IN DEFENCE OF CARBON CAPTURE AND STORAGE

I am not an expert on CCS, and prepared to be agnostic. Also I usually have a lot of time for George Monbiot, but this week I was puzzled by his vitriolic attack on carbon capture proposals, backed up by a number of Guardian readers. 

 

Both the IPCC and the UK’s own Committee on Climate Change (CCC) support a crucial role for carbon capture. IPCC extends this to the much more expensive DACC - direct atmospheric extraction as opposed to the presumed retro-fitting to capture at the point of combustion.  Both IPCC and CCC are serious bodies, tasked with climate concerns, and with access to the best technical and science expertise. CCC has an excellent overview of the UK energy and CO2 scene. Neither are compromised by financial links to fossil lobby groups. 

First nobody should dispute the simple truth that the cheapest and first best solution is to burn as little fossil fuel as possible. So we should pick the low hanging fruit first. That includes not just home insulation but also "obvious" but contested proposals like suppressing bitcoin and many other cryptos (ultra high energy use and zero societal value).

Second the UK has proven itself perfectly capable of screwing up major projects (cf HS2) so there are no absolute certainties this won’t happen again with CCS, but that concern applies to any of the many major infrastructure or retro-fitting projects that we need to get to net zero, including heat pumps and grid expansion.

Third the much harder and costlier option of DACC will certainly be a necessity as we are already well past the degree of CO2 limitation needed for 1.5 degrees. And no, we can’t  do it all through managing land use. If we can’t even do retro-fitting to fossil plant or industrial process CCS, what hope is there for DACC ?

Fourth the abandonment of earlier CCS projects surely stemmed from the shameful austerity programmes and Tory retreat from Cameron's “Green crap” rather than from infeasibility. Here there are more shades of the British disease in which political vacillation stalled the kind of nuclear programmes the French completed so successfully in the last century

Finally the recent September 2023 Royal Society report also touches on CCS, but makes it clear that alternatives like hydrogen storage are also substantial infrastructure projects with significant project risks.

 

Carbon Capture. Getting behind the hysteria.

Carbon capture is in the news again, as the new Labour government announces a substantial new programme for the development of the technology. This has attracted a barrage of criticism from both Left and Right, in spite of the fact that carbon capture is widely regarded as an essential component of any mitigation strategy. So it’s worth exploring a bit further.

 

Some technical background.

 

We should get the terminology clear. There are many approaches to carbon capture, including the use of natural processes in the carbon cycle, for example by improved land use, planting trees or through various “geo-engineering” schemes to increase the “fixing” of the carbon in the oceans.  Greens and others, unsurprisingly, tend to favour the most “natural” and least environmentally intrusive of these. 

 

Second, when CO₂ is captured, it can either find a useful purpose, or it can be sent to a safe permanent store. Use in the soft drinks industry will be trivially small, but it can also be used in the production of synthetic fuels. Most recently there has been a lot of interest in synthetic aviation fuel (SAF) for the hard-to-decarbonise aviation industry.

 

Trees are one form of direct atmospheric carbon capture (DACC). But there are also industrial process approaches to direct capture, sometimes referred to as mechanical trees, which rely on established chemical techniques to separate CO₂  from the atmosphere. It’s claimed that the cost of DACC and subsequent storage (DACC+S) could be brought down to below $200/ tonne, a level that could imply total costs of emission-free oil use well within the historical range of oil price variations. Proposed options for storage include geological formations such as depleted oil reservoirs  and the deep oceans

 

Problems with and arguments against the various DACC methods include:

 

·       excessive requirement for land use, sometimes in competition with food production; this will apply to some but not all methods of both a “natural” and industrial nature; this places an upper limit on what they can achieve

·       excessive land use can also have ecological and human rights implications

·       unproven nature and potentially high costs, and, in the case of natural methods, science unknowns around whether particular land-use policies will be net emitters or receivers of CO₂

·       for industrial methods, high energy use requirements

·       the argument that carbon capture is a distraction from the preferred alternative of eliminating fossil fuels

·       in relation to storage, doubts about suitability of locations, safety and permanence; transport of CO₂and injection into storage may also be expensive

 

The above has all been about direct air capture. However it is, for obvious reasons, likely to be much easier and cheaper to capture high concentrations of CO₂  at the point of combustion when it is released from the fossil fuel. A Green version of this technique involves the use of sustainable bio-fuels, known as bio-energy carbon capture and storage or BECCS. BECCS is likely to be severely supply limited in relation to the scale of what is needed. More generally carbon capture can be fitted or retro-fitted to fossil burning plant, including power generation, and this has generally been the main focus of carbon capture and storage policies, usually referred to as CCS.

 

An additional issue for CCS is that it is likely to be less than 100% effective, with a leakage rate of perhaps 10% or more, so it is not a silver bullet.

 

Is carbon capture an essential component of climate strategies?

 

The IPCC is fairly clear that carbon removal, ie DACC, will be an essential component of any feasible route to a sustainable future. It also endorses continued use of fossil fuels, where this is accompanied by CCS, as one of the options for getting to a net zero future. CCS is also supported by the UK Committee on Climate Change (CCC) as part of a UK strategy aimed at this objective. Both these bodies have the advantage of access to a huge body of scientific and technical advice on the subject, in the context of means to mitigate climate change.

 

So should the UK government be promoting CCS?

 

On the basis of IPCC and CCC advice, the principle of promoting CCS seems to bejustified. There may be alternative means of getting to net zero, but if this is the quickest and cheapest option, then there should be no reason to object to it. Moreover this will not just be a UK issue. Much of the world is even more locked into fossil-based technologies than the UK, so the potential of CCS as an interim or transition technology may be quite important.

 

Whether it has a positive contribution to a UK industrial strategy is another question. Potentially the answer is that it does. Countries like Germany have a much higher lock-in to fossil fuel. But as ever, geography and trading relations matter. Not all countries will enjoy the storage options that the UK has, and Brexit will make the potential to exploit European markets harder.

 

Finally there is a history to this. In 2015 the Cameron/ Osborne government cancelled a CCS programme after the spend of £ 100 million of public money and substantial private sector investment of time and resources. This was part of a major rolling back of  Cameron’s Green promises and accompanied the slashing of budgets on other “easy win” measures such as home insulation. As a marker of determination to take net zero seriously, the Labour government's move is a welcome step. But it does not detract from the need to continue to explore the wider DACC options for carbon removal and storage, nationally and globally.

FRACKING WAS NEVER A SENSIBLE CHOICE FOR THE UK.

Perhaps carbon capture was a better bet and one that might have helped justify fracking.

Source: The Independent

The Fantasy of an Economy Transforming Pot of Gold

Perhaps Cameron and Osborne imagined that fracking could be a re-run of the enormous boost that North Sea oil gave to the UK economy of Margaret Thatcher. I recall the late Denis Healey predicting in the late 1970s that whichever party came to power when North Sea oil was about to come on stream would be in power for a generation. And so it proved. Mrs Thatcher came to power in 1979 just before North Sea oil came on stream, adding up to 10% to annual income (GDP) in the 1980s and 1990s. The revenues were even sufficient to finance the disastrous economic policies that resulted in the wholesale deindustrialisation of Britain in the 1980s and 1990s, and even to allow the pretence  that this was all due to successful economic policy.

So it’s easy to understand why the government of Cameron and Osborne should have looked at gas fracking not just as a potentially secure and indigenous source of what is currently still the dominant fuel in the UK economy, but as a macro-economic “get out of jail free” card, to offset some of the economic damage wreaked on the UK and world economies by an out-of-control financial and banking sector in 2008. The very real success of fracking operations in the USA clearly encouraged this idea.

Unfortunately “geography will out” as the government is now belatedly discovering. Sadly this was all too evident at the time. Writing in 2013, and early in the progress of UK fracking initiatives, Howard Rogers of the Oxford Institute for Energy Studies summarised fracking prospects[1] very succinctly as follows

“... the sobering conclusion is that UK shale gas, given its timing and perhaps modest scale in terms of production level, in no way changes the critical and pressing nature of UK policy challenges and decisions needed between now and the end of the decade.”

“Geography” in this case is a combination of geology, which determines a theoretical reserve and likely cost, and population density, which amplifies the problems of secure extraction without serious social and environmental costs. Unlike North Sea oil, the fracking boom was never set to repeat the 1980s oil boom.

The UK government remains muddled and inconsistent over whether or not to continue its support for fracking. It has, according to the recent National Audit Office report on Fracking for shale gas in England, no clear idea on how much it has spent supporting fracking, what the benefits would be and how much investment would be needed in future. Inter alia, the National Audit Office said ministers could also not explain who would pay for clean-ups if fracking companies went out of business.

The National Audit Office (NAO) report highlighted:

• risks of the self-reporting system of shale gas regulation
• unprecedented public opposition to fracking planning applications and falling national support
• slower than predicted development of the industry
• lack of progress on carbon capture usage and storage (CCS) needed for shale gas to meet climate objectives

The Environmental Case ?

The last of these observations, on the failure to progress carbon capture, is perhaps the most telling. Given that we are now targeting zero carbon, natural gas, in principle at least, is likely to be confined to a declining and transitional role[2]. Any environmental defence of further gas exploration was therefore dependent on assurances that it would not add to emissions, with carbon capture being one route to achieving this, at least in part.  It is therefore ironic that the Cameron government should also have pulled the plug on carbon capture for the UK, though only after the private sector had spent several hundred million on it, and at severe cost to the reputation of the UK in terms of its ability to follow through on commitments to energy industry investors.

Carbon capture is by no means an ideal technology, partly because of the energy inputs it requires and partly because it typically fails to capture 100% of CO2, a necessity in a zero carbon world. But at least it may have had more potential as a transitional technology, given the amount of fossil fuel based generation and other capacity that the world currently has.

Lessons to be Learned

This episode is perhaps an excellent illustration of what happens when governments take energy policy decisions not driven by any realistic appraisal of environmental, climate or energy policy needs, but by the impulse to gamble on a quick fix with a macro-economic and political pay-off. Expert opinion was always sceptical, and environmentalist opposition has been more than vindicated.

                                  

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[1] https://www.oxfordenergy.org/wpcms/wp-content/uploads/2013/07/UK-Shale-Gas-GPC1.pdf

[2] There are however possible options for synthesising gas as a means of chemical storage to overcome the seasonal imbalances between renewable generation and winter heating demands. But this is another story.

CLIMATE SCIENCE. RESIDUAL UNCERTAINTIES THAT DO NOT CHANGE THE UNDERLYING MESSAGE.

Understanding Time Lags Important for Climate Policies.

“Cumulative carbon”, the fact that human emissions of CO₂ are removed only slowly from the atmosphere through the natural carbon cycle, is the essence of the climate change problem. Given the thermal inertia of our planet it may produce a substantial time lag between effective action, to limit emissions, and actual stabilisation of temperatures, equivalent to the operation of a domestic heating radiator on a one way ratchet. Some climate scientists believe this effect may have been exaggerated, and will be largely offset by other elements in the natural cycle. Even so there is a consensus that we need to move to a world of net zero emissions and beyond.

So much of the predictive element of climate science has been borne out by observation that it is easy to forget there are still major gaps in our understanding and major uncertainties that are very relevant to understanding what climate policies are necessary to (ultimately) stabilise global temperatures.

The slow but seemingly relentless upward trend in global surface temperatures sits firmly in the middle of past model predictions, and denials that it is actually happening (the famous Lawson “hiatus” based on cherry picking outlier el Nino effects), or that it has nothing to do with human contributions to greenhouse gas concentrations, look increasingly threadbare and ridiculous. There is no doubt that human-induced climate change is with us, and that it is dangerous.

However, although the science makes it clear that urgent emission reductions are essential, it is much less clear how much leeway we have, and whether the 1.5^o C or 2.0^o C “targets” are attainable. The uncertainties manifest themselves in discussions over the time lags involved, for example between stabilisation of the atmospheric concentration levels of CO2 and stabilisation of global temperature. These questions relate in turn to complexities of the natural carbon cycle and the

The issue of time lags is in some ways politically important. Thomas Stocker, then co-chairman of the IPCC Working Group I (assessing scientific aspects of the climate system and climate change), and addressing the Environmental Change Institute in Oxford in 2014, argued that “committed peak warming rises 3 to 8 times faster than observed warming”. The implication is that there are very substantial time lags. In this case temperatures could continue to rise, perhaps for several decades or even centuries, even if net human emissions were reduced to zero. Similar comments can be found from other climate scientists. It has even been suggested that the thermal inertia effect, considered on its own, could stretch the lag to about 200 years – the time for heat equilibrium adjustment to reach the deep oceans.

The intuitive physical explanation of long time lags is simply the phenomenon of thermal inertia. When we turn up the radiator at home it may take an hour or more for the room to reach a new equilibrium temperature. Global warming, in this analogy, is a radiator heating system on an upward ratchet. The issue for humanity is that by the time temperatures become really uncomfortable, we have already ratcheted up the future temperature to which we have committed. If this is a real danger it dramatically increases the risks associated with climate inaction or “business as usual” trends. It is also creates an alarming image of climate change as a kind of doomsday machine in which humanity is trapped through its failure to anticipate and respond.

However rather more optimistic views have been presented by other scientists. In 2014 Ricke and Caldeira[1] argued that the lags had been seriously overstated, suggesting a time lag of only ten years as a more appropriate estimate. Oxford-based climate scientists, such as Myles Allen, have also suggested that stabilising atmospheric concentrations could lead to a comparatively early stabilisation of global temperature.

The main reason is the potential offsetting effect of the absorption of incremental carbon through the various elements of the natural carbon cycle, including ocean CO₂ uptake and the behaviour of biosphere carbon sinks. However there is no natural law that requires such a balance of effects, and the reality seems to be that we are trying to compare two magnitudes, both of which are of major importance but are also difficult to measure with precision. If the effects broadly cancel out over particular timescales, this is essentially a numerical coincidence within the modelling effort. We can expect future research, better measurement, and associated modelling, will gradually improve our understanding.

But melting ice caps are a separate story!

The above discussion does not however cover all the long time lags involved. One particular concern has to be the polar ice caps. If global temperatures reach the point where these start to melt, then the consequential effects in the form of rising sea levels will go on for centuries. Ice sheets, as opposed to sea ice, can, like the retreating glaciers, only be restored by precipitation. That will be slow and net annual ice gain will probably depend on conditions associated with a fall in global and polar temperatures to or beyond what used to be regarded as normal.

And the policy implications of these uncertainties?

In reality the consequences for policy of differing estimates can be exaggerated, since there is agreement on most fundamentals. Most modelling now recognises that stabilisation of temperature, even at a higher level, requires progress to net zero human emissions. Importantly, this is probably unachievable without substantial measures to remove CO2 (and other gases) from the atmosphere.  In practice processes for carbon sequestration are likely to be very expensive process. They represent a form of geo-engineering.

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[1]Maximum warming occurs about one decade after a carbon dioxide emission. 2014, Ricke and Caldeira

NEGATIVE NET CARBON. DIRECT EXTRACTION OF CO2. IS IT A GAME CHANGER?

DIRECT EXTRACTION OF CO2 FROM THE ATMOSPHERE.  IS THIS REALISTIC? IF SO IT COULD BE A GAME CHANGER?

A Swiss company has told the Carbon Brief website that there is a real prospect of reducing the costs of the direct extraction of carbon dioxide from the atmosphere to a point where it will be possible to consider large scale operations that could substantially offset current emissions and even feature in attempts to reduce concentration levels, in the so-called “zero carbon” or “net negative CO₂” policies that many people consider are implied in the Paris agreements. If their promises are realistic, then this would be a truly revolutionary development, with profound implications for our approach to climate policy. But there will be a lot of questions to answer on the way.

A Swiss company has opened what is believed to be the world’s first ‘commercial’ plant that sucks carbon dioxide from the atmosphere, a process that could help reduce global warming, it is claimed. The firm, Climeworks, expressed confidence they could bring down the cost from $600 per tonne of the greenhouse gas to $200 in three to five years with a longer term target of $100. This is almost an order of magnitude lower than previous estimates of the cost of direct carbon extraction, widely assumed to be around $1000 per tonne.

This is also one of the two most important candidates for a game changing technology breakthrough that I identified in my 2016 submission to the House of Lords Inquiry, which can be viewed as a separate page on this site. If it proves to be feasible then it may represent a considerable advance on what has hitherto been considered the only feasible route to net negative carbon, the so-called bio-energy with carbon capture and storage (BECCS) approach. Shortcomings of the latter include the limited supply of bio-energy, not least due to land availability constraints, and controversy over whether this really represents a sustainable approach[1]. So direct sequestration, if feasible, is very attractive.

There are clearly still a large number of outstanding questions before we get too excited by this prospect.

Is $200 or $100 per tonne really achievable? And if so is the technology scaleable? And to what scale[2]? If it is scaleable, it seems likely the world could be seeking an expansion of the process well beyond the 1% of current emissions suggested as an ambitious target by Climeworks.

The other big question is how to dispose of the CO₂ after its capture. This is a big issue, and a very substantial part of the cost for all carbon capture technologies, including those based on removing the CO₂ from fossil fuel combustion. This cost needs to be factored in and is bound to be a fairly substantial element in the total. It does not appear to be included in the Climeworks figures. Moreover the disposal issue, at scale, will raise its own environmental and risk issues.

But if these questions can be answered this could be a very significant technology advance. It is certainly not the magic bullet that solves all problems, but it could have some important consequences for the way we look at climate policies. Why?

First, one of the most terrifying features of the climate change threat is the apparent irreversibility of the processes involved. CO₂ emissions are cumulative. If they cannot be removed on any scale, then there is a real risk of a future where the climate science starts to tell us there is no return.  At this point priorities would take a dangerous turn towards survival rather than the global idealism, or at least hope, that underpins global agreements. But it is not just that dealing with a very expensive problem is psychologically more attractive than coping with the prospect of unavoidable catastrophe. Ability, in principle at least, to partially reverse out of the worst consequences, puts a finite bound on the costs of making the wrong policy choices. Inter alia it ought to increase the available policy options.

Second, and more importantly, direct sequestration has the potential to change the basis of policy in relation to carbon pricing. I have previously commented on the weakness of traditional cost benefit analysis (CBA) in this context. CBA fails to provide a basis for a carbon price, and the failure is in large measure due to an impossible number of uncertainties (in climate, geographical and economic impact) to which probabilities cannot be assigned from any established base of knowledge. But if we have a clear way of putting a cost on CO₂ removal, then we have at least a first approximation to a “true” cost of CO₂ emissions. This might inter alia provide a better justification for effective carbon pricing, and even for global adoption of a “common” rate of carbon tax. It could be a much more hard-edged approach than complex negotiations over carbon trading schemes, which, as with the EU Emissions Trading Scheme, have so far failed to deliver adequate carbon prices.

These are obviously early days for direct extraction technologies, and we should avoid premature optimism, but this could be an important part of the geo-engineering landscape to watch.

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[1] One of the reasons BECCS is controversial is that its justification requires careful analysis of the entire chain of processes involved, starting with the cultivation of the bio-crop and including any ecological or carbon related side effects, as well as consideration of the alternative land uses for food production or other purposes.

[2] Limits to scale might be imposed, for example, by the availability of other input chemicals to the extraction process. But the more serious limitations are likely to be on disposal of the CO₂ gas. A preferred route of extraction might be capture of the carbon in a solid and inert form, such as calcium carbonate, if this were possible.

TRUMP, COAL, AND CLIMATE. AN OPENING FOR CARBON CAPTURE?

Modified policies on climate issues might have some surprising benefits for a declining US coal industry, and for the future of carbon capture.

President-elect Trump is having second thoughts about climate change, previously dismissed as a Chinese-inspired hoax. There are many reasons that might make this a perfectly rational response to the impending responsibilities of office.

First he is almost certainly now getting briefings from scientific and other experts both on the reality of climate science, and on the potential impacts of climate change.

Second the USA is now suffering major drought conditions in the South West. There are indications of a possible link with climate change and strong indications of possibly much worse “megadroughts” in the future. Most people in the US now accept the reality of climate risks, and for some people the potential costs are becoming apparent.

Third, and of more immediate political significance, it seems unlikely that a US withdrawal from the Paris agreement would be followed by any significant US allies or trading partners. Even more significantly, and as I have observed in earlier blog comments, climate policy will become increasingly tied in with trade. China’s Vice Foreign Minister Liu Zhenmin, for example, has made it clear that China will take other countries’ positions on climate change and the low-carbon economy into account when negotiating trade deals.

This is hardly surprising. No-one is going to put up with trading partners who free-ride on cheap but destructive energy sources with unabated emissions, undercutting competitors who adopt environmentally responsible policies. [The UK incidentally will have to recognise the same realities as it navigates a path to those sunlit uplands of new trade agreements. This will be a bitter medicine for ardent climate sceptics and Leave campaigners such as Lawson, Redwood and Rees-Mogg.]

But acceptance of the compelling arguments for action on greenhouse gas emissions could, in principle at least, also provide a lifeline for US coal communities, in the “rustbelt” that provided an important contribution to Trump’s election victory. The connection is carbon capture and storage (CCS) applied to coal. This is not currently a frontrunner as a least cost solution for US energy policy, and a substantial unknown is the extent to which Trump will be willing or able to fulfil his campaign promises to these neglected communities.

Coal has almost certainly suffered more from fracking and the resulting cheap gas than it has from federal environmental policies, so the connection may seem an improbable one. Proposed policies to spend on infrastructure, similar to those advanced by Obama but blocked by a Republican Congress, may provide a “Keynesian” stimulus to the economy. But directing them to benefit deprived areas may be much more difficult, particularly as the allocation of infrastructure spend is far from being in the gift of the President. 

There are in consequence some potential merits in CCS that at least make this an avenue worth exploring. A programme to develop carbon capture and storage has several potential advantages, and these include benefits to economically depressed regions with high dependency on coal.  It requires a very substantial infrastructure spend which is likely to be close to those regions. It may provide a more promising future for coal. And in terms of wider benefits, CCS is still seen by many policy analysts as an important or even essential ingredient of real progress to a low carbon economy, and could reduce the large number of coal fired stations that otherwise threaten to become stranded assets.

These are complex questions, and continued coal fired generation with CCS could still face many barriers, not least on cost. But the idea does provide at least a small element of hope for a fading industry.

PARIS CLIMATE AGREEMENT. COP 21 SETS AN AGENDA.

AFTER THE PARIS SUMMIT (COP 21). CHALLENGES FOR TECHNOLOGY, ENERGY POLICY AND EVERYONE?

Adrian Gault, Chief Economist at the Committee on Climate Change, addressed the BIEE’s regular energy and climate policy seminar this week. His presentation will be available to BIEE members on the BIEE website, and this note reflects both his presentation and some of the subsequent discussion at the meeting. (These meetings are held under the Chatham House Rule, with no attribution of opinions allowed. This comment however reflects both the meeting and this author’s personal observations on conclusions to be drawn from Adrian’s presentation and the subsequent discussion.)

Aim for temperatures well below 2^oC above pre-industrial levels. Get to rapid reductions from peak as soon as possible. Try to lower risk with a 1.5^oC. limit.

The December negotiations in Paris should be viewed as a success for international climate diplomacy. The level of ambition for effective action, and the aim of reducing the “2^oC limit” to an even more challenging if aspirational 1.5^oC was both surprising and encouraging.  The UK can claim that its current approaches are entirely compatible with Paris, but there will nevertheless be important challenges for the EU as a whole, for the UK in supporting key technologies such as carbon capture, and globally in ensuring adherence to the principles set down in Paris. This was an event that will interact with every aspect of our politics, from regulation and markets through to trade deals after a possible “Brexit”, for a very long time.

Paris 2015 was anticipated as a “make or break” event for concerted international action on climate, and should be viewed as a success, even if it fell short of the negotiated imposition of “top down” national climate targets that some were demanding. Instead it is a strategy based on national commitments, but with a process of monitoring, review and verification (MRV) that allows for a tightening of requirements (to reduce GHG) over time.

Given the difficulty of enforcing binding commitments in any case, this may well be a more robust strategy. The growing evidence of the risks posed by climate change, sharpened by this year’s record temperatures, will expose backsliders to a considerable volume of criticism, and will be hard to separate from other international negotiations, eg over trade. But there is no doubt that the tasks will be extremely challenging, even for countries like the UK which are relatively well equipped in institutional terms for the task in hand.

The CCC’s advice to the Secretary of State in January recognised that the Paris agreement was more demanding for the long term than current UK targets assume, but nevertheless that its earlier recommendations for the fifth carbon budget, covering 2028-2032, should be retained, although tighter budgets may be needed in the future. The measures underpinning this budget appear to be consistent with a cost effective approach to the 2050 target (the CCC’s formal remit) and also with more ambitious commitment by the EU in the light of Paris.

But it is clear that longer term targets will require this, and the UK’s overall strategy, to be kept under review. The UK government has already responded positively to the agreement by acknowledging the profound implications of Paris, promising "to take the step of enshrining the Paris commitment to net zero emissions in UK law".

A number of particular questions arise in this context, particularly for a number of the technologies required for cost-effective progress towards “zero carbon”.

·         Both CCC analysis and that of the Energy Technologies Institute (ETI) has indicated the importance of carbon capture and storage (CCS) technology in providing a cost-effective route to a low carbon future. Unfortunately support for this was cancelled in November 2015, and will now need to be reconsidered.

·         Aiming for “zero carbon” requires some energy technology which is “carbon negative”. The only serious contender for this currently is bio-energy with carbon capture (BECCS), which was discussed in my earlier comment (20^th April) on the benefits of wood burning at Drax. This could have been an early demonstration of BECCS.

·         Cost-effective low carbon scenarios also face some difficult choices in the heat sector, some of which are discussed under the DECARBONISING HEAT tab on this site. The CCC already recognise the heat sector as having potentially the slowest rate of reduction in carbon emissions.    

·         Pushing ahead faster on the transport sector is another priority.  This is a sector where considerable weight attaches to regulatory measures to encourage electric or other potentially low carbon technologies.

·         Consistency with current or revised EU targets in the context of the EU’s flagship emissions trading scheme

The discussion also reverted to the familiar debate on the relative merits of regulation and markets, and whether tighter targets might tilt the balance back towards regulation. In many respects this may be a false dichotomy, but the weight to be given to each instrument will be a continuing theme.

One participant referred to the “elephant in the room” – the possibility of a Leave result in the EU referendum, and its effect on the political landscape. The very strong correlation between “Leave” and opposition to climate focused policies[1] would imply very difficult times ahead, on both UK climate policies and on future trade negotiations, either with the EU or others. It would be hard to see the EU, or many countries outside the EU, accepting trade deals which exempted the UK from emissions policies to which they had themselves signed up.

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[1] This blog. Anti-Europe and Anti-Science, 28^th March 2016

WOOD BURNING GENERATION AT DRAX. A GREEN SUBSIDY?

A GOOD DEAL BUT COULD DO BETTER?

Pilita Clarke in the FT of 19^th 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.

CLIMATE MILESTONES POINT TO A TROUBLED FUTURE FOR COAL AND OIL (AND GAS) INVESTMENT.

Three significant events in the last fortnight point towards a sea change in the way that investment markets will increasingly look at fossil fuels. The first is just a headline. Even oil barons are giving up on fossil fuels. The second is a new report by the US National Academies of Sciences, Engineering, and Medicine. This draws much stronger connections between climate change and the frequency of extreme weather events, something that notoriously cautious scientists have hitherto been reluctant to claim with confidence. The third is a straightforward analysis from the Oxford Martin School of facts and figures on carbon emissions, pointing out the risk to any new investment in fossil fuel power generation without carbon capture. It is a “stark warning … on the probability that ‘2°C capital stock’ will be reached in 2017.”

Rockefeller charity takes ethical stance on fossil fuels

The Rockefeller Family Fund, the charitable vehicle of one part of the family, announced last month that it would be divesting its shares in coal producers and oil and gas explorers, including ExxonMobil, today’s of the Rockefeller money machine, Standard Oil. This is a repudiation of the fossil fuels that were the foundation of the family fortunes. By itself the action of a single charitable organisation may appear of limited consequence, but as an indicator of future investor sentiment, it will be symbolic.  For reasons unconnected with ethical principle, other serious investment funds, including pension funds are also taking a long hard look at the impact of climate concerns, and the risk to long term investments which may be forced to close before the end of their “economic” life.  The reasons relate to the second and third of our recent events. [see FT’s US investment correspondent, Stephen Foley, 3 April 2016]

Responsibility for extreme climate related events

The second news item, the US National Academies Report, is important for its potential political impact. It explores the controversial question of event attribution due to the impact of climate change. Nick Butler [FT, 28 March]  asks whether events such as the 2003 Paris heatwave (killing 3,000), floods on the Somerset levels in in the winter of 2013/14, or the wildfires of western Russia in 2010 (killing 56,000) can be confidently attributed to climate change. The report suggests that at least for some extreme events, notably heat, there is a causal connection. It is not the first such attribution. Myles Allen of the University of Oxford was the first to propose the use of Probabilistic Event Attribution to quantify the contribution of human influences on climate to specific individual weather events.

For some physicists and engineers this may merely confirm an instinctive intuition that complex systems with more energy (ie heat) will tend to be more chaotic, and the report remains quite cautious and nuanced. But the tendency to ignore climate change, as a far distant phenomenon that need not concern us now, will be weakened if locally catastrophic impacts start to be seen as immediate. As Butler says, if the linkages become more obvious, the public demand for action will grow.

He adds: “In politics, if a risk cannot easily be removed or managed the temptation is to look for someone to blame. In legal terms this will be translated into the concept of liabilities. If you are a shareholder in an energy business you might like to ask your company’s view of the issue.” As a practical matter, legal liabilities for climate change may seem rather hard to establish, but I would not underestimate the abilities of US law firms in this area. It is certainly another question for investors.

New fossil fuel plants for power generation will turn into stranded assets

The third event is a report from the Oxford Martin School, by Professor Cameron Hepburn and others, that reiterates the observation that we are uncomfortably close to the point where the world’s energy system commits the planet to exceeding the carbon budget for emissions consistent with a “safe” climate change target of 2°C increase. The report goes on to argue that, even on quite favourable assumptions for other sectors, any new fossil generating plant built after 2017 will, unless it allows for carbon capture and given the longevity of power plant, commit us to exceeding the global budget.

So if we actually propose to take the Paris agreements seriously, and if we do not then we face the prospect of a dangerously uncertain global future, we need to recognise that any such plant will need to be retired well before the end of what investors would normally consider to be its economic life. In other words it would be a stranded asset.

There are many qualifications that might be added to what are inevitably broad brush projections. The assumptions may be too optimistic, both on greenhouse gas reduction in other sectors, or on the degree of “safety” provided by the notional carbon budget. Other, older, fossil plant (without CCS) might be retired earlier. And allowing for a carbon capture retrofit introduces a loophole.

But the general direction of travel is clear.  “Far from having years to work out how to curb the risks of climate change, we face a moment of truth.” [Martin Wolf, FT, 5 April 2016].  The regulatory and policy risk for new fossil plant will be huge, and such plant depends on revenue guarantees over periods of up to 30 or 40 years. This will be a really serious concern for investors and make the investments much harder to finance at any realistic cost of capital.

Nor can the owners of the stranded assets expect much sympathy. To quote a colleague, “surely the sight of stranded assets will be seen as a sign of successful climate policy”. 

(re-published on the Oxford Martin School website)