Carbon capture can drive a 21st century revival of British industry (What’s left of it!)
By Paul Homewood
AEP finishes his series on energy policy with a long, rambling piece on carbon capture and storage. I won’t bother repeating it all, but here is the gist:
Renaissance beckons for the once great industrial hubs of northern England and Scotland, and the unexpected catalyst may be stringent global climate controls.
What looks at first sight like an economic threat could instead play elegantly to Britain’s competitive advantage, for almost no other country on earth is so well-placed to combine energy-intensive manufacturing with carbon capture at a viable cost.
The industrial clusters of the Tees Valley and the Humber are linked by a network of pipelines to depleted and well-mapped oil and gas fields in the North Sea, offering rare access to infrastructure for carbon storage deep underground.
Liverpool has old wells of its own offshore in the Irish sea. Scotland’s heavy industry in Grangemouth and the Forth have feeder pipelines to the Golden Eye.
Such sites may not be worth much today – with carbon prices in Europe too low to matter at barely $5 a tonne – but the COP21 climate deal agreed in Paris last December transforms the long-term calculus.
It implies a tightening regime of higher carbon penalties for the next half century, ending in net zero CO2 emissions. Once prices approach $50 a tonne the equation changes. Beyond $100 it inverts the pyramid of energy wealth: profits accrue to those with access to the cheapest low carbon power.
The drastic implications of COP21 are still sinking in. A maximum ‘carbon budget’ of 3,000 gigatonnes – deemed necessary to stop temperatures rising more than 2 degrees Celsius above pre-industrial levels – may mean zero emissions from the power sector by mid-century.
"There are areas like farming and aircraft travel where it is tougher to drive down emissions, so other areas will have to go negative to meet the target," said prof Gibbins. The term ‘negative’ is confusing but it essentially means combining CCS with bioenergy.
The accord was signed by 195 countries, led by the US and China. It makes no difference whether you accept the hypothesis of man-made global warming. The deal constitutes the political will of the world, and will be legally-binding in the sense that each state transposes its commitments into domestic law.
It is possible that Donald Trump will be elected US president and that the global consensus will unravel. But Britain cannot make strategic plans based on what a putative President Trump might or might not do, and I write this article on the assumption that COP21 will remain the global framework.
I hate to spoil his party, but here are a few inconvenient facts:
1) CCS does not work on any viable or commercial scale, as even Greenpeace admit. This does not mean it never will, but we clearly should not be setting energy policy or spending billions of pounds on something that may or may not happen in decades time.
2) Even if technical problems could be overcome, the use of CCS would add considerably to the cost of power. The Committee on Climate Change estimates that the cost could be between £95 and £138/MWh in ten years time.
3) AEP steps around this “slight problem” by imagining that the world will introduce punitive carbon taxes, that will make CCS cheap by comparison. He has history here. For instance, in May last year, he was forecasting that “It is a fair bet that world leaders will agree this year to impose a draconian “tax” on carbon emissions that entirely changes the financial calculus for coal, oil, and gas, and may ultimately devalue much of their asset base to zero. “
4) As we know, all that COP21 achieved was to kick the can down the road for another couple of decades. The idea that the deal constitutes the political will of the world, and will be legally-binding in the sense that each state transposes its commitments into domestic law, or that there will be a maximum ‘carbon budget’ of 3,000 gigatonnes – deemed necessary to stop temperatures rising more than 2 degrees Celsius above pre-industrial levels – meaning zero emissions from the power sector by mid-century, are frankly ludicrous.
No future Chinese President will allow himself to be tied by agreements currently made by Xi Jinping, and certainly not if they damage China’s economy or competitiveness. Chinese politics simply does not work that way. Ditto India and the rest of the developing world.
As AEP himself points out, most countries don’t have convenient oil fields nearby to pipe CO2 to. Will China agree to a CO2 tax which effectively cripples their coal based industry? Of course not!
5) It is interesting that proponents of renewable energy, including AEP himself, always complain about the pollution put out by fossil fuel power stations (real, not CO2). Yet they seem quite relaxed about the same pollution emitted when CCS is involved.
6) He eloquently describes Teeside’s industrial history, apparently still home to 58% of Britain’s chemical industry. He goes on to say:
But its Achilees Heel is the cost of power. Five of the UK’s top 25 CO2 emitting plants are packed together between Darlington and the mouth of the North Sea.
Perhaps he might ask himself how much of this will be left in a few years time, if the ruinous Climate Change Act is allowed to continue. Whether CCS ever arrives or not, it is likely that Britain’s industrial heartlands will have no heavy industry left to take advantage of it.
It is ironic that AEP has spent all the last week proposing hugely expensive alternatives to conventional power, which will end up causing untold damage to British industry, but now claims to be concerned about the great industrial hubs. And all in the naive belief that the rest of the world will join us in the race to the bottom.
If he wants to take out his crystal ball and imagine what our economy might look like in 50 years time, then fine. But it should not be confused with reality.