Engineering news
Teesside Collective, a cluster of energy-intensive industries working to establish one of Europe’s first clean industrial zones, has published its finance proposal to support an industrial Carbon Capture and Storage (CCS) network.
The report, funded by the Department for Business, Energy and Industrial Strategy and commissioned from Pöyry Management Consulting, sets out the business case for an industrial CCS support mechanism that would grow the UK’s industrial base while substantially reducing carbon emissions.
The total cost of the financial model outlined in the report, including access to a transportation and storage network, is £58/tonne CO2 – making industrial CCS a less expensive form of carbon abatement than offshore wind (£200/tCO2) and new nuclear power (£128/tCO2), while enabling government to meet its carbon reduction obligations.
Teesside Collective said the project would transform the Tees Valley economy, a combined authority area in the North East of England between North Yorkshire and County Durham, and could be replicated across the country as part of the UK’s Industrial Strategy.
The finance mechanism would see government and industry share costs to clean up energy-intensive facilities.
The report suggests that a government-run CCS delivery company would provide 50% of upfront capital in the form of a grant. Government would also provide capex support and 100% opex during the 15-year lifetime of its contract with energy-intensive industries. Incremental operating costs, including payment for use of the transport and storage network, are covered by government.
Investing a portion of its 50% capex contribution up-front, energy-intensive industries would then receive a payment from government to pay back the capital with an agreed return on investment. Some EU-ETS downside protection is included as carbon savings are shared. After the 15-year support period, energy-intensive industries gain a CCS system long-term that they can use without additional government payments.
The government pulled its previous support programme for a £1 billion CCS competition over concerns about the cost and the impact on consumer bills. CCS was absent from the recent Industrial Strategy Green Paper published last month.
Paul Booth, chair of Tees Valley Local Enterprise Partnership and board member of Tees Valley Combined Authority, said: “There is no doubt the technologies involved in CCS are tried and tested and that Teesside has the concentration of facilities that make it the ideal place to start. The benefits in terms of long term industrial growth and emissions reduction are also clear.
“The question this report answers is whether there is a cost-effective way of making this a reality. The answer is a resounding yes. We know the demands on the public purse are great, but these are also lean industries with low margins. Working together, sharing the costs and risks opens up vast opportunity for all involved.”
Lord Oxburgh, who chaired the cross-party Parliamentary Advisory Group that published a report on CCS in 2016, 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."
The Teesside Collective brings together a number of industrial firms including Lotte Chemical, BOC, CF Fertilisers, Sembcorp Utilities UK and SABIC.