The UK government has decided that CCU projects should not be eligible for early rounds of industrial CCS projects support contracts. This looks like the right decision.
Carbon capture and use (CCU) is an appealing concept in some respects. Carbon capture and storage (CCS) adds the costs of transport and geological storage to the costs of capture. In contrast, CCU is intended to make captured CO2 a valuable product, replacing costs with a revenue stream. The main use of captured CO2 to date has been for enhanced oil recovery (EOR) in North America. In the UK, including there is a range of potential applications including making building materials, lime, food and drink and e-fuels. CCU may be particularly attractive for capture sites away from large industrial clusters that have limited access to transport and storage.
Some CCU projects, for example, aggregates manufacture, result in the permanent abatement of CO2, where the carbon is permanently stored in the product and not subsequently released. However many CCU projects, including food and drink and e-fuels, lead to only the temporary abatement of CO2, as the carbon is ultimately emitted to the atmosphere. The latter are not compatible with reaching net zero emissions. EOR also leads to new emissions. The CO2 injected into the reservoir to drive out additional oil stays there, or can be almost completely recovered and reinjected. However the additional oil recovered will typically be burnt without capture, creating additional emissions (although this may only displace other oil).
CCS and CCU are intended to play a role in the UK reaching net zero. In this context, the UK government has envisaged supporting CCU when it results in the permanent abatement of CO2 emissions, excluding use where CO2 eventually returned to the atmosphere.
However further work has led the government to conclude that, although some forms of funding may be available to CCU, only CCS projects will be eligible for support under the industrial carbon capture business model, which provides support contracts for projects[i].
They give three reasons for this.
The need to gather more evidence
They suggest that further evidence is needed on the market potential and costs of CCU to understand what barriers the market faces, the detailed technical application of CCU, the technological and commercial readiness, and the economic potential of CCU. They note that until these issues are understood, there will be uncertainty over what form of government support is the most suitable for CCU projects.
Additional commercial and technical complexity
The application of CCU could involve additional commercial and technical complexities to the business model that would need to be worked through in detail before support is provided. For example, the business model would need to take into account a number of considerations specific to CCU projects, including the revenues gained if the CO2 captured is sold, and monitoring the end-use of CO2 to ensure the captured carbon is permanently abated.
Prioritising support for the deployment of CCS
There is a focus on incentivising large-scale abatement of CO2 and the establishment of transport and storage infrastructure essential for net zero. CCU resulting in the permanent abatement of CO2 potentially represents only a very small abatement potential when compared to CCS.
Essentially the overall view is an argument that:
- Only CCU projects that result in CO2 being kept permanently out of the atmosphere should be eligible for support
- These are too small as a proportion of total emissions to merit the additional effort and complexity they would lead to at the moment.
Both these arguments seem sound. The first point will always apply. On the second, those CCU projects which include permanent abatement may be worthwhile at a later date. But for now the focus should be on getting large scale CCS projects built.
Adam Whitmore – 23rd November 2021