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Oxburgh’s CCS Illusion

September 12, 2016

By Paul Homewood




Ambrose Evans-Pritchard writes:


A high-level Parliamentary inquiry has called for a massive national investment in carbon capture to revive depressed regions of the North and exploit Britain’s perfectly-placed network of offshore pipelines and depleted wells.

Lord Oxburgh’s cross-party report to the Government has concluded that the cheapest way to lower CO2 emissions from heavy industries and heating is to extract the carbon with filters and store it in the North Sea oil.

The advisory group said the technology for carbon capture and storage (CCS) is ready to go immediately and should cut costs below £85 per megawatt hour by the late 2020s if launched with sufficient conviction and on a large scale, below the strike price for the Hinkley Point nuclear project.

It could be fitted on to existing gas plants or be purpose-built in new projects, and could ultimately save up £5bn a year compared to other strategies. Unlike other renewables CCS does not alter with the weather or suffer from intermittency. It can be “dispatched” at any time, helping to balance peaks and troughs in power demand.

“I have been surprised myself at the absolutely central role that CCS has to play across the UK economy,” said Lord Oxburgh, a former chairman of Shell Transport and Trading.

“We can dramatically reduce our CO2 emissions, create tens of thousands of jobs, and give our domestic industry a great stimulus by making use of technologies which are now well understood and fully proved,” he said.

No other country is likely to take the plunge first since few have the magic mix of industrial hubs, teams of offshore service specialists, and cheap, well-mapped, sea storage sites all so close together. “CCS technology and its supply chain are fit for purpose. There is no justification for delay,” says the report, to be released today.

Lord Oxburgh said the state must take the lead and establish the basic infrastructure in the early years.

The report called for a government delivery company modelled on Crossrail, or the Olympics Authority, taking advantage of rock-bottom borrowing costs. It could be privatised later once the CCS has come of age.

The economic calculus of CCS is sophisticated. There is no avoiding the fact roughly 18pc of the power from gas or coal is lost in the process, the so-called “parasitic load”. The technology is not viable today without subsidies, given that carbon prices in Europe are barely $5 a tonne.

But the COP21 climate deal agreed in Paris implies a ratchet effect of higher carbon penalties for the next half century. The equation will look very different at $50 a tonne; at $100 the storage sites will be worth more than fossil fuels. Countries able to dispose of CO2 most effectively may become the new masters of the energy world.

Other renewables have a 20-year head start on CCS technology. Advocates say costs would plummet once there was a concerted push. Managers of the world’s first utility scale CCS plant at Boundary Dam in Canada say they could shave 30pc off the next plant.

For the industrial hub of Teesside – once home to the world’s greatest iron works, and now reeling from the loss of the Redcar steel plant – it may mean the difference between regeneration and slow death. The valley hosts 58pc of Britain’s chemical industry and five of the UK’s top 25 CO2-emitting plants. CCS could ultimately help it to leapfrog rivals with the cheapest decarbonised energy in Europe, and reclaim some of its former glory.

The initial outlay for the state body would be £200m to £300m spread over four years, with a second body exploring how to decarbonise heat. An earlier study for the Government concluded that the total capital costs for transport and storage for all sites would be £4.4bn, with an offshore lifetime of 40 years.

The push for CSS divides green activists. Some fear the stored CO2 may leak and cause further acidification of the oceans. “Rather than being a solution, it risks perpetuating the problem,” says Friends of the Earth.


The full Oxburgh report is here.


There are a number of points:


1) The covering letter to the report states:

I have had a long association with CCS and the CCS industry as do many members of the group. However, after so many false starts I began this study, as I know a number of my colleagues did, quite prepared to advise you to write-off CCS as a part of UK energy policy. As you will see, our report recommends the opposite of this.

An uncharitable person would perhaps come to the opposite conclusion – that their closeness to the CCS industry has biased the report’s findings.


2) Amongst the members of the Group is Bryony Worthington, formerly of Friends of the Earth. Can she really be a suitable member?


3) None of the Group members appears to have had any industrial experience, especially energy intensive industries which will be heavily affected by high energy prices and regulation.


4) Even AEP admits that CCS comes with a price. But then goes on to repeat earlier claims that Paris will result in higher carbon penalties.

The economic calculus of CCS is sophisticated. There is no avoiding the fact roughly 18pc of the power from gas or coal is lost in the process, the so-called “parasitic load”. The technology is not viable today without subsidies, given that carbon prices in Europe are barely $5 a tonne.

But the COP21 climate deal agreed in Paris implies a ratchet effect of higher carbon penalties for the next half century. The equation will look very different at $50 a tonne; at $100 the storage sites will be worth more than fossil fuels. Countries able to dispose of CO2 most effectively may become the new masters of the energy world.

As we already know, CO2 emissions will continue to rise sharply in China, India and the rest of the developing world, at least until 2030. There is simply no way that China and co will then agree to hamstring all of this CO2 intensive power with carbon taxes.


5) The essence of the report’s recommendations is that work on developing CCS power stations and the transport and storage network will be undertaken by a state owned company, the CCS Delivery Company or CCSDC.

A budget of up to £300 million will be required, but this does not include construction work. It purely covers design and planning work.

There is still no guarantee, even after this stage, that billions won’t be poured down the drain building CCS systems that don’t work.


6) Even if everything goes to plan, the report still estimates that power from CCS fitted plants will still cost £85/MWh, twice the current price.

This is claimed to be economic, because it is cheaper than nuclear or offshore wind power.

It is recommended that the price the CCSDC can charge is capped at £85/MWh. But can you honestly see a state owned company, effectively a monopoly, not charging more if it is losing money?

It sounds to me like an open cheque book.


7) One particularly pernicious recommendation is for a CCS Obligation System:




So when you fill your car up, you will also have to pay for CCS certificates. Industry of course will be hit even harder.




The bottom line in all of this is that we should plough on with CCS in the hope that, someday, it might actually be commercially viable. In the meantime, it is not clear whether Lord Oxburgh and co believe we should carry on building offshore wind farms, solar farms or Hinkley Point.

If we do, we simply end up with far too much capacity. And if we don’t, pray tell me where we will get our power from in 2030? 


And one final thing. 


There is a very interesting graph in the report:




Just to emphasise, the red curve is the equivalent electricity demand for heat, (presumably on top of the actual electricity demand). Most heating is currently supplied by natural gas.

It is well recognised that, if heating is decarbonised, electricity consumption will rise. Figures of around 30% are sometimes estimated.

But average figures, such as this, don’t take into account the effect on peak demand. What this graph shows is that we could need more than 300GW of electricity capacity for those peak periods in winter, compared to the approximate 60GW which we currently have.

To pretend that we could ever have 300GW of dispatchable capacity is simply pie in the sky.

  1. AlecM permalink
    September 12, 2016 1:38 pm

    The Man’s a Fool, in reality representing the carbon traders.

    CCS is a dead duck: declaration – I was a pioneer of the technology.

    • Paddy permalink
      September 13, 2016 6:45 am

      Actually, the man is a charlatan of the highest order, and a snake oil salesman to boot.

  2. September 12, 2016 1:42 pm

    Ah Lord “Oxbung”.
    That ever faithful “safe pair of hands who “played a blinder” investigating UEA and finding nothing of note.
    And we are supposed to believe this purveyor of smoke and mirrors?

    • Harry Passfield permalink
      September 12, 2016 7:59 pm

      Don, is he the guy who, on investigating UEA/CRU never managed to question Phil Jones?

  3. CheshireRed permalink
    September 12, 2016 2:37 pm

    So we pay tens of billions for a system that doesn’t yet exist (!) and even if it did (given the UK’s tiny 2% contribution to man made CO2) would have NO measurable impact on earth’s temperature. Sounds like a plan!

  4. September 12, 2016 2:41 pm

    £85/MWh is not “cheaper than nuclear … power”. Current UK nuclear power, made by 14 AGR and 1 PWR reactor, is much cheaper than £85/MWh. The Hinkley contract for difference covers the first 35 years. After that, Hinkley must compete with the market. CCS contracts for difference will never fall in price. In fact prices might rise because there’s a limited number of locations at which carbon can be theoretically captured. Within a decade, we could see far cheaper nuclear power. Canadians Terrestrial Energy now have Duke Energy on their board, who are one of the biggest electricity suppliers in the USA. Their non-greenhouse gas energy is in development and backed by commercial money. No need to throw government money at non solutions like CCS, the market wants nothing to do with. Terrestrial Energy plan their molten salt reactor to be competitive with current, low, fossil fuel prices. I’m not dead against CCS on principle. I’m a practical person. Let someone show a working prototype and I’ll have far more confidence in it.

    • It doesn't add up... permalink
      September 12, 2016 6:54 pm

      Stuff Hinkley. How about Moorside?

      That’s supposed to be 3.8GW for £10bn – less than half Hinkley’s 3.2GGW for £18bn before overruns and delays in capital cost per GWe. Moreover, with the South Koreans expressing an interest and being the builders of the most cost efficient capacity at the moment using well established designs, things may be looking up for nuclear.

      • September 12, 2016 9:07 pm

        Moorside reactors are Westinghouse AP1000. The first AP1000, at Sanmen China, should be operating any day now, delivering to the grid. At least we’ll be able to see what we’re getting before we splash the cash. Final electricity costs depend hugely on discount rate of borrowing, and the proportion of cost the consortia need to borrow. Let’s hope we can negotiate this better than at Hinkley. I much prefer the AP1000. Simpler, more elegant, no useless boondongles.

  5. September 12, 2016 2:51 pm

    Oxborough, or whatever his proper name used to be, also stated on the Beeb this morning that “there is at least a dozen commercially viable CCS plants throughout the world already” operating. Does anyone know where they are? Who they are?

    How do they manage this without subsidies – because surely one as wise as he would not classify a subsidised company as economically viable would he? Or would he? After all wind farms, solar farms et al mostly farm subsidies rather then wind or sunshine.

  6. Derek Buxton permalink
    September 12, 2016 3:04 pm

    However he talks, there is no getting away from the fact that CCS adds cost. I suspect that pumping it into pipes or oil wells is not as easy as he thinks, neither scientist nor engineer. Pressures in the deep sea are high, I have had experience with 100:1 ratio pneumatic pumps and that was only to pump lubricant down the long string to the bottom, gas is compressible, liquids are not.

  7. September 12, 2016 3:13 pm

    Wonderful to be able to claim lower costs than anyone else for a technology that is still at the early design stage. The Trident cost estimate and other major projects, such as the ill-fated EdeF nuclear reactor, always increase due to the unknown-unknowns, except for this one: but whose money are they gambling with?

    The authors mention that only the USA is throwing millions at this; it is a dead parrot in Europe and should certainly stay that way. If the government has millions to spend speculatively, I could think of many more useful gambles that would have more chance of working.

  8. September 12, 2016 3:55 pm

    I suspect that the “lowest-cost” claim here is simply that CCS might be a bit cheaper than the ludicrously expensive wind and solar electricity, which are currently not so much of a problem for consumers simply because they produce tiny amounts. UK electricity is still (but barely) affordable because most of it comes from gas, and old coal and nuclear plants which long ago paid off their construction costs.

    CCS + wind + solar, if generating 100% of UK electricity would probably roughly treble current UK electricity costs.

  9. John F. Hultquist permalink
    September 12, 2016 4:03 pm

    Carbon Capture and Storage (CC&S; CCS) is a “smoke & mirrors” technology right up there with advanced biofuels** as a scheme to lighten your wallet.
    Always ask where the money comes from and to whom does it flow?
    Always ask how much this technology will lower the temperature?
    Always ask about the opportunity costs?

    **Read some of the history here:

  10. CheshireRed permalink
    September 12, 2016 4:40 pm

    They’re talking of using an ‘Olympic-style delivery authority’. Would that be the London Olympics that was several billion over budget?

  11. Russ Wood permalink
    September 12, 2016 4:56 pm

    Anyone even THINKING of CCS ought to have a big sign on their wall: “Remember Lake Nyos!”. And taking Murphy’s Law into account, any successful storage of CO2 in quantity is going to leak sometime.

  12. Joe Public permalink
    September 12, 2016 5:08 pm

    Decarbonising heat:

    A reminder that besides ……

    “What this graph shows is that we could need more than 300GW of electricity capacity for those peak periods in winter, compared to the approximate 60GW which we currently have.”

    … 2015 GB gas demand was 880TWh vs ~334TWh for power demand; and, only 20% of the gas demand was by gas fired power stations.

  13. Billy Liar permalink
    September 12, 2016 5:47 pm

    In my view, 2010, to emphasise potential savings from improved insulation, is a blatant cherry pick.

    2010 was the coldest year since 1986 in the CET and to find a year more that 0.1C colder than 2010 you have to go back to 1963.

    I haven’t read the full report: do they mention the programme to build the capacity to cover for the loss of 18% of generation in parasite power?

    • It doesn't add up... permalink
      September 12, 2016 7:25 pm

      They conveniently ignore the cost of their insulation proposals, never mind the other impacts (such as making already tiny rooms in British homes even smaller). Most of their proposals have payback periods of thirty years and more – before considering an interest charge on the investment required. Almost for sure the insulation will require replacement before it has paid for itself.

  14. Billy Liar permalink
    September 12, 2016 5:57 pm

    I’ve now read the report. It is glib, full of assertion and totally unbelievable. Lord Oxbung is obviously unreconstructed Old Labour in believing that only nationalised CCS can possibly work.

  15. It doesn't add up... permalink
    September 12, 2016 8:01 pm

    We should remember that Lord O was intimately involved in the Peterhead CCS scheme for which engineering studies were started by some of the otherwise redundant Shell engineers and financed by Ed Davey

    before being cancelled by Osborne

    • Gerry, England permalink
      September 13, 2016 12:58 pm

      As a Shell shareholder I was concerned when they got involved in this but happily they ditched it as soon as the taxpayer cash stopped. You couldn’t help but laugh at the statement released saying it was such a shame that this great project was closing as it was a very good prospect for profit – except not at Shell or indeed anyway else.

  16. September 12, 2016 8:04 pm

    Have read the report and visited the fancy website of the Carbon Capture and Storage group. It is frightening how much power and influence the CCC has as the clear under-writers of this report and the lies in the report are beyond belief.

    The UK Government needs to spend a fortune setting up new bodies to develop and implement the technology they say, then they say that the technology is proven in 15 large-scale CCS projects, with 7 under construction: so that “there is no need for proof of the technical concept”. This is such an obvious contradiction that one wonders at their low cunning! If it were so well proven, we could buy the technology (or a licence anyway) and would need no fancy control and implementation bodies to be created.

    The cost estimate is passed-over by claiming it is by Mott Macdonald (MM) and therefore safe. I bet MM would not guarantee this price in any meaningful way: in fact no-one can cost a developing technology accurately.

    At its simplest this is a proposal to further damage UK competitiveness and finalise the demise of heavy industry. It would make a lot more sense to grow trees then bury the trunks and capture a lot more carbon in a solid form!

  17. CheshireRed permalink
    September 12, 2016 8:46 pm

    This is a reheat of the 2006 Stern Review and for similar reasons. Just as Stern cleared the way for the insane CC Act 2008, so too is this report designed to both close down any debate and justify the governments decision to go for CCS. ‘Any questions or objections? See the Oxburgh report.’ That’s the case for CCS in one sentence. I sincerely hope Mrs May doesn’t fall for this relentlessly shite policy.

  18. Vernon E permalink
    September 13, 2016 11:41 am

    Can anyone please tell me how carbon dioxide can be “filtered” out of a mixed gas stream? As far as I know the only ways to remove CO2 is by amine absorption (inefficient, polluting) or by de-riming (chilling) as in air separation (small scale only).

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