Hydrogen is working and it’s much cheaper than we thought

[This article is republished from The Fifth Estate. Originally published on 9 August.]

The technology that produces hydrogen using renewable electricity has already passed crucial regulatory tests for grid balancing in a commercial environment, despite what I said here a month ago.

For over 30 years the prophets of green energy have been promoting the idea that the “hydrogen age” is just around the corner. The gas is abundant in the form of water, molecules of which possess two hydrogen atoms for every oxygen atom.

Making it from water using electrolysis releases only oxygen and no pollutants. It can then be burnt in any suitable boiler, cooker or vehicle and used in fuel cells. All we have to do is get it to the right place at the right time at the right price.

The problem has always been the right price, which provides the market incentive for investment in the necessary infrastructure.

A month ago I wrote a piece on a proposal to convert the UK’s gas grid to hydrogen. The reports I covered judged that the most likely route to creating the hydrogen was through the steam reforming of methane. This is not a climate friendly way of doing it, although it is currently by far the most common.

In a low carbon future, producing hydrogen this way in the required quantities would be unlikely without the ability to capture the carbon released by this process and store it underground, a relatively unproven and expensive process dubbed Carbon Capture and Storage.

I had compared in my article the cost of steam reforming with CCS with the cost of producing hydrogen by the electrolysis of water using wind or solar power. My source for the latter information was an apparently reliable one: the Energy Institute of University College London, which produced a report in April last year authored by Samuel L Weeks about using hydrogen as a fuel source in internal combustion engines. This states: “Hydrogen produced by electrolysis of water is extremely expensive, around US$1500/kWh [AU$1959/kWh].

The editor of The Ecologist magazine, Oliver Tickell, pulled me up on this, observing that it struck him as being way too expensive. I tried to get Professor Weeks and the UCL Energy Institute to give me the source for the $1500 figure but so far have not had a response.

So instead I turned to a company that is already making hydrogen from renewable electricity for grid balancing and fuel cell powered cars: ITM Power. They provided me with another professor, Marcus Newborough, who is their development director. He gave me a much lower figure.

Much, much lower.

He said: “We are currently selling high purity hydrogen at our refuelling stations for fuel cell cars at £10/kg of hydrogen. Each kilogram contains 39.4kWh of energy, so that’s about 25 pence/kWh or $0.33/kWh. The ambition is to decrease the $/kWh value as more stations are manufactured and more FC cars are in circulation. So yes the $1500/kWh number looks absurd to us.”

Indeed it does. It is 4545 times larger, if we are comparing like with like.

And I apologise for not checking more thoroughly.

And I’m still mighty curious as to why UCL Energy Institute got it so wrong.

Not only is ITM using the gas for hydrogen car filling stations, a chain of which it is opening in the UK (on a full tank of hydrogen a fuel cell car can drive up to 300 miles), it is also using it to inject into the grid.

Power-to-gas

The process is called power-to-gas (P2G) and it is useful when too much renewable electricity is being produced compared to the demand that exists at that moment. Instead of it going to waste it could be used to produce hydrogen as a form of energy storage and used when required.

Professor Newborough said, “The power-to-gas approach is a form of energy storage and (in the UK) there are various assessments and discussions ongoing [through organisations such as BEIS (the new UK government department dealing with energy and industry), OFGEM (the British energy regulator), UK National Grid, DG Energy in Brussels (the European Commission’s department dealing with energy) and The European Association for Storage of Energy] but no conclusive economic framework yet for energy storage to operate within.”

He said P2G was particularly advantageous for its following abilities:

• to respond to an instruction from the grid operator to charge up or absorb electricity
• to hold on to the stored energy for a significant period without incurring energy losses
• to discharge energy on demand at a desired rate
• to be scaled up in number or capacity as we head towards a much more renewable electricity system

“P2G is part of this alongside batteries, pumped storage, etcetera,” he said. “Fundamentally the economic benefit is greatest for those technologies that possess the operational advantages of being able to respond very rapidly and/or hold onto the energy for a long period and/or discharge energy at a controllable rate across a very long period. Now power-to-gas is particularly advantageous in each of these respects.”

ITM has a pilot P2G system operational in Frankfurt with 12 other companies that together form the Thüga group.

At the end of 2013, this plant injected hydrogen for the first time into the Frankfurt gas distribution network. It therefore became the first plant to inject electrolytic generated hydrogen into the German gas distribution network, and possibly anywhere in the world. Final acceptance of the plant was achieved at the end of March 2014.

Overall efficiency is said to be over 70 per cent and the plant is now participating in Germany’s secondary control (grid balancing) market.

The conditions for being allowed to do this are extremely stringent. Systems have to respond in under one second when they receive a command to increase to maximum power or decrease to zero power to demonstrate that they are suitable for frequency regulation. The energy is discharged as hydrogen and should be available for as long as required.

The Frankfurt system has been shown to do this and can react to variable loads in the network.

Work is ongoing to see how the plant can be integrated into an increasingly intelligent future energy system.

“For the duration of the demonstration, we want to integrate the plant so that it actively contributes to compensating for the differences between renewable energy generation and power consumption,” Thüga chief executive Michael Riechel said.

The regulatory framework is playing catch-up

Professor Newborough told me that the payment levels for providing such services have yet to emerge.

In the UK, the national grid is introducing an Enhanced Frequency Response service to pay energy storage technology operators to provide sub-second response.

“ITM has already pre-qualified to provide such a service,” he said.

They are also introducing a Demand Turn Up service, which will pay operators £60/MWh (AU$102/MWh) for operating overnight and on summer afternoons to absorb excess wind and solar power.

“Clearly the economics of P2G are a function of such balancing services payments from the grid operator and the electricity tariff,” he said, “but in addition P2G offers a greening agent to the gas grid operator in the form of injecting hydrogen at low concentrations into natural gas.

“So the economics are also a function of the value placed on greening up the gas grid. By analogy we have seen in recent years in France, Germany and the UK, feed-in tariffs for injecting bio-methane into the gas grid as a greening agent and these have been up to four times the value of a kWh of natural gas.

“The economic case therefore depends on a combination of value propositions and costs – providing services to the electricity grid, the electricity tariff paid, the value of green gas for the gas grid and the capital cost of the plant. In this context it is not possible to state firm figures at this time, but equally it is important to state the underpinning factors as described above.”

It was at this point in our conversation that he gave me the price at which the company is currently selling high purity hydrogen at its fuel cell car refuelling stations.

Advantages of hydrogen over batteries

A report on energy storage undertaken by McKinsey and Co last year found that using variable renewable electricity this way could use nearly all excess renewable energy in a scenario in the future in which there was a high installed capacity of renewable electricity generation.

Reusing this stored energy in the gas grid, for transport or in industry, it said, would provide a valuable contribution to decarbonising these sectors. The European potential, in 2050, of this value would be “in the hundreds of gigawatts”.

That’s massive.

This future scenario, in which countries are reliant for much of the electricity on renewables, is likely to be common.

The Kinsey report contrasts the use of hydrogen with the use of batteries, which it calls power-to-power or P2P because it’s electricity rather than gas that comes out.

In this situation hydrogen scores better as a storage medium because batteries can either be emptied (in which case they can’t supply the demand) or full (in which case they can not be charged even if the generator is generating). By contrast, hydrogen can continue to be pumped into the grid or into vehicles and the limiting factor instead is the limit of local demand for the distance to the demand from the generator. This is shown in the following diagram:

How low energy storage capacity is a limiting factor for the use of batteries.

Nevertheless the Kinsey report warns that current regulations lag behind the potential of these technologies. Reviewing them is the key to unlocking this enormous opportunity.

So it now seems that the most likely route to creating the hydrogen that goes into our gas grids could be from electrolysis using renewables after all.

Yet, like many cutting-edge low carbon technologies, it’s early days. The Germans are pioneering this method as part of their transition strategy. It’s one part of the picture.

With the UK Met office this week saying that we have already reached 1.38°C temperature rise since the beginning of the industrial revolution and the Paris Agreement aspiring to keeping that rise to 1.5°C, the task of mainstreaming these technologies becomes even more urgent.

David Thorpe is the author of:

• Best Practices and Case Studies for Industrial Energy Efficiency Improvement (with Oung, K. and Fawkes, S. UNEP, 2016)
• A London Conversation: Business Briefing on Green Bonds (The Fifth Estate, 2015)
• The One Planet Life (Introduction: Jane Davidson. Routledge, 2015)
• Earthscan Expert Guide to Energy Management in Buildings (Earthscan, 2013)
• Earthscan Expert Guide to Energy Management in Industry (Earthscan, 2013)
• Earthscan Expert Guide to Solar Technology (Earthscan, 2011)
• Earthscan Expert Guide to Sustainable Home Refurbishment (Earthscan, 2010)

Britain's carbon capture dream is over after EU cash refused

""That's nearly £500 million of investment in northern England and Scotland that George Osborne just threw away," tweeted Chris Davies, the Liberal Democrat MEP who led discussion of the funding in the European Parliament.

A failure by the British Government to provide details of funding guarantees means that none of the carbon capture and storage (CCS) projects it put forward will receive funding from the European Union.

According to Chris Davies, the Liberal Democrat MEP who led discussion of the funding in the European Parliament, an EU official speaking on condition of anonymity said the reason for the decision was “a lack of funding detail".

A spokesman for the Department of Energy and Climate Change (DECC) said it had not been informed of the decision and refused to comment.

Under the NER300 competition, governments of Member States propose CCS and renewable energy projects for financial support from sale of greenhouse gas emission allowances from the EU European Emissions Trading Scheme by the European Investment Bank.

Chris Davies said the failure was "a devastating blow" to British hopes of becoming a world leader in CCS technology.

"The government has no excuse,” he said. “The EU funding mechanism was only introduced as a result of British pressure and for us not to take advantage of it is simply woeful."

CCS, which captures carbon emitted from the generation of electricity by burning fossil fuels and places it underground, is supposed to play a key part in the British Government's plans to meet its carbon emission reduction targets, especially under the Energy Bill.

Funding details may have been omitted from the application to the EIB pending finalisation of the contents of this Bill, which is due at the end of this month, and which is the subject of continued conflict between the Treasury and DECC.

"That's nearly £500 million of investment in northern England and Scotland that George Osborne just threw away," tweeted Chris Davies on hearing the news.

The Government submitted two projects at the end of October: Progressive Energy consortium's pre-combustion coal gasification project on Teesside and Alstom's 'White Rose' oxyfuel capture system at Drax's proposed new 304 MW coal-fired power station in North Yorkshire.

It is not clear if the same decision applies to the Sound of Islay tidal renewable energy project that was put forward for funding by the Government.

Britain's attempts to become a world leader in this currently unproven technology is now in a complete shambles.

Firstly, a previous competition which it held to fund pilot schemes fell apart over a year ago, as it proved too expensive and had to be relaunched.

There was no shortage of applicants in the second round, but, to much astonishment, the favourite project was not selected by the Government last month. This was the Don Valley Power Project, which had already earned first place among all NER300 CCS proposals.

DECC might have taken this unexpected decision because it wanted to maximise the UK’s overall financial return from NER300. NER300 support for Don Valley would have amounted to €130 million only, while the project replacing it, UK Oxy CCS Demo, would have got funding of €337 million.

Now it looks like DECC won't get any funding at all.

Carbon capture: our get-out-of-gaol-free card just got smaller

Carbon capture and storage is not going to save us. We must wean ourselves off fossil fuels as quickly as possible.

It has emerged that it is now likely that just one carbon capture and storage project in the UK will receive funding from the European Investment Bank. This is the Don Valley Project, which has already received €180 million of European funding, and is now the only one of the nine projects put forward by the UK for European funding which will get anything at all.

This is due to the pitiful amount of cash now expected to be realised from the sale of carbon emission permits by the European Investment Bank this year under the NER300 financing package. A maximum of €1.5 billion is anticipated, due to the collapsing of carbon prices to record lows and the inability of the European Commission to do anything about it.

This cash must be shared between at least half of the 27 nations in the European Union. The Commission has stated that it wants the funding to be prioritised for member states “in economic and fiscal difficulty". You would think that this would mean Greece, Italy, Spain and Portugal.

Actually, it appears that Sweden is likely to receive funding for three proposals, the UK and Greece for two each, and Belgium, Portugal, France, Finland, Czech Rep., Germany, Austria, Italy, Poland and the Netherlands would get one each, when the final list is confirmed.

(I have put the full draft list of projects that may be funded at the bottom of this column.)

Moreover, in the second call, the remaining 15 Member States (Croatia will have acceded) will have to share a pot that might, if the carbon price remains at its current level, be half the value of the current pot. Some exciting proposals have failed to make the list, including an innovative floating wind turbine concept, a Romanian biofuels from algae project in Romania and the installation of smart grids in Hungary.

From the start, carbon capture and storage in the UK has suffered setback after setback. There have been a mixture of delays and price increases: the addition of carbon capture and storage technology to a coal-fired power station can add between 25% and 100% of the cost. Potential developers have pulled out.

The International Panel on Climate Change has always been somewhat sceptical of this technology, but nevertheless, given that most energy scenarios foresee that the world's supply of primary energy will continue to be dominated by fossil fuels until at least the middle of the century, it has been seen to be necessary to achieve stabilisation of atmospheric carbon dioxide levels.

I have shared this scepticism for most of the last decade, but more recently I have been inclined to accept that, while it does seem to let fossil fuel producers continue to satisfy society's addiction to their products into the distant future, to the detriment of the development of alternatives, it nevertheless must become an unfortunate part of our armoury of weapons with which to fight the war against rising average global temperatures, because of the dire straits in which we find ourselves.

Now, the developer of the Don Valley Power Project, 2CO, has previously indicated a need for grants totalling £1 billion to enable it to proceed. Under the terms of NER300, at least 50% of the funding must be provided by the member state. The EC can't give any single project more than €315 million (£230 million). CCS projects originally asked for far more than this (€600-700 million or £0.5 million).

To save face, DECC needs to provide much of the remaining cash, which could be up to £500 million. How likely is this? Last week, Greg Barker admitted that the cost of looking after existing radioactive waste will rise from eating up half of its annual budget to a staggering 75%. And, with the Treasury's Mr. Micawber eyes watching every remaining penny it spends, and a shopping list that includes the Green Deal, tax breaks for the North Sea oil and gas industry, new nuclear power stations, offshore wind farms and so on, something is going to have to give.

In April DECC launched another £1 billion competition to fund CCS projects which pledged ongoing finance through the forthcoming Contracts for Difference framework, assuming this becomes law. Meanwhile, the CCS Cost Reduction Task Force is supposed to be coming up with an action plan to reduce the costs of CCS. Samsung C&T and BOC have each agreed to take an equity stake in the Don Valley Project and will provide some match funding.

The 650 MW facility is supposed to be completed in 2016 and connect up to a host of additional CCS projects in the area. If built, it will be one of the most advanced projects of its kind in the world. I hope it goes ahead, but I equally hope that it is not to the detriment of the funding of other low or zero carbon initiatives.

The news also provides another reason why, later this month, the European Commission must urgently take steps to reduce the number of emissions allowances on the market in order to stimulate the price of carbon.

Above all, the delays in rolling out carbon capture and storage should send a deafening message to society that its get-out-of-gaol-free card is actually an illusion. Business as usual cannot continue. We must wean ourselves off fossil fuels as quickly as possible.

The list of approved projects

CCS

• Don Valley Power Project, Yorkshire (2CO is the developer)


• Belchatow CCS project, Poland


• Green Hydrogen, Holland


• Teeside CCS (Progressive Energy is the developer)


• UK Oxy CCS demo, Yorkshire (Drax and Alstom are the lead developers)


• C.Gen CCS demo, North Killingholme Power Station, Lincolnshire


• Zero Emission Porte Tolle, Italy


• Steelworks project, France

Reserve list

• Getica CCS, Romania


• Peterhead CCS, Scotland (Scottish and Southern Energy, Shell and National Grid are the developers)

Renewables

• Pyrogrot bioenergy scheme, Sweden


• GoBiGas bioenergy scheme, Sweden


• BEST bioenergy scheme, Italy


• Vindpark Blaiken wind project, Sweden


• Ajos BTL bioenergy scheme, Finland


• Windpark Handalm, Austria


• Minos concentrated solar project, Greece


• Swell wave power scheme, Portugal


• Smart Grid Gotland scheme, Sweden


• UPM bioenergy scheme, France


• Innogy wind scheme, Germany


• Litomerice geoethermal scheme, Czech Republic


• Solar scheme, Portugal


• Maximum concentrated solar scheme, Greece


• Scottish Power tidal project, Isle of Islay


• Slim distributed energy scheme, Belgium


• Verbio straw bioenergy scheme, Germany


• Hungarian geothermal project


• Windfloat scheme, Portugal


• PV megalopolis scheme, Greece


• Archetype 30+ concentrated solar project, Italy


• ETM Martinique wave power scheme, France

Government told: use social media to allay public's nuclear fears

It's not just nuclear: Greenpeace and others have effectively campaigned against carbon capture and storage in Germany using new media, and MPs want the Government to take them on using Facebook and Twitter. Can you see this happening?

The Government is being advised to use independent regulators and social media to provide public information on the risks associated with nuclear power and other energy technologies.

A group of MPs is recommending that officials and regulators use the same communication strategies as employed by campaigning organisations such as Greenpeace and Friends of the Earth to allay public fears on nuclear power, fracking and carbon capture and storage.

Would you ‘like’ a Facebook message from the Treasury telling you that it's okay for the taxpayer to subsidise nuclear power?

Because the public knows that the Government backs nuclear power, it regards official messages on the subject as biased, says the Science and Technology Committee, which has been looking into the public perception of risk.

Therefore, technically competent public bodies that are independent of Government are in a much better position to engender public trust and influence risk perceptions, the MPs say, citing the Health & Safety Executive and Office for Nuclear Regulation as examples.

"The public must be able to trust the information it receives on the risks of nuclear power and other energy technologies – such as fracking or carbon capture and storage," said Andrew Miller MP.

"Developing the public profile of independent regulators as trusted and authoritative sources may be one way of increasing public trust and understanding of such risks."

The MPs say in the report that "the evidence shows that around half of the population support [nuclear power], even though it may be a reluctant support for the least worst option. The Government's position as an advocate for nuclear power makes it difficult for the public to trust it as an impartial source of information."

Carbon capture and storage

Although most of the inquiry looked at nuclear power, the MPs also considered other technologies such as carbon capture and storage (CCS). As one witness who gave evidence, Professor Nick Pidgeon, Director of the Understanding Risk Programme at Cardiff University, said: "[energy] policy in the EU and UK depends very heavily upon CCS technology working".

The MPs visited a site of a pilot CCS project in Germany, where there has been almost as much opposition to the technology as there has been to nuclear power. They found the underlying reasons for this were “distrust of industry and concerns that CCS would provide a means for fossil fuel dependency to continue".

They highlighted a comment by one of the enquiry's witnesses that campaign groups like Friends of the Earth were very good at getting their message across. They "will pick a very narrow issue, go for that very strongly and throw lots of resources at it. They have embraced the internet and the new media very well," said Dr Andrew Bloodworth, Head of Science, Minerals and Waste, British Geological Survey (BGS).

"If the Government intends to rely on carbon capture and storage (CCS) as part of emissions reduction strategies, it should examine the difficulties experienced in Germany due to public concerns," concluded the MPs.

Community engagement

While in Germany, they were also impressed by the model of citizen partnership that has been developed there for wind farms. They suggest that “enabling communities to feel more ownership of local energy infrastructure by offering shares in projects could be conducive to building acceptance".

Regarding nuclear new build proposals in particular, the MPs advocate "the further use of current community engagement processes led by energy companies, working with local government and the public, for building trust".

In this regard EDF Energy has recently been sponsoring a series of editorial features in women's magazines. It seeks to portray the human side of working with nuclear power by, for example, interviewing female workers and photographing them in the same style as fashion models.

For example, the last issue of Marie Claire features an attractive photograph and an interview with Sabrina Greenberg, whose age is patronisingly noted as 25, a member of EDF Energy's Nuclear New Build team and personal assistant to the 'client construction and commercial director'.

Before taking on this job she worked, the advertorial says, at the Department of Energy and Climate Change. However, her LinkedIn profile makes no mention of this, instead saying that she worked at the Department of Justice.

The interview questions include: how much she knew about nuclear energy before starting work, what is involved in her typical day, what her family and friends think about her working for an energy company, what she likes about working at EDF Energy and what she sees as her future there.

Propaganda versus information

EDF has clearly noted the recent market research which shows that women are far more likely to oppose the new nuclear build than men, and this is their cynical response: to use senior members of their own staff as examples of how safe nuclear power is.  How stupid do they think women are?

It illustrates that the distinction between propaganda and objective information can be easily blurred.

This blurring may also explain why NGOs are trusted by the public more than energy companies and the Government. The public sees that when it comes to international efforts to save the planet such as the Rio+20 Earth Summit and UN climate change summits, it is NGOs who are pushing most strongly for the required measures, and governments that are lagging behind.

The MPs' report accepts that the public does not always understand the true nature of relative risk, even when attempts are made to explain it scientifically. It is a difficult issue to get across. This was seen most dramatically in recent times with the controversy over the MMR vaccine.

This does not mean that the public is necessarily anti-scientific, it says. While their level of scientific understanding may not be the same as a scientist, they may be influenced by “other affective (that is, feeling or emotion-based) factors" that are not accessible to rational argument.

This must make women wrong. Shame on them, for responding with their feelings.

In response, the MPs advocate the setting up of a new Risk Communication Strategy team led by a senior individual in Government.

That's all right then: I'm sure they will be completely trustworthy.

Industry calls for greater support for decarbonisation

 As George Osborne vows to cut support for onshore wind, business leaders call for the opposite.

Business leaders have called upon the government to provide a more stable, consistent and sufficiently long term set of policies to enable the transition to a low carbon economy.

In a new report by think tank IPPR, Growing pains: British industry and the low-carbon transition, which is based upon conversations with senior executives in many sectors at the forefront of this transition, the leaders also call for specific industrial strategies targeted at the different sectors.

The findings suggest there are plenty of opportunities for British companies to participate in this fast growing global business sector. According to figures to be released next week by WWF, in their annual Clean Economy, Living Planet report, in 2011, the global sales value of greentech manufacturing, from manufacturing inputs like silicon to end products like biofuels, came to €198 billion ($245.3 billion), double the figure in 2008.

Reg Plant, one of the authors of the IPPR report, put an even higher value, of £2.27tn, on the global market for wider environmental goods and services, and said it was growing by 4% a year.

“The government should work far more closely with industry," say the business leaders, in order to counteract the perception that its policies are muddled, overlapping, continually being changed, and not farsighted enough, particularly for the period after 2020. All sectors considered mid-term targets (to 2030) to be important, for providing greater clarity and consistency with current investment timeframes.

Support for onshore windpower

The Government continued to give mixed signals to industry over the weekend, with the news that George Osborne was seeking to reduce the level of Renewables Obligation support for onshore wind power, after April 2013, by five or ten per cent more than that which had been proposed by the Department For Energy and Climate Change, due to pressure from backbench Tory MPs.

Tim Yeo, Conservative leader of the Select Committee for Environment and Climate Change, led the criticism of this move by saying that it made absolutely no financial sense to do this, since "you get more carbon reduction for your money by subsidising onshore wind than you do by subsidising the more expensive offshore wind power".

One British company which would be affected by such a savage and politically motivated cut in support for onshore wind, is David Brown Gear Systems, which has been manufacturing gear sets for 150 years and is based in Huddersfield and West Bromwich. The company has found the wind sector to be a core market for the business, last year receiving a £2 million grant from the regional growth fund to invest in a state-of-the-art R&D centre for wind gearbox technologies.

Carbon price floor

Amongst other Treasury policies that business leaders say should be amended or scrapped is the carbon price floor. Currently, this is specifically designed to encourage investment in nuclear power which, they say, would skew precious investment at a less effective technology. "It is ill-designed as it reduces British competitiveness, won't cut emissions and will drive up fuel bills pushing more people into fuel poverty," said Reg Plant.

Call for more partnerships

Business leaders also call in the report for “strategic public-private partnerships at the sector level based on the model successfully pioneered by the Automotive Council", which brings together leading industry players, policymakers and expert academics. This would help to identify and tackle barriers to development such as infrastructure, skills and financing requirements.

Many leaders criticise the Carbon Reduction Commitment and called again for an industry-by-industry approach to emissions reductions, with incentives such as support for research and development.

Business leaders also think that greater collaboration with European partners on low carbon innovation is advisable, to target possible technological breakthroughs. Pooling member state resources and encouraging countries and businesses to work together is cost-effective, attractive to investors and could deliver greater returns.

The UK is already doing this in the areas of carbon capture and storage (CCS) and offshore wind but the pace of change should be speeded up, they say. One way of doing this is with the help of a new European programme modelled on the governance structure of the EU's NER 300 programme, which subsidises installations of innovative renewable energy technology and CCS, and is funded by a set-aside of 300 million allowances from the European Emissions Trading Scheme.

Transport sector

Government support is also called for to help the transport sector, which is responsible for 21% of the UK's emissions, to decarbonise. In particular, despite government efforts by the offer of a grant of up to £5000 to purchase an electric vehicle, there has been little effect on the market, partly due to the high upfront cost but also to the lack of charging infrastructure.

There is also a lack of tax harmonisation on vehicles across EU member states, leading to the fact that the same car model can be effectively taxed at different rates in different countries. But addressing this issue would pose a huge political challenge, since taxation policy is largely a matter for individual states.

Several leaders called for greater integration between the energy and transport roadmaps, which would include “explicit modelling of the consequences of the electrification of transport for the electricity and gas sectors", otherwise, if the grid was not decarbonised fast enough, more electric vehicles on the roads could increase carbon emissions.

Manufacturing sector

In the manufacturing sector, the vast majority of executives interviewed for the study were ignorant of the long-term vision set out in the various EU 2050 roadmaps. This uncertainty, say the report's authors, “could reflect the increasingly short-term perspective within which many manufacturers operate".

In principle, however, when it was explained to them, participants supported the roadmaps because they provided policy direction and milestones that businesses can work towards.

A particular incentive for the manufacturing sector would be a type of 'green deal', which would help them to invest in low carbon and energy efficient technologies. A pilot scheme for small and medium-sized manufacturers should be established as a first step.

One company involved in energy is Ceres Power, a spin-off from Imperial College which manufactures fuel cell technology for use in small-scale combined heat and power systems. Despite having identified a market of 14.5 million households in the UK and aiming for a market launch in 2014, it sees its next step as being far from straightforward. It requires a significant injection of capital to finalise product development and scale up its manufacturing, which would normally come via equity finance.

But as a result of the economic downturn this has proved difficult, so it is now investigating corporate venturing, which means partnering with a large energy utility or manufacturer. Even this is difficult and, to make things easier, it is calling for the Treasury to introduce “more tax incentives for corporate investments in SMEs, together with any capital gains and dividends from these investments".

All in all, the report paints a picture of an industry full of enthusiasm, but continually frustrated by the slow pace of change and inconsistent support from government.

Low Carbon Innovation Survey

Coincidentally, in June and July, the Department of Energy and Climate Change (DECC) is surveying firms on their levels of investment in innovations that result in reductions in greenhouse gas emissions. DECC says it is also keen to investigate drivers of and barriers to investment. This will help inform the development of future innovation support programmes.

DECC says it is keen to hold brief telephone interviews with a wide range of companies active in the low carbon sector. If you would be interested in taking part in this survey, please enter your details here. If you would like further details about the survey, please contact William Lecky in the Energy Innovation team at DECC (William.Lecky@decc.gsi.gov.uk, 0300 068 5080).

Energy-intensive industries to get billions in EU-ETS compensation

The European Commission has cleared Member States to pay billions to high electricity using industrial sites, such as steel and aluminium producers, to compensate for EU Emissions Trading Scheme (ETS) costs after 1 January 2013.

The sectors deemed eligible for compensation include producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and some plastics.

It will allow the refunding of up to 85% of costs incurred by these sectors from complying with the scheme from 2013 to 2015, falling to 75% by 2019 to 2020. This will amount to billions of euros.

In Britain, George Osborne has already promised £250 million of help for UK companies to compensate them for the carbon price floor in his Autumn Statement last year. Many already perform well in meeting their carbon reduction targets and reducing, thereby, their energy bills.

The Commission reached this decision after lengthy period of consultation with member states and stakeholders. It determined that these industries would not be able to pass on the costs incurred to their customers without suffering from unfair competition from imports that are not subject to the same rules.

EC Vice President Joaquín Almunia said that the rules were being changed to prevent “carbon leakage, in other words the relocation of industrial sites outside the EU" as a result of changes to the emissions trading scheme, and to preserve competition within the internal market.

The EU has an aim of reducing greenhouse gas emissions by 20% by 2020 compared to 1990 levels. Mr. Almunia said that if companies were to relocate their facilities outside the EU then “the objective of reducing overall emissions will not be realised".

“The rules have been designed to protect the effectiveness of the EU ETS in order to promote a cost-effective decarbonisation of the economy," Almunia said, and “to minimise competition distortions in the internal market by avoiding subsidy races within the EU at a time of economic uncertainty and budgetary discipline".

The maximum aid amount that Member States can grant will be calculated according to a formula that takes into account the installation’s baseline production levels or the installation’s baseline electricity consumption levels, together with the CO2 emission factor for local electricity.

This ensures that the aid is proportionate and that it maintains the incentives for electricity efficiency and the transition from "grey" to "green" electricity. For this reason it does not fully compensate industry for the full costs of the EU Allowances.

Carbon capture and storage

Mr. Almunia also announced that the construction of carbon capture and storage plants for coal burning power stations can receive up to 15% cost subsidy without breaking state aid rules. Aid will be highest for those projects which are chosen in a genuinely competitive and transparent bidding process.

Member states are allowed to use the revenues generated from the auction of emission allowances to support the construction of highly efficient power plants, including those that are carbon capture and storage ready. This is mandated for plants over 300 MW of rated capacity.

Support is also available to upgrade dirty power plants; and hospitals are to be excluded from the costs of the EU ETS.

"All in all," he said, "these new rules reflect the general approach to state aid that it is legitimate as long as it supports areas of common interest like climate change, provided that it is necessary, efficient and well designed".

Government leaves domestic biogas and microbes CCS out of its heat strategy

The Government has launched a consultation on its strategy for decarbonising heat which omits domestic biogas and the method favoured by Richard Branson for carbon capture.

This is the second consultation on the topic of heat in three years; the last one resulted in the Renewable Heat Incentive and the Green Deal. This one attempts to envisage how the market will be transformed as a result, and as part of the goal of supplying 15% of UK energy from renewables by 2020.

Launching the consultation, Energy and Climate Change Secretary Edward Davey spoke of the need to cut emissions from the way we generate heat and said that many towns, cities and communities across the UK are already switching from fossil fuels to low carbon forms of heating like biomass, heat pumps and solar thermal.

“I want to give the opportunity to others to follow the pioneers," he said, “so that in time, our buildings are no longer dependent on burning fossil fuels for heat but using affordable and reliable alternatives to help create a flourishing, competitive low carbon manufacturing industry."

Alongside the consultation DECC published a series of electronic maps which show the heat demand from buildings across England, aimed at developers so they might identify areas in most need of low carbon heating projects and local authorities.

Demand reduction

The document envisages different solutions for different locations and geographies, as households, businesses and local authorities choose the approach that will work best for their circumstances.

It proceeds logically through an examination of measures to reduce the wastage of heat and hence demand, through to an examination of means to supply the remaining demand.

In particular there is emphasis on the potential for expansion in the heat pumps market and the solar thermal market. In 2010, the UK heat pump market alone was worth nearly £50m, and the solar thermal market grew 24% to £25m.

Heat networks

There is also hope expressed that more heat networks will be installed by, for example, integrating them with local authority plans for urban growth and regeneration.

The document notes that such networks can be the most effective way of supplying low carbon heat to buildings, offering the benefit of flexibility, since a number of different heat sources, such as biomass and gas boilers, combined heat and power (CHP) plants and heat from energy-from-waste plants, can supply the same network.

However, they have a high upfront cost due to the need to install the pipework, and to their dependence on municipal vision. Hence, although widespread in Europe, there are a few examples in this country, exceptions being Nottingham, Sheffield, Birmingham, Aberdeen, Southampton and a new project in Newcastle which is to be supplied from geothermal heat.

The Newcastle borehole will eventually reach 1821m and tap into water at a temperature of 80 deg. C, which will be used to heat a new science park.

Nottingham's one of the largest district heating networks in the UK, with a 65km network serving over 4,600 homes and 100 businesses and public sector properties; roughly 3.5% of the city’s entire heat consumption.

Measures for industry

The consultation also examines the decarbonisation of process heat for industry to create a separate strategy. "By focusing on biomass, biogas and electrification, as well as innovative technologies like Carbon Capture and Storage, we have the opportunity to achieve a competitive advantage, winning contracts abroad in a new and thriving global market," it says.

It recognises six major subdivisions of industry which will need their own specialised attention. These are: Coke and refined petroleum, food and drink, pulp and paper, basic metals, non-metallics and chemicals.

It sees particular opportunities for combined heat and power, which is ironic considering that George Osborne removed support from the technology in his budget two weeks ago.

Biogas

Responding to the Heat Strategy, Energy Networks Association (ENA) Chief Executive, David Smith, expressed disappointment that “domestic use of bio-gas has not been considered. As the Strategy points out, currently 81% of the UK uses gas for its heat and hot water.

"To ignore a potential fuel source which can use existing domestic heat infrastructure seems bizarre to say the least.

“With the proposal that gas for domestic heat be phased in only a decade or so the Strategy has also failed to consider the cost implications for the public."

The ENA is undertaking a major study on domestic heat out to 2050 that will be published in early May.

The Strategy does refer to biomethane injection into the gas grid for the industrial sector. It notes that the Renewable Heat Incentive (RHI) currently only gives support for biogas from anaerobic digestion, sewage gas and syngas for heating equipment with a capacity of less than 200kWh.

It says that the Government will consult on removing this limit or setting a higher limit in September.

Hot air

The RHI is currently limited to supporting installations which generate hot water or steam through a boiler or engine, as these can be metered relatively easily.

The Government is also considering the inclusion of equipment which can heat air directly, thereby potentially expanding the type and number of industrial uses of bioenergy which the RHI supports.

Electrification and carbon storage

The strategy also notes the potential for carbon capture and storage at a small, industrial scale. But it does not seem to be aware of the latest technologies such as the use of microbes, as supported by Richard Branson's Virgin Atlantic.

In the short term it expects industry to concentrate on energy efficiency, switching to low temperature processes and sustainable biomass, using CHP and fuel switching.

After 2020 is looking for even greater efficiency of thermal processes using heat recovery or reuse between high and low temperature processes, greater use of biogas and sustainable biomass, and further electrification of lower temperature processes, for example through direct electric steam generation as the grid itself is the carbonised.

In the longer term wider deployment of carbon capture and storage is anticipated to capture the remaining inherent process emissions. Further fuel switching to electricity and biomass for the remaining high-temperature processes is also expected.

Roger Webb, director of the Heating and Hot Water Industry Council (HHIC), thought this could be a problem. "From the strategy it seems there is a big push on electricity rather than fossil fuels - so the main question is how quickly can we move forward to low carbon electricity?"

DECC expects to receive responses by May 24, expand its evidence base and produce a range of policy proposals around the beginning of next year.

A much more practical kind of carbon capture and storage - that makes jet fuel...

LanzaTech chief executive Jennifer Holmgren and Richard Branson with some of the jet fuel.

National Grid and partners have announced a potential new CCS project for Scotland. But a different form of CCS is soon to be used by Virgin Atlantic to create aviation fuel.

Petrofac, the oil services company, American developer Summit Power, together with the National Grid, have announced they are joining the ￡1bn government competition to build a carbon capture and storage (CCS) project in Grangemouth, Scotland. The project is dependent on securing financial backing from the EU as part of the U.K.'s next funding round for CCS, in which case it could be up and running in 2018.

From carbon capture to aviation fuel

But a far more interesting form of carbon capture and storage technology promises to be up and running much earlier, and capture carbon more cheaply and effectively from industrial processes, and turn the result into aviation fuel, amongst other things.

The revolutionary fuel production process recycles waste gases that would otherwise be burnt into the atmosphere as carbon dioxide.

Virgin Atlantic has signed a deal with its developer, New Zealand company LanzaTech, which was this week named as one of 10 New Energy Pioneers at the fifth annual Bloomberg New Energy Finance Summit in New York.

Several of these winning companies are in the area of smart grid or energy efficiency, while others are in electric vehicles and generating entity from treating wastewater. They were all selected because of their “innovative, proven technologies, robust business models and the ability to demonstrate traction and global scale".

LanzaTech won for its success in using bacteria that absorb and process carbon dioxide and other waste, polluting gases from fossil fuel combustion, and turning the result into biofuel and useful chemicals.

The company has won a string of awards; just last month it was named one of the 50 most innovative companies in the world by the editors of Technology Review Magazine.

LanzaTech chief executive Jennifer Holmgren said the start-up was honoured to get the award, which recognises its technology as a game changer. "By beneficially recycling waste gases, LanzaTech is able to address the three pillars of sustainability by reducing overall carbon emissions and increasing the supply of fuels and chemicals without competing for food or land resources," Dr. Holmgren said.

Its first commercial project is installing its technology on a steel mill in South Auckland, which will be operational as soon as next year.

But the company also has development projects in Shanghai, China, and India (a deal with Mumbai-based renewable energy investment company Concord Enviro Systems), which are expected to be completed and generating income streams in the same timeframe by selling the fuel product to Virgin Atlantic.

"This partnership to produce a next generation, low-carbon aviation fuel is a major step towards radically reducing our carbon footprint, and we are excited about the savings that this technology could help us achieve," Richard Branson says.

"We were the first commercial airline to test a biofuel flight and we continue to lead the airline industry as the pioneer of sustainable aviation."

LanzaTech is 51% owned by Khosla Ventures of Silicon Valley in California, and was founded by Vinod Khosla, the India-born co-founder of Sun Microsystems.

The fermentation technology has been proven using a 100,000 gallon-a-year demonstration plant. At the heart of it is a patented microbe that uses gas feeds as its sole source of carbon and energy for fuel and chemical production.

The bugs can feed off a broad range of industrial offgases, whether they contain hydrogen or not, such as from steel mills, municipal waste, organic industrial waste, syngas and methane, and converts them into ethanol.

Because it is much more straightforward to install, it could be implemented relatively quickly on a wide scale throughout all these industries. If so, it would slash global carbon emissions and provide a sustainable source of fuel in a much shorter timescale than the complex one being envisaged for energy generation plants.

LanzaTech is also working with French company Global Bioenergies to produce the biofuel-precursor chemical isobutylene from waste carbon monoxide, which currently has to be expensively scrubbed from many industrial processes as it is toxic.

If successful, this will be a revolutionary process, because nowhere in nature is isobutylene made using bacteria. The chemical is also used to make kerosene: jet fuel.

Dr. Holmgren said “This work is a natural extension of the Global Biotechnologies and LanzaTech technology platforms.

"LanzaTech’s strategy is to diversify its product portfolio beyond ethanol to key chemical intermediates and drop in aviation fuels through developing key technology partnerships.

"Global Biotechnologies’ technology could contribute to this strategy as isobutene can be directly converted to polymers and jet fuel relevant C-12 molecules.”

The process is not unique. Many companies throughout the world are also competing, whether small fry innovators with large partners: BP and Verenium, OPX Bio and Dow; or two large companies together: BP and Dupont, and Rentech and ClearFuels.

The Petrofac project

The CCS initiative in Scotland is called the Caledonia Clean Energy Project. Under it, a new coal-fired power station would be constructed in the Firth of Forth, fitted with carbon capture technology that would carry 90% of the carbon emissions from combusting the coal via a pipeline into the North Sea.

"The project site has been selected to take advantage of synergies with other facilities for industrial gas supply and to support CO2 capture," said Summit Power in a statement.

"The location provides the benefit of being close to the UK North Sea for both CO2 storage and, later, enhanced oil recovery opportunities, and enables the re-use of existing pipelines."

If it gets the go-ahead, securing the carbon dioxide gas under the seabed would be the responsibility of Petrofac's subsidiary company CO2DeepStore.

Petrofac has an office in Aberdeen, and CO2Deepstore is 50% partner in the Storage Joint Venture at Goldeneye, in the Outer Moray Firth, for CO2 storage from SSE’s Peterhead gas fired power station.

As with the Don Valley Power Project, the gas would be used to pump out oil deposits from the bedrock in the St Fergus oilfield, in a process known as enhanced oil recovery.

Dr Sam Gardner, from WWF Scotland, said that this aspect of the proposal cancelled out its carbon-capturing purpose; therefore the project would only attract their support if this element were to be removed.

Aedán Smith, RSPB Scotland's head of planning, also called enhanced oil recovery “unsustainable" in this context.

The project builds on the experience of a similar demonstration one being developed in Texas by Summit Power with the help of a $450 million grant from the US Department of Energy, which will pump oil from local fields.

Large scale carbon capture and storage gets closer with new appointments

Schematic diagram of how the CCS set-up will work which is based upon the former BP Peterhead concept.

A crucial step has been taken in the development of what may be the U.K.'s first large scale Carbon Capture and Storage (CCS) project, with the appointment of Foster Wheeler Energy Limited (FWEL) as project management consultants of a ￡3 billion, 650MW (net) project at Hatfield.

The Don Valley Power Project, at Stainforth in South Yorkshire, expects to combine a coal gasification plant, with CO2 capture on all of the plant, with an integrated gas-fuelled combined cycle power station that is fired by a hydrogen-rich fuel.

It will potentially capture up to 97% of the carbon dioxide from its operation and its principal emission will be water vapour.

Planning permission for the power plant has already been granted, and main construction activities would start in 2013, provided the project wins financial support from the EU and UK government, for which it is currently competing. The plant would be commissioned in 2016.

This was the only UK project to win funding (€180 million) under the European Energy Programme for Recovery (EEPR) and is being assessed by the European Investment Bank (EIB) for further EU funding under the New Entrants Reserve (NER300) programme, which is itself to be financed by the European Commission's satisfactory sale of 300 million EU allowances (EUAs) by the end of this year.

The appointment of Swiss company Foster Wheeler, a global engineering and construction contractor and power equipment supplier, has been made by 2Co Power (Yorkshire) Ltd. which is to design and construct the power station with pre-combustion carbon capture facilities.

Foster Wheeler's role will last until the plant comes into operation in 2016 and begin by helping 2Co Power (Yorkshire) to prepare an Engineering, Procurement and Construction (EPC) contract for the project build over the next six months.

Jonathan Briggs, Managing Director, 2Co Power (Yorkshire) Ltd said: “I firmly believe that the Don Valley Power Project is the UK’s most advanced and economic carbon capture and storage project.

"Foster Wheeler’s appointment will ensure we deliver this ground-breaking project on time to help create jobs, supply low carbon electricity to the region and help the UK meet its ambitious energy security and national carbon reduction commitments."

2Co Energy has also boosted its management team to take on the project with the addition of two leading carbon capture and storage experts, Jonathan Briggs and Graeme Miller.

Jonathan led the Hydrogen Energy joint venture between BP and Rio Tinto in California, and was responsible for managing the $2.5 billion carbon capture and storage project that is now under development by SCS Energy.

Graeme also worked on the Hydrogen Energy CCS project and previously worked on BP’s original Peterhead CCS project, which provides the technical blueprint for this one.

It is reckoned that the power station will employ over 2,000 people during the peak of construction and about 200 during operation.

The offshore part of the project is the responsibility of National Grid Carbon (NGC), an independent subsidiary of National Grid created to develop carbon dioxide transportation infrastructure in the UK, who are designing, building and operating the carbon transportation system and identifying potential offshore carbon storage sites in Southern North Sea.

This part should employ 800 workers during construction and 300 during operation.

Enhanced oil recovery

The Don Valley Power Project's unique business model centres on the vast CO2 storage and additional oil recovery potential under the North Sea, known as Enhanced Oil Recovery (EOR).

2Co proposes to inject the CO2 into proven secure oil fields where it can tap reserves of oil that would otherwise be unrecoverable, and then store the CO2 permanently in the oil fields.

Three quarters of CCS projects throughout the world in operation or under construction are currently linked to EOR.

A major feasibility study is nearly completed on two North Sea oil fields that might be used for this purpose.

It is hoped that sale of the oil will not only substantially offset the costs of carbon capture but generate several billion pounds in Treasury revenue as well as extending the life of North Sea oil fields by up to 20 years and deferring substantial costs to UK government from its shared responsibility for decommissioning oil fields.

The Humber cluster effect

One of the key elements of why this project at Hatfield was selected by the EU for the EEPR funding is the potential for developing a pipeline to support a cluster of CCS plants in the Humber.

Such a cluster could potentially capture about 60 million tonnes of CO2 per year from this region.

The Humber area is one of five identified by National Grid Carbon for CCS because they contain the UK's highest CO2 emitting facilities. NGC thinks the Humber could become the largest CO2 capture volume region in Europe.

This is now the only project being taken forward by National Grid Carbon after the decision by the Department of Energy and Climate Change not to go ahead to the construction stage of the Longannet CCS demonstration project.

The Humber cluster includes a further 426MW oxy-fired carbon capture and storage project currently under development at the Drax power station in North Yorkshire with partners BOC and Alstom.

Both are applying for part of the ￡1bn funding from DECC's CCS Delivery Programme.

DECC held its first CCS Industry Day on 16 December 2011, which was attended by over 130 delegates; the next is to be on 22nd February, and the CCS Delivery Programme competition will launch in Spring 2012.

Scottish Power to Treasury: give us £0.5bn or we'll ditch flagship CCS project

Electricity generator Scottish Power is threatening to withdraw from a project to build a flagship pilot carbon capture & storage (CCS) facility at Longannet coal-fired power station near Fife, Scotland, unless the Treasury gives it £0.5bn more funding.

If the Treasury can't produce the money, this will be a severe blow to the UK's hopes of becoming a world leader in the technology. Urgent talks are being held between Scottish Power, DECC and the Treasury.

Do you fancy their chances, especially after Osborne's anti-green speech at the Tory Conference? I don't.

The plant is the UK's second largest coal-fired power station and Europe's third largest. If CCS proved to be successful it could capture between seven million and eight million tonnes of carbon dioxide a year and make a serious contribution to tackling the UK's overall emissions.

George Osborne had earmarked £1 billion for the project, but Scottish Power, owned by the Spanish company Iberdrola, is now asking for half as much again. It is supposed to be up-and-running in three years.

A competition to find contenders to build pilot CCS projects was begun in 2007 by the previous Labour administration, and there had been five entrants.

Now the project at Longannet is the only one remaining in the running, since E.On pulled out of constructing a coal-burning power station at Kingsnorth in Kent earlier this year.

Last May, a study by Scottish Enterprise suggested more than 5,000 Scottish jobs could be created by three proposed CCS schemes, including the one at Longannet.

Jeff Chapman, chief executive of the Carbon Capture & Storage Association, remains upbeat, saying that even if this project were not to go ahead, “there are lots of others ready to take its place”.

DECC is still insisting that a way will be found for the project to proceed, and an announcement will be made before the year's end.

It is expected that some of the funding will come from the sale of CO2 permits by the European Investment Bank that are beginning in a month's time.

The Bank is being given 300 million EU carbon permits by the European Commission, which are reserved for new entrants into the EU's emissions trading scheme from 2013, and is being told to sell 20 million units per month through next year in order to raise funds for renewable energy and carbon capture and storage projects in all the member states.

CCS has always been touted by the conventional energy sector as being a vital weapon in the armoury to fight climate change, not least because if successful it would allow 'business-as-usual' to continue without the release of climate-warming gases to the atmosphere.

Critics of the technology have always argued that its cost would prove prohibitive, that it is unproven and would take too long to implement to make a significant dent on global emissions in time to curb dangerous climate change.

The loss of the scheme would also affect proposals for a £3bn CCS-enabled coal-fired power station in Ayrshire, by Ayrshire Power, a company owned by Peel Energy Ltd, to be situated near Hunterston B nuclear power plant.

A coalition of environmental groups that includes WWF, RSPB Scotland, Friends of the Earth, Oxfam, and the Scottish Wildlife Trust had mounted a legal challenge to the plans which a judicial review over-ruled on 4th October.

Developers of several other proposed power plants are also waiting to see if they can be constructed using CCS. Scottish Power itself is hoping to fit it to a new gas turbine power station at Cockenzie in East Lothian, which has also just received planning permission.

Only in June, ScottishPower, National Grid and Shell announced plans to create an onshore pipeline to carry up to two million tonnes of CO2 from Longannet to the North Sea.

Last month the Energy Technologies Institute (ETI) launched a £3m, two-and-a-half year project involving EDF Energy, E.ON, Rolls-Royce and Petrofac, to create a modelling tool-kit capable of simulating the operation of all aspects of the CCS chain, from capture and transport to storage.

ETI Chief Executive Dr David Clarke believes that “around a third of the UK’s electricity could be generated from coal, gas, biomass or hydrogen turbines fitted with CCS by 2050".

“CCS infrastructure is complex," he says, "and will need to be rolled out rapidly to meet those targets."

The ETI has already announced £29m worth of CCS projects, including a next generation capture demonstration project led by Costain and an appraisal of the UK’s potential storage sites led by Senergy. Scottish Power has had funding to scope out its own projects.

The ETI is also commissioning a project to develop and demonstrate cheaper carbon capture technologies specifically for gas fired power stations. An announcement on who will carry out the work on this project is expected in early 2012.

There are several different types of CCS technology, depending on whether it is retrofitted to an existing plant or intrinsic to a new-build, and depending on the fuel burnt.

Costs can be reduced if the gas is used to help extract more oil and gas from the North Sea fields into which it is pumped. The most optimistic studies put a figure of £150bn on the amount of fuel that could be obtained in this manner.

A new dash for gas is on the way

The Government's proposed Reform of the Electricity Market is unlikely to meet its goal of reaching 15% renewable electricity in the UK by 2020 as currently framed, and instead result in a dash for gas which will increase emissions and mean the UK has to buy credits abroad to offset its emissions.

Furthermore, the White Paper says that any plant that ends up being equipped with carbon capture and storage (CCS) will be able to turn it off, if having it on means it can't satisfy a peak in demand for power!

The dash for gas revisited

Open Cycle Gas Turbines (OGCT) are the cheapest kind of plant by far, and relatively quick to build. They have half the emissions of coal burning plants and they can fire up quickly to meet peak demands.

A new wave of 'dash for gas', like that in the nineties, will see a slew of these plants built - as long as they operate at a load factor of just under 85% to avoid hitting the level required for Emissions Performance Standard requirements - stipulated in the White Paper - to kick in.

This is especially likely since any plants permitted between now and the point of entry of the EPS level won't ever have to abide by the new limits - the principle known as 'grandfathering' - despite criticism during the earlier consultation that this would encourage the construction of more gas plants.

The modeling in the impact assessment suggests that there will be at least 12GW of new CCGT gas plants built over the next twenty years - greater than the average of 9GW of nuclear power expected but less than the hoped-for 21GW of renewable energy (mostly offshore wind) envisaged.

Most gas is imported and therefore this will reduce our energy security while keeping consumers subject to unpredictable price fluxes, running counter to several of the aims of the EMR.

It could also come from fracking or shale gas, which has higher environmental impact than traditional natural gas.

What's the point of carbon capture and storage?

Another of its aims is also sacrificed to meet the demand for security of supply - using CCS.

The White Paper proposes that a carbon capture and storage (CCS) equipped plant could be able to switch off their capture technology and have a greater net electricity output in order to meet a peak demand, without being penalised for the increase in emissions which could breach the limit set by the EPS (see page 15 of the impact assessment).

This is because, although CCS technology is not yet developed, it is thought that it would have a considerable parasitic load on a power station - around 20%. (This means that it has to generate 20% more power than a plant without CCS, in order to supply the same amount as that plant... very efficient.)

If the loss of that 20% were to mean the lights going out, then the plant can use this 'get out of jail free' card to meet that peak demand - but release a puff of carbon dioxide in the process.

Er, so what is the point of carbon capture and storage?

Carbon capture and storage under question as E.ON pulls out

Energy supplier E-ON has announced that it is abandoning efforts to build a new coal-fired power station at Kingsnorth in Kent, which would have been the first new coal burning electricity generating plant to have been built in the UK for decades.

It was to have been part of the government's carbon capture and storage demonstration programme, one of four such plants which the government hopes to build.

In fact, the only coal project left that is currently still under development using carbon capture and storage (CCS), is one to bolt on the technology onto an existing coal power station at ScottishPower's Longannet plant.

There, it is planned that the captured CO2 would be used in Enhanced Coal-Bed Methane Recovery (allowing methane gas to be recovered from coal seams and the CO2 to be stored).

The government's “market sounding exercise" for three of the four demonstration projects ended on 8 October. The Office of Carbon Capture and Storage is now considering this and will publish its response shortly.

The CCS pilots are in line to receive an estimated £1 billion of government funding, mostly under the EU Funding Mechanism “NER300”. This is a pot of 300 million EU ETS allowances set aside for supporting 8 CCS and 34 renewable energy projects. At current prices, each allowance is worth €15.

E.ON reckoned that even with this subsidy, building the Kingsnorth plant would be uneconomic given “current energy prices".

It said it has not withdrawn its application to build Kingsnorth at some point in the future, possibly as one of the later CCS pilot projects, after 2020.

Environmental campaigners are claiming this as a victory. Greenpeace, in a statement, said, “It does underline that right now the economics for new coal simply don’t stack up.

“But we need to make sure the future of dirty coal plants is dictated by climate and energy security needs, not simply the prevailing economic winds.

“That’s why Osborne’s promised Green Investment Bank is so important, and why we need it to be accompanied by tough new rules to put a legal limit on pollution from power stations."

Greenpeace is concerned that three later, second tranche, CCS demonstration plants, which are in line for funding via a "CCS levy" on energy bills, could result in new coal plants being built that only capture around a quarter of their carbon emissions.

But the Government has said it is committed that no new coal-fired power stations will be built without CCS, and emission performance standards. Climate Change Minister Gregory Barker told Parliament last Tuesday that he is working with his Scottish counterparts "to establish an emissions performance standard that would prevent coal-fired power stations being built without the provision of Carbon Capture and Storage (CCS) to enable them to comply with our Emissions Performance Standard (EPS)".

Unlike the first of the four projects in the CCS competition, these three second tranche ones will not receive direct government funding.

CCS is not cheap. A project in Norway, the Mongstad CCS centre, has seen costs rise from an original projection of $700 million to $1.02 billion, Reuters reported at the end of September.

Another recent report, from the Wuppertal Institute, said that with renewables prices coming down, it will be cheaper to invest in these and phase out fossil-burning plants, than in the still technically uncertain CCS.

Carbon capture and storage is an end-of-pipe dream

The Government is basing its enthusiasm for new coal-burning power stations on the notion of retrofitting CCS (carbon capture and storage) in the future once the technology is developed.

But is this feasible?

"Even the most optimistic proponent of CCS would not envisage any demonstration plant to be operational much before 2015, which would put wide-scale deployment as far away as 2020 or later after lessons from the pilot have been learned and digested," says a submission from The Royal Academy of Engineering to the House of Commons Environmental Audit Committee (EAC).

In July the EAC published its examination of CCS and found it to be a pipe dream. In fact, an end-of-pipe dream. It estimates that the cost of building the first CCS plant could be anything up to £500m, on top of the £1bn cost of a new coal-fired power station. Retrofitting CCS at a station like Kingsnorth is likely to cost over £1.1bn. This is a huge figure by any standard, and would have a massive impact on energy prices.

The EAC urges: "We cannot emphasise strongly enough that the possibility of CCS should not be used as a fig leaf to give unabated coal-fired power stations an appearance of environmental acceptability." Furthermore, "Replacing old coal-fired power stations with new ones, rather than using alternative energy sources, locks Britain in to a high level of emissions for many years to come."

Hutton has said that a high carbon price under the EU-ETS will mean that CCS-retrofitting so-called 'CCS-ready' new power stations becomes economical. The EAC slams this notion on three counts:

1. Lack of knowledge of the technology: since the eventual nature of CCS technology is currently unknown, how can a plant built now be designed to have the technology retro-fitted on?

2. Carbon emissions: "The EU ETS is a mechanism designed to reduce emissions; using it as a cover for choosing high emissions technology goes against the purpose of the scheme."

3. The price per tonne of CO2 for retrofitting CCS required to make it commercially viable is unfeasibly high: estimates of this vary from the rather optimistic €40 (E.ON UK) to €90-155 per tonne (Climate Change Capital) and €70-100 per tonne (UK Energy Research Centre). How much it will really be is anybody's guess, but the Government cites an EU estimate of a forward price of carbon of €39 for 2013-2020 (EU-ETS Phase 3). The UK Energy Research Centre predicts around €30. The EAC concludes from this: "the gap between the carbon price and the cost of CCS is enormous".

The EAC concludes: "Coal should be seen as the last resort, even with the promise of CCS."

[Sources available in the EAC report on CCS].

Legal challenge to ETS mooted

In the first phase of the EU's Emissions Trading System, permits to burn fossil fuels were given away to 5,000 of the EU's biggest polluters.

At one point, the price of permits rose to €27 per tonne, making the whole distribution worth €177 billion.

This inflated their profits and enabled them to out-compete cleaner, less energy-hungry firms. It also encouraged them to lobby in the manner described in Dire Threat to EU renewables.

If, instead, the emissions permits had been given to every EU resident, we could each have been better off by up to €280 a year.

Some campaigners are currently considering whetehr to mount a legal objection to this, on the grounds that the energy companies operated as a cartel, and that the emissions were part of 'the commons' belonging to all EU citizens, who had effectively paid for it through their energy bills.

Although it's a case of bolting the stable door after the horse has run off, the point of the challenge would be to raise awareness of the rip-off and challenge the companies' hegemony.

The only two policies that have a chance to see us through the climate change crisis are not the ETS or carbon capture and storage, but feed-in tarriffs and cap-and-share (or TEQs).