UK’s Half a Trillion Splurge For Carbon Capture
We are all now well aware of UK Secretary of State for Energy, Ed Miliband’s plan to waste £22 billion of taxpayers’ money on carbon capture schemes. Even though it will be spread over two decades, it is still a lot of money.
But alarmingly it is just the tip of the iceberg, as the Telegraph reported this week:
Miliband has already pledged £22bn to CCS projects. Most of this will be added to consumer bills, with the rest from taxpayers, roughly equating to £800 per UK household, albeit spread over two decades.
But far more will be needed.
Some economists suggest Britain will have to spend £400bn between now and 2050 to build and run a working CCS industry.
The question is, can a country already facing the world’s highest electricity bills cope with yet more costs, despite the potential benefits?
The Telegraph fails to point out what those mysterious “benefits” might be! But it was right to draw attention to the unbelievably high costs of carbon capture, which the government is desperate to keep hidden away from the public. The costs quoted are derived from the Climate Change Committee, who notoriously tend to understate costs.
Some of that £400 billion will not be spent for many years yet, maybe not until the 2040s, when Direct Air Carbon Capture will be essential for removing the carbon dioxide from hard to decarbonise sources.
But worryingly a recent study by the Institute for Energy Economics and Financial Analysis has found that the government is already budgeting to spend up to £50 billion just to support existing projects in the pipeline, known as Track-1 and 2. In fact, it is worse than that, because these costs are at 2021 prices, so we are looking about £60 billion at current prices, to instal and operate CCS infrastructure. All of this is, of course, on a process that is still unproven commercially at scale anywhere in the world.
Of that £50 billion, £22 billion has already been allocated to a CCGT gas power station fitted with carbon capture (CCGT/CCS) on Teeside, a transfer and storage facility in the North Sea and another in Liverpool Bay.
However, these initial projects will only capture an estimated 2 million tonnes a year of CO2, out of the UK’s total emissions of about 300 million tonnes. The official target for Track-1 schemes is 6 million tonnes. Consequently, the Department for Energy Security and Net Zero, DESNZ, is already actively considering other CCGT/CCS projects, including Stallingborough, Pembroke and Staythorpe, all of which could be operational by the early 2030s.
DESNZ has already earmarked a subsidy budget of £30 billion for CCGT/CCS projects, of which £10 billion has already been allocated to the Teeside project. These subsidy payments cover the capital costs and the costs of paying fees to the transfer and storage facility to pipe the carbon dioxide away under the sea.
Another pot of money, totalling £13 billion has already been set aside for the two transfer facilities mentioned above – HyNet in Liverpool Bay and Northern Endurance Partnership in the North Sea.
On top of that is £8 billion to subsidise industrial users of carbon capture. So, we have a total of £51 billion. Each subsidy scheme is officially logged in the government’s Subsidy Scheme Database – for instance, here.
It is absolutely astonishing that the DESNZ is planning to spend well over £50 billion on schemes that will at best only capture 2% of the UK’s emissions. The National Energy Systems Operator, NESO, has already said we will need thirty Teeside-sized CCGT/CCS plants by 2050. Meanwhile, the Climate Change Committee has projected that the UK will need to capture 73 million tonnes a year by 2050.
As the IEEFA report rather understatedly puts it:
“Collectively £23 billion of subsidies has been assigned to support around 2 MtCO2 of capture per year. This presents a worrying signal around future costs and subsidy requirements, given that the UK’s 2050 CCS target is 73 MtCO2.”
The government insists that these are the likely maximum costs and may be much lower in practice. They hope that these schemes will be commercially viable in the long run, with customers queuing up to buy low carbon power, blue hydrogen and pay to have their carbon dioxide piped away.
However, the real problem is that there is no commercial demand for carbon capture. The whole thing has no actual, tangible benefit – so why pay for it?
The IEEFA, who actually want carbon capture to succeed, say the only solution is to force businesses to choose carbon capture by making the alternatives even more expensive. This could only be done by raising the existing carbon tax to astronomic levels.
In other words, the public end up paying the cost either way. If these projects are subsidised, we pay via higher taxes and energy bills. And if carbon taxes rise, we pay higher energy bills and prices for everything we buy.
There is no magic-money tree, which can mysteriously disappear these hundreds of billions away.
The simple fact is that carbon capture schemes intrinsically make the processes they are attached to inefficient and costly. A gas power station, for instance, will waste a fifth of its electricity generation on powering the CCS unit. On what planet is it sensible to waste a valuable resource such as natural gas in this way?
According to the Telegraph, Kayte O’Neill, the chief operating officer at the National Energy System Operator, shared Miliband’s vision when speaking at last week’s annual conference of the Carbon Capture and Storage Association in London.
“CCS and hydrogen production clearly have a very important role to play,” she told industry leaders.
“As we go towards 2050, you’re talking tens of gigawatts of needs for these technologies on the system, and it’s really important that we can see a trajectory to that.”
But when asked by The Telegraph what adding such a massive amount of green generating capacity might do to bills, O’Neill’s answer was anything but transparent.
“You have to take the question in the round,” she said.
“We do have to think about affordability for consumers today, and tax implications today. But there isn’t a do-nothing option.”
Sorry Kayte, but this is a do-nothing option!
source notalotofpeopleknowthat.wordpress.com
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