# Presentation: 543063

## Center for Strategic and International Studies – CCS event

- 31st March 2008
- Rachel Crisp
- Deputy Director, Cleaner Fossil Fuels Unit, Energy Group

## The importance of CCS

- Under business as usual, global emissions from the energy sector will rise by 57% by 2030.
- Global primary energy needs are predicted to grow by 55% between 2005 and 2030. Coal demand is predicted to increase by over 70% in real terms in response.
- CCS technology has the potential to reduce CO2 emissions from fossil fuel power stations by as much as 90%.
- Could contribute up to 28% of global CO2 mitigation by 2050.
- Stern Review – without CCS marginal abatement costs rise from $25 to $43.

## Rationale for demonstration project

- Acknowledgement of role CCS could play in achieving twin objectives of tackling climate change and ensuring energy security
- Recognition that the next step in developing CCS is testing full chain on commercial-scale power station
- CCS has UK and international relevance
- Aid development of effective regulatory framework

## Taking the decision

- Dec 06 - commissioned engineering study to investigate costs
- Study assessed feasibility of projects and potential costs
- March 07 – announcement in Budget that UK Government would hold competition to select project to support
- Will provide up to 100% of capital and operating costs of CCS elements of project

## Objectives of UK demonstration

- 2 key objectives –
- Deliver successful demonstration of full chain of CCS technologies on a power plant at commercial scale
- Demonstrate technology that is relevant and transferable to key global markets

## What UK Government is funding

- One project – post-combustion capture on commercial-scale (at least 300MW) coal power plant
- Post combustion – tackle global emissions, retrofitting can reduce emissions already locked-in
- Carbon dioxide stored offshore
- Operational by 2014

## Rationale for using a competition

- Significant investment by UK Government
- Competition best way to get value for money
- Aware of several potential projects – competition for funds should deliver better value projects and greater innovation

## Timescales for competition

- Pre-qualifying phase ended today
- Received several applications
- Enter competitive phase in April/May 08
- Aim to name preferred bidder by May/June 09

## Pre-qualifying phase

- Competition being run in accordance with EU procurement rules
- Pre-qualification questionnaire published in Nov 07 – deadline of 31st March 08
- Applicants will be assessed on technical capability and capacity, and financial robustness – NOT their project

## Competition phase

- 3-5 Bidders invited to competition phase?
- Series of staged discussions with each Bidder addressing a number of complex issues such as – design, costs, supply chain management, financing, risks, insurance
- Likely to be a couple of iterations
- Will help refine final invitation to submit bids

## Regulatory Framework

- Most CCS issues covered under existing regulation
- Gap in relation to storage of carbon dioxide
- Energy Bill sets out overarching framework
- Will be consulting on detailed licensing arrangements shortly

## Key regulatory issues

- Lease required for storage site + licence to store carbon dioxide
- Liabilities – Government will take eventual responsibility for long term liabilities associated with carbon dioxide storage
- Transfer of storage site to Government –
- Timing depends on site
- Transfer once carbon dioxide is “settled”

## Demonstration to Deployment

- Demonstration is first step
- Aim for commercially deployable CCS by 2020
- Issues to be resolved –
- Incentives
- Infrastructure
- Skills
- Capacity
- Must resolve urgently to allow CCS to fulfil potential!

## Center for Strategic and International Studies – CCS event

- 31st March 2008
- Rachel Crisp
- Deputy Director, Cleaner Fossil Fuels Unit, Energy Group