Britain’s first carbon capture-and-storage (CCS) projects include a new gas fired power station and plants that make “blue” hydrogen. These are just a few of the eight projects in Teesside and the north chosen by the government for formal funding talks.
A number of CCS projects proposed around the Humber were canceled, which was a major blow to groups like SSE. Projects in Scotland, however, are still waiting for clarity.
The government selected 20 hydrogen projects to receive financial support. These include a series electrolyser plants that can use renewable energy to make “green” hydrogen.
BP, an oil major, was one of the biggest winners. Three projects were selected by BP for funding, including Britain’s first CCS-powered power plant on Teesside. This could produce enough electricity each year to power 1.3million homes. Other BP-led projects were also selected to produce low-carbon blue hydrogen from natural gases with CCS and zero carbon green hydrogen on Teesside.
SSE was one of the companies that missed out. It wanted to build a CCS-powered gas power plant at Keadby, Lincolnshire. This plant, it claims, is the only such plant to have planning permission.
Drax was also not selected for fast-track negotiations to implement its £2 billion plan to capture carbon emissions from its biomass plant in Selby, North Yorkshire. This led to a sharp drop in shares during early trading. The shares recovered and closed at 31 1/2 p (or 5.5%) at 606p. This was after Drax said that it had been invited to start formal discussions over possible financial support.
The UK’s decarbonisation plan includes carbon capture. This involves capturing carbon dioxide emissions from power plants or factories and then using them or permanently storing them under the seabed.
According to the government, it plans to have two “clusters” in operation by the middle 2020s, and two more by 2030. By then, it expects to be capturing 20 to 30 million tonnes of carbon 2 per year. This is equivalent to the annual emissions from 15 million cars. To make these projects feasible, it has committed to funding up to £20billion over the next two decades.
Two clusters were already fast-tracked. The East Coast Cluster plans to capture the emissions from the northeastern and store them inside a saline well in the North Sea. HyNet, on the other hand, aims to capture the emissions from the north and west and store them within disused gas fields in Ireland Sea.
The clusters are still waiting for the government’s decision on which carbon-emitting projects will receive funding to implement the technology. CCS projects selected today will be fast-tracked to “Track 1” projects. Formal funding negotiations are now underway, but the government stated that the final contract award would depend on their value.
The East Coast Cluster will capture both Teesside’s and Humber emissions, but the government has only chosen projects from Teesside. It stated that it would launch later in the year a process for bringing in additional projects within Track 1 clusters by 2030. This would allow the government to select additional emitters, including the Humber.
It also started a process to choose the next two clusters. The initial view of the committee was that the Acorn project, in Scotland, and the Viking project, in the Humber were the “leading contenders”. Acorn was already selected as a Reserve Track 1 Cluster and was hoping to get the go-ahead today.
BP stated that it would make final investment decisions next year on the winning projects. Louise Kingham (BP’s UK Country Head) said that today’s announcement was a significant step forward for these transformative initiatives, which will help drive the low-carbon revolution in the region and achieve the UK’s zero-carbon targets.
The blue hydrogen plant that Essar proposed for the northwest, which is also the Stanlow refinery’s operator, was one of the other winners. Director of Essar Capital Prashant Ruia said that he was grateful to the UK government for supporting his investment. This allows us to confidently proceed with our Essar Energy Transformation plans to build a premier hub for energy transition in the northwest, anchored around the Stanlow Refinery.
Alistair Phillips Davies, chief executive of SSE, stated that “While the Humber was not selected to be among the first CCS project to progress, we stand prepared to invest and will collaborate with government to get shovels into the ground as soon as possible.”
SSE is also involved with the proposed Scottish CCS cluster. Phillips-Davies stated that it was crucial to clarify the timescales for the Humber, the northeast of Scotland and other areas if the UK wants to fulfill its climate commitments as well as increase energy independence.
Drax’s proposed bioenergy plant with carbon capture and stock (Beccs), was not selected for Track 1 negotiations, but it had passed an initial assessment. The government stated that it would continue to engage with the project.
Drax stated that it was invited to immediately enter formal bilateral talks with the government to help move the project forward.
Drax chief executive Will Gardiner stated that delivery of Beccs (bioenergy with CCS) will help the UK reach its net-zero targets. It will also create thousands of jobs in the north and ensure the UK’s long term energy security. To move our project forward, we will immediately engage in formal discussions with the government. Drax is ready to move our PS2 billion investment program and deliver this crucial project for the UK by 2030 if there is government engagement and quick decision-making.