the coalition’s CCS road map. We recognise that that is most important for confidence in CCS and to kick-start wider deployment to get the first projects up and running in UK conditions. The coalition’s £1 billion competition is designed to help that to happen and we are making good progress.

In December 2013, the coalition awarded the White Rose CCS project a multi-million pound contract for a front-end engineering design study of its bid. The proposal is to build a new state-of-the-art 426 MW-equivalent clean coal power plant with full carbon capture and storage, bringing clean electricity to more than 630,000 homes and capturing approximately 2 million tonnes of CO₂ per year. That will link into the planned development of a CO₂ transportation and storage infrastructure—the Yorkshire CCS trunk line—with the capacity for additional projects in the area.

We are also looking beyond the first project, reflecting the coalition’s ambition in this area. We want a strong and successful CCS industry able to compete on cost with other low-carbon technologies in the 2020s, and to deploy up to 13 GW by 2030. Our policies are designed to help to bring CCS to the point where it can compete with other low-carbon technologies. Our electricity market reform programme will provide certainty and a route to market for CCS projects in the UK.

As my hon. Friend knows, the second Energy Bill of this Parliament received Royal Assent just before Christmas, and we are now working to develop the contracts for difference for CCS. My hon. Friend also asked about contracts for difference for CCU. We do not believe that utilisation is currently available on the scale needed for commercial electricity generation, but if utilisation became established as a viable technique for permanently avoiding the release of large quantities of CO₂, there is no reason in principle why the clean electricity produced should not become eligible for contracts for difference. I hope that that is the answer she wanted.

We are focusing on how else we can strengthen the business case for CCS projects. We are trying to learn from overseas experience, and we have seen in north America how enhanced oil recovery using CO₂ has played a crucial role in the development of CCS projects. Some people believe that this is a type of CCU and have adopted the abbreviation CCUS for carbon capture utilisation and storage.

Conditions here are different, but we are exploring with industry whether enhanced oil recovery might have an important role in UK CCS projects and in extending the supply of North sea oil. We have undertaken a detailed mapping exercise to estimate potential and held a workshop with industry to inform the coalition’s approach. We know that CCS could be important for industrial, energy-intensive sectors, and in December 2013 the Prime Minister announced agreement on the Tees Valley city deal, which includes funding for a feasibility study on industrial CCS.

On the inclusion of CCU in the IPCC best practices for greenhouse gases, I should say that it would be sensible if, when CCU activities lead to permanent storage of CO₂, such activities were reflected in the IPCC in respect of how to report emissions.

In conclusion, I thank my hon. Friend for allowing us the opportunity to shine a light on a fascinating area of innovation, with the potential to improve the economics of carbon capture by putting a value on the CO₂ captured. It may also present an innovative solution for smaller or more remote emitters, when it may not be economical to transport the CO₂ to storage or to a trunk. We are providing multi-million pound funding to help to develop projects in this area and to assess its viability. That work complements the coalition’s wider ambitious programme on carbon capture and storage, which is maturing and beginning to deliver. We have awarded the first front-end engineering design, or FEED, contract to the White Rose project, and we hope to make a further announcement shortly on the competition.

Our £125 million research and development programme is keeping the UK at the forefront of CCS innovation and the global race for clean energy. Our electricity market reform programme has passed the significant milestone of Royal Assent for the Energy Bill. All told, we are set for a very exciting future.

Question put and agreed to.