The UK government needs to refine its approach to funding allocation, accelerate delivery of carbon markets and deploy public finance through GB Energy and the National Wealth Fund, according to a new report from the Carbon Capture and Storage Association (CCSA).
The CCSA is a UK-based industry association for accelerating the commercial deployment of carbon capture, utilisation and storage (CCUS). It represents the interests of companies and organisations seeking to develop commercial-scale CCUS projects.
The three recommendations were cited in the “Driving cost reductions and value for money in CCUS” report, putting the case for how to bring down costs in the near term.
For a new industry such as CCUS, costs are wide-ranging, spanning research and development, capital expenditure and operational costs.
The main cost drivers for project deployment are risk allocation in supply chain contracting; cliff-edge payment suspensions under capture business models; and uncertainty and delays in permitting and planning, which means projects can face up to three-year lead times.
From a policy and market framework, the report noted how costs are rising due to a lack of predictable carbon prices, barriers to full value chain collaboration, and also uncertainty in the negative emissions market, which facilitates the trading of credits for removing carbon dioxide (CO2) from the atmosphere.
Andrew White, Director Energy Strategy for the global business consultancy KPMG, which compiled the report, said, “First and foremost, if CCUS is going to play [a] fundamental role in decarbonising our economy, we need a long-term pathway towards full scale commercialisation. And, ultimately, as set out in the vision, a sort of subsidy-free, competitive market.”
In the near and medium term, White noted that the industry would still rely upon support from governments to enable deployment to happen.
“Innovation doesn’t happen in one big bang. It happens incrementally, as we learn more, so what we really need to see is different parts of the industry getting experience of constructing, deploying and operating these assets.”
White said that providing near, medium and long-term certainty to the industry was fundamentally important in making sure that supply chains can right-size early for economies of scale.
