The professor of carbon capture and storage at the University of Edinburgh discusses why achieving net zero needs multiple technologies and explains the thinking behind the UK’s evolving approach.

Almost a decade after the UK government scrapped what would have been the world’s first industrial-sized carbon capture and storage (CCS) project1, the technology is back in favour.

In its Ten Point Plan for a Green Industrial Revolution2, published last November, the government described CCS (a process whereby carbon dioxide is captured from power generation, hydrogen production and industrial processes and stored deep underground3) as an “exciting new industry” that could “revitalise the birthplaces of the first Industrial Revolution”.

The government went on to say it plans to invest up to £1 billion to support CCS in four industrial clusters, creating ‘SuperPlaces’ in areas such as the North East, the Humber, North West, Scotland and Wales. A consultation was subsequently launched in February4 to seek views on a possible approach to sequencing the deployment of CCS clusters. Then in May a new 900MW gas fired power station was proposed for Peterhead, to be fitted with CCS technology, which would transport CO2 to a site being developed in the Scottish North Sea.5

So, who better to speak to on the subject than Stuart Haszeldine, Professor of CCS at the University of Edinburgh? A renowned expert in the field, Haszeldine, who in 2012 was awarded an OBE for his service to climate change technologies, is on the Carbon Capture, Usage and Storage Council, part of the Advisory Committee at the Department for Business, Energy and Industrial Strategy.

How have things changed since the government put carbon capture and storage (CCS) back on the agenda?

The UK has combined its net-zero target with the industrial strategy that started in 2018. Decarbonising industry is a priority, from switching fuels to removing CO2 from the air. It has attracted a lot of attention, not least because the government is giving away £4 billion to co-fund new technology approaches and equipment.

We have not seen the cheques come out yet

We have not actually seen the cheques come out yet. They have allocated parts to various industrial clusters, but the big allocations are due later this year, which will test whether they mean what they say or not. Funding has been allocated; now it needs to be spent. Everybody around the table thinks you should not have a competition just for one cluster. We need all five clusters to go forward together if we are going to hit the carbon reduction targets.

The G8 said CCS should be a serious priority back in 2005. Why has it taken so long?

It's partly the net-zero target. Prior to that it was a ‘nice to have…we must get on with climate sometime’. That’s largely been the narrative since 2005. Politicians never really grasped that cleaning up would cost slightly more than not cleaning up.

The analogy I would make is paying for your municipal waste in your wheelie bin. What does that cost you; £100 a year? We all regard that as money well spent, far preferable to just tipping rubbish in the street outside your neighbour’s house, which is what we have been doing so far.

Instead of having one megaproject, we proposed splitting the different elements

I was part of the review led by Lord Oxburgh (former chair of Shell Transport and Trading), where we tried to redesign the CCS system in the UK. So, instead of having one megaproject, which would be very high stakes to deliver, we proposed splitting the different elements. So, you would have ‘capture’, then ‘transport’ and ‘storage’, and you would need to get paid for doing something in each role. That's what we've ended up with now, except they still have not resolved the payment side. That's one of the big missing links.

With that approach, you can save huge costs by sharing pipelines and storage sites. Switching to clusters, then separating the capture risk and capture business from the transport and storage elements seems to be working. (See Figure 1 below for a progress assessment of CCS and other negative emissions technologies (NET).)  

Figure 1: Assessment of CCS and NET
Assessment of CCS and NET
Source: ‘Negative emissions technologies and carbon capture and storage to achieve the Paris Agreement commitments’, R.S. Haszeldine, Royal Society Publishing, April 2018

What are the main policy changes needed to unlock the current situation?

We have enough policy in place to get going with the first projects. That involves getting paid with a contract for difference, which is well established in the renewables market. So, the people who want to build a power plant fuelled by gas with CCS can have a very firm business model and be paid through the amount of electricity they deliver.

What happens if the electricity generated is slightly more expensive than wind electricity?

Then there are other questions, such as what happens if the electricity generated is slightly more expensive than wind electricity. What happens if it cannot be sold?

For industry, the idea seems to be to have a UK emissions trading scheme, where everybody buys permissions to emit CO2, and the money from that gets funnelled through to pay for the people who are capturing CO2. So, industries who fit carbon capture will get paid for each tonne, and that will enable them to pay for transport and storage.

My caveat with both mechanisms is they're great for starting off, but they cannot get you to net zero. Imagine you are at 90 per cent capture, then nine out of ten people are wanting to get paid and just one will be paying fees to everybody else. Clearly it won’t take you far enough.

We propose a different mechanism so that rather than focusing on emissions, which is what most of Europe has done, you create a market for storage. The government needs to define a storage target per year, say one per cent of CO2, one per cent of carbon imported or produced in the UK, and it has to be stored in 2025. But how it is achieved is up to those producing it, and what it costs can also be decided by those involved in competition with each other. Then, by 2027, the government could lift the storage threshold to five per cent, 15 per cent by 2030 and 75 per cent by 2035.

The government needs to define a storage target per year

It is a simple process based on a mandate for storage. That revolutionises thinking, because it takes the emphasis away from giving people permission to buy emissions, to carry on polluting, and places the onus on producers of fossil carbon or biocarbon to clean up their end point pollution in the same way as many European industries must. It embeds the cost of emissions or clean up in the cost of the product.

With this approach, the oil companies may have to charge more because they will ultimately be liable for cleaning up. But I argue that is fair and legitimate, compared to dumping into the global atmosphere.

If we did that, ultimately, the consumer would be forced to pay.

Yes, that’s right. The other issue is carbon border adjustment. If we're going to decarbonise quicker than the rest of the world, we cannot just open our doors to high-carbon imports from other countries. This is a way of saying we are going to effectively place a carbon tax on our border, for the materials that contribute to the goods and services coming in. But that starts with some obligation on carbon coming in. The advantage is that there's no requirement on the government to invent a price; that will be discovered in the process. Big companies like Shell, BP and Acorn in northeast Scotland will basically be competing on price and quality.

We cannot just open our doors to high-carbon imports from other countries

One important point is that the carbon takeback obligation can be unilateral. The UK could declare this is how we're going to get to our target of minus 100 per cent by 2050. By doing that and by placing the obligation on people to store carbon if they bring it across our borders, they might find it advantageous to store the carbon where they can get the benefit of the employment created. Once the approach is proven to work, perhaps Ireland or France or Norway might start doing a similar thing.

I'm also concerned that one of the narratives for the UK to engage in climate change issues is that we try to invent solutions, hoping others will follow and copy. What we are busy doing now with BEIS is trying to work out seven different funding streams. Electricity contracts for difference, big industry payments, hydrogen payments, a special case for cement and so on. It’s complicated and requires an army of civil servants. Whereas if we work on carbon takeback obligations, you just need to know how many tonnes of carbon come into your country. It’s lighter to administer.

Now net-zero legislation is in place, are you hopeful that policy uncertainty will diminish?

The way you achieve the carbon reductions, as set out by the Committee on Climate Change, has lots of optionality. We've been able to make a lot of easy gains early on, reducing emissions by about 50 per cent since 1990, and now it gets harder.

The trick is to try and convince people it's better to move early

Psychology is important. The trick is to try and convince people it's better to move early, but you may not necessarily want to be first unless you can capture the whole market. You want to be in that early wave, which is what the UK is trying to do.

Different countries are taking different actions that are easiest for them. It's been relatively straightforward for Norway: they have lots of hydroelectricity and clean power, so that is an obvious route.

But we have closed the coal plants in heavy industry, and now we must think. That is the point of our industrial strategy. Do we close all our industry and then sell each other haircuts? Or do we try to grow our industry in a low-carbon way? That's what we're trying to do in the UK, and that's unique.

We clearly need quicker progress to meet 2050 targets. How confident are you that will happen, and we have the right tools?

Big industrial change takes two to three decades. If we are going to hit 2050 with the tools we've got now, one of those is certainly CCS, and another is going to be direct air capture (DAC). A global maximum price on CO2 will be set by the price of capturing it from the air, because you can do that anywhere. The capture plants will be built close to CO2 storage centres. That's one of the things we're starting to get on with in terms of research and development.

The price of CCS has come down from around $120 a tonne of CO2 to $80 a tonne

The price of capture has already decreased a lot. The price of CCS has come down from around $120 a tonne of CO2 to $80 a tonne. The price of DAC has also come down, from $600 to around $200 a tonne. We're going to start trying to develop that in the UK. Instead of using methane to reheat chemical capture, we will be using wind-powered electricity, and that should reduce the price and the carbon output.

I am optimistic we will see the price of DAC fall to $150 or even $100 per tonne of CO2 captured and stored. Anywhere under $200 is very competitive. Industries like steel or cement can capture about half their emissions, but the other parts get expensive; they might end up having to pay $500-$600 a tonne for the last bit.

What they could do is capture the easy bits themselves and then buy certificates from the air capture side to make up the rest of the obligation. Having an obligation like that means you are creating a market with certainty and longevity.

How do you see the role of wind in this?

You have a choice of using wind power for either electrolysing to make hydrogen or to create cheap electricity to heat the chemical recovery mechanism in DAC equipment. You could take the output from wind farms directly to that equipment. Then the price of your electricity is only about four pence a kWh compared to buying it through the grid at around 14 pence. Buying wholesale and avoiding the national grid is a smart thing to do if you can position the equipment where you need it.

Where can we achieve the largest gains fastest, across CCS and DAC?

The largest and fastest gains will come from supporting industry strategy projects. There are some big ones in the UK, each of which could capture around two million tonnes a year, with the ambition to head up towards five or ten million tonnes.

The largest and fastest gains will come from supporting industry strategy projects

If the government supported all of these, the UK could be injecting ten million tonnes of CO2 a year by 2030 and storing it. The amount could quite possibly be double or triple that, which is what we need to target.

That's the reason for starting the DAC projects now because they could follow soon after. They could mop up the other 20 or 30 per cent of emissions, which each of these CCS units will not be able to address.

Want more content like this?

Sign up to receive our AIQ thought leadership content.

Apologies, this content is currently unnavailble.

Please enable javascript in your browser in order to see this content.

I acknowledge that I qualify as a professional client or institutional/qualified investor. By submitting these details, I confirm that I would like to receive thought leadership email updates from Aviva Investors, in addition to any other email subscription I may have with Aviva Investors. You can unsubscribe or tailor your email preferences at any time.

For more information, please visit our Privacy Policy.

Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This material is not a recommendation to sell or purchase any investment.

In Europe this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK Issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: St Helens, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In France, Aviva Investors France is a portfolio management company approved by the French Authority “Autorité des Marchés Financiers”, under n° GP 97-114, a limited liability company with Board of Directors and Supervisory Board, having a share capital of 17 793 700 euros, whose registered office is located at 14 rue Roquépine, 75008 Paris and registered in the Paris Company Register under n° 335 133 229. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.

In Singapore, this material is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited (AIAPL) for distribution to institutional investors only. Please note that AIAPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIAPL in respect of any matters arising from, or in connection with, this material. AIAPL, a company incorporated under the laws of Singapore with registration number 200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act (Singapore Statute Cap. 289) and Asian Exempt Financial Adviser for the purposes of the Financial Advisers Act (Singapore Statute Cap.110). Registered Office: 1 Raffles Quay, #27-13 South Tower, Singapore 048583. In Australia, this material is being circulated by way of an arrangement with Aviva Investors Pacific Pty Ltd (AIPPL) for distribution to wholesale investors only. Please note that AIPPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIPPL in respect of any matters arising from, or in connection with, this material. AIPPL, a company incorporated under the laws of Australia with Australian Business No. 87 153 200 278 and Australian Company No. 153 200 278, holds an Australian Financial Services License (AFSL 411458) issued by the Australian Securities and Investments Commission. Business Address: Level 30, Collins Place, 35 Collins Street, Melbourne, Vic 3000, Australia.

The name “Aviva Investors” as used in this material refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom. Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is registered with the Ontario Securities Commission (“OSC”) as a Portfolio Manager, an Exempt Market Dealer, and a Commodity Trading Manager. Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas is also a commodity trading advisor (“CTA”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.

Related views