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The UK government cancelled a CCS commercialisation programme in November 2015, citing the high cost. However, CCS is “essential for low cost decarbonisation” and inaction will cost UK consumers £1-2 billion a year in the 2020s, rising to £4-5 billion per year in the 2040s, the Parliamentary Advisory Group on Carbon Capture and storage said in its report.

Lead times are lengthy on this sort of project, so early decisions are needed, the advisory group said. “UK action on CCS now will deliver the lowest cost for the consumer. There is no justification for procrastinate,” it said.

The report recommended that a CCS delivery company should be established to manage development of infrastructure. based on hubs to which power stations and other emitters could send CO2 and possess it sent on for storage for a fee. This should initially be government-owned, but could later be privatised in two parts: unit delivering the hubs and unit the transport and storage infrastructure.

power expert Chris McGarvey of Pinsent Masons, the law firm behind Out-Law.com said: “The report, and particularly its recommendation that a government-owned CCS delivery company be established represents a radical departure from the previous two government funding competitions which sought to place responsibility and reward for CCS deployment on the private sector on an arm’s length basis. The rapid reduction in costs recently experienced in renewable technologies and the anticipated potential of storage and demand-side measures possess combined with low oil and carbon emission prices to undermine the case for investment in CCS in the short term.”

“However, intermittency and power density limitations standfor that fossil fuels will persevere to constitute a significant proportion of power supplies across the power, transport and heating sectors for the foreseeable future,” McGarvey said. “It is this ongoing reliance together with carbon emissions from industrial manufacturing that supports the case for deployment of CCS as unit of several tools to meet the UK’s obligations below the Climate alter Act and Paris Agreement.”

The hubs should deliver the full chain of CCS services for at or beneath £85 per megawatt hour (Mwh), the report said.

“That would construct it comparable with other sources of low carbon generation,” McGarvey said, “but for a first of a helpful project, pegging costs to more established technologies could ultimately prove undeliverable and counterproductive. The £85/MWh figure assumes considerable efficiencies and cost reductions can be found from previous estimates. In the absence of development of a global CCS industry, it is difficult to identify how these savings can be realised. Focusing on a levelised cost of generation in this way may also fail to properly account for wider benefits that CCS can bring in terms of overall system flexibility and reutilisation of the existing oil and gas skills base and, possibly, physical infrastructure useful source.”

The report recommended that CCS be encouraged through industrial capture contracts, funded by the government, and that a group be set up to assess the lowest-cost route to decarbonising heat provision in the UK.

A certificate system could be used to certify that companies possess captured and stored CO2, and a CCS obligation should be implemented from the tardy 2020s, obliging fuel suppliers to capture a growing percentage of the CO2 associated with their provide, it said.

“Establishment of a CCS obligation along the lines of the previous renewables obligation would represent a particular challenge given the geographical constraints of emissions sources connected to storage sinks,” McGarvey said.

“Initial available capacity would be limited to whatever first project the CCS delivery company would construct and, assuming the obligation would possess some shape of buy-out price similar to the renewables obligation, there would be a strong political tension between setting a price high sufficient to underwrite future investment in capture and storage capacity versus affordability, with the risk that the obligation simply becomes another shape of levy without driving the behavioural alter desired,” he said.

The Committee on Climate alter (CCC), which is the statutory body established by the UK government to provide advice on climate alter matters, wrote to Secretary of State for power and Climate alter Amber Rudd in July stressing the “urgent require for a recent approach” on CCS.

The CCC welcomed the advisory group report. “The CCC has previously highlighted the crucial role of CCS in helping the UK to meet its climate alter targets. If delivered in a low-cost way, the technology could greatly reduce the cost of decarbonising the UK and global economy,” it said.