A GOOD DEAL BUT COULD DO
BETTER?
Pilita Clarke in the FT of 19th
April (yesterday) discusses fuel burn at Drax, and the offer of Britain’s
largest power station, and biggest emitter of carbon dioxide, to reduce
emissions in exchange for continuing subsidy.
The figures are interesting. If we can assume with confidence that the
wood pellets imported from the US are indeed carbon neutral, admittedly a big
assumption, then this looks like a good value short term fix to reduce UK
carbon emissions. But the story does not end there. If the biofuel supply provision
can be made to work in an environmentally friendly (ie carbon neutral) way, Drax
could be at the forefront of UK efforts to move towards a “net zero” carbon
economy, something that the Government has promised in the wake of Paris.
At full output Drax is capable
of burning nearly 10 million tonnes of coal a year. Very approximately this is likely to equate to
about 25 million tonnes of CO2 emissions. If the FT figures are correct, and
with a few other significant assumptions, then the 2015 subsidy, if it relates
to 50% of Drax output, may have reduced UK emissions by around 12.5 million
tonnes at a cost of around £450 million.
In other words the implied cost of CO2 reduction is about £36/ tonne.
This is prima facie below even
relatively conservative estimates of the long term damage caused by carbon
emissions, for example those published in the 2011 Treasury guidelines, and
looks to be below most estimates of the carbon price at which alternatives such
as nuclear energy become viable on a long term perspective (ignoring for the
moment the trials of Hinckley Point). So prima facie this looks like a good
deal and a sensible deployment by the government of its own cost benefit analysis.
But the bigger picture is also
important. Post Paris, the government committed to a zero carbon strategy for
the long term. De facto this implies a
substantial removal of CO2 from the atmosphere, and the only viable route to this
currently on the horizon is the burning of biomass, as at Drax, combined with
carbon capture (CCS).
Prior to the November cancellation, itself a contravention of the government’s election promises, of
funding for CCS, Drax had been engaged in substantial planning to deploy carbon capture and
construct a pipeline for its eventual storage in the North Sea. Those plans are
now on hold. In terms of current prices, CCS requires additional primary energy
input, so the notional cost of CO2 sequestration will rise above the £36/ tonne quoted above. But then so will the urgency of CO2 sequestration,
and our collective willingness to pay.
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