Focus on UK |


split into two phases (see box). Demand from industry is growing. Storage sites in the UK have order books of emitters waiting for final investment decisions on infrastructure. Nevertheless, the industry remains nervous about the programme, believing that action is needed immediately, especially given the UK’s history of cancellations.


Heads of terms have been agreed between the members of the first two consortia and the government, but final prices are waiting for approval. That signature has been slow to come, although the funding envelope is set and the final costs are in, because of HM Treasury checks and balances. The supply chain is said to be getting impatient. Its members have provided fixed price contracts as required – fixed until September next year, rather than the one or two months that would normally be required. Fixing often raises


prices, especially over a longer period, and that brings up ‘value for money’ questions in the Treasury process.


The industry would like to see contracts signed in this half-year, not least because there is a general election looming in the UK. The date of the election is not fixed and speculation most often places it in the third quarter. There is political consensus on the carbon capture and storage programme and even on the four clusters. Nevertheless, the election itself, the traditional period beforehand when no announcements are made and the need for a new government to settle in (whatever its makeup) would create further practical difficulties in signing off the agreements with the government that would allow a final investment decision to be taken.


Meanwhile, individual projects have moved forwards elsewhere in Europe. In December,


Ørsted began construction of two CCS facilities at the Ørsted Kalundborg CO2


Hub, which has


been awarded a 20-year contract by the Danish Energy Agency (DEA). These are expected to begin storing carbon dioxide in 2025. The project was awarded a 20 year contract by The Danish Energy Agency (DEA) in May 2023. In France, Heidelberg Materials, Lafarge France, Lhoist and TotalEnergies launched a CCS project at the port of Nantes-Saint-Nazaire in July 2023, planning to take an investment decision in 2027 for commissioning in 2030. The UK remains in the game. Its four lead industrial clusters would deliver the government’s its 30 Mt target by 2030, but its position remains vulnerable.


“Companies are still interested in the UK,” says the CCSA, “but if they don’t see final investment decisions in the first two clusters soon, investors will think ‘is the UK still happening?’”


The EU sets out its plan


At the start of February 2024, the European Commission published the new EU Industrial Carbon Management Strategy. The strategy has now to be turned into a regulatory framework that can deliver its objectives. The EU wants to develop a range of technologies to capture,


store, transport and use carbon dioxide emissions and remove it from the atmosphere, via: capture and storage; capture and utilisation as a substitute for fossil-based carbon; and removal from the atmosphere, followed by storage.


Transport infrastructure, consisting of pipelines, ships, road or rail transport, is “a key enabler” and necessary to establish a carbon dioxide market in Europe. Industrial carbon management solutions will be most needed in


sectors such as cement, steel and natural gas processing, electricity generation (especially from biomass), low-carbon hydrogen, refining processes, waste incineration and heat production. The Net-Zero Industry Act proposes that at least 50 Mt of per year be stored geologically by 2030. The EU wants


CO2


to capture 280 Mt/year by 2040 and around 450 Mt/year by 2050. The limited number of large, operational industrial carbon management projects in Europe means an EU-wide approach and vision are needed. The new strategy will “complement and complete” existing EU policies and funding instruments, notably the CCS directive for geological storage, the EU’s Emissions Trading System, the proposed EU certification framework for carbon removals, the Net-Zero Industry Act, support for CO2


transport infrastructure,


the Innovation Fund and the Connecting Europe Facility. The Strategy has three stages: By 2030: CO2


storage capacity of 50 Mt/y with related


pipelines, ships, rail and road. By 2040: economically viable regional carbon value chains and carbon dioxide as a tradable commodity. Up to a third of captured carbon dioxide to be used. After 2040: industrial carbon management as an integral part of the EU’s economic system. Carbon-based industrial processes or transport use biogenic or atmospheric carbon.


A study by the Joint Research Centre (JRC) estimates that transport infrastructure could span up to 7300 km and deployment could cost up to €12.2 billion by 2030, rising to around 19 000 km and €16 billion in 2040. The Commission will start


Netherlands Sluiskil Yara


Storage site


Receiving terminal


Norway


preparatory work on a transport regulatory package to optimise development and provide certainty to investors. The regulatory framework could include issues such as market and cost structure, cross-border integration and planning, technical harmonisation and investment incentives for new infrastructure, third-party access, competent regulatory authorities, tariff regulation for transport assets and ownership models. The Commission will develop a platform to matching carbon dioxide suppliers with storage operators. A future framework will also look at interactions with the


electricity, gas and hydrogen sectors and the need for future spare capacity, including potential repurposing and re-use of existing infrastructure. International collaboration will be needed. The EU is already


working closely with members of the European Economic Area on industrial carbon management solutions. The first commercial cross-border agreement to capture carbon dioxide produced in the EU and ship it for sequestration off the coast of Norway has already been signed as part of the Northern Lights project.


The first commercial agreement to be signed as part of the Northern Lights project (jointly owned by TotalEnergies, Equinor and Shell) was that with Yara to transport and store CO2


captured from Yara Sluiskil, an ammonia and fertiliser plant in the Netherlands. The CO2


will be captured,


compressed and liquefied in the Netherlands and then transported for sequestration to the Northern Lights site off the coast of Øygarden in the Norwegian North Sea


14 | May 2024| www.modernpowersystems.com


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