In his presentation Matthew gave an update on the Government’s CCS policy, with a focus on the Scoping Document which was published by DECC in August 2014 and is open to views and contributions from stakeholders until 23rd October.
The Scoping Document is intended to provide industry with an indication of the Government’s plans to support the deployment of CCS. During the development of a new technology, it is possible to identify three different phases, which are:
The first phase consists in the development of first-of-a-kind (FOAK) commercial scale projects (White Rose, Peterhead). This is because it is the Government’s belief that the quickest and most effective way to reduce CCS cost is to support the development of FOAK projects.
The second phase represents the transition between the heavily state-supported Phase 1 and the cost-competitive Phase 3. The effort is focused on reducing the costs from FOAK to market-competitive projects. The analyses carried out show that the most effective way to reduce CCS cost is investment and effective use of shared transport and storage infrastructures.
In the third phase CCS projects are supposed to be able to compete in the market with other low carbon technologies. The final aim is to have a pool of low carbon technologies competing on price providing cheap and clean energy for the final consumer. In its high-CCS scenario, the Government expects to have 13 GW of CCS-equipped power generation installed by 2030.
The two projects that have been taken forward into the FEED phase are White Rose (capture of 90% of carbon dioxide produced by a new high-efficiency coal fired power station and its storage in a saline formation in the Southern North Sea seabed) and Peterhead (capture of 85% of CO2 from one of three existing turbines in the Peterhead gas fired power station). During Phase 1 these projects benefit from state-support for FEED development cost as well as for construction costs and support during operation (in terms of Contract for Difference, CfD). Thanks to the cost savings expected to take place during the second phase, Phase 3 projects are expected to be competitive without state support, with the exception of CfD.