Deputy Prime Minister Nick Clegg and Energy Secretary Ed Davey have announced a ground-breaking deal with Shell which could generate enough clean energy to power half a million homes, and capture 1 million tonnes of CO2 each year.
This revolutionary multi-million pound project is the first of its kind in the world. The signing of the deal is for the first stage of a project to retrofit the Peterhead gas-fired power plant with carbon capture and storage technology.
The Peterhead project is the second of 2 projects to be funded under the UK’s CCS competition marking a significant milestone for the programme. Over the next 2 years, the Government is investing around £100 million from its £1 billion CCS budget, with additional industry investment, to plan, design and engineer the UK’s first 2 CCS projects.
Along with the White Rose CCS Project in Yorkshire, the projects will be supported by around £100 million of Government money and will create 2,000 jobs including construction, and technical and operational jobs.
Peterhead will be the first gas plant in the world to capture carbon dioxide on an industrial scale and pipe it under the sea where it can be stored safely. This means the plant can produce clean energy.
Deputy Prime Minister Nick Clegg said: “The innovation of the UK’s energy industry is something we should be really proud of and the fact that we are a world leader in carbon capture and storage is a great example of our country’s ingenuity.
“Today’s multi-million pound deal with Shell will help to safeguard thousands of jobs and power half a million homes with clean electricity.
“It shows we can build a stronger economy and do it fairly by protecting our environment for future generations.”
Scottish Carbon Capture & Storage (SCCS) said it welcomed today’s announcement that the Peterhead CCS Project has signed an agreement with the UK Government for a front-end engineering and design (FEED) study.
It says the news is a crucial milestone on its path to becoming the world’s first large-scale carbon capture and storage (CCS) project at a gas-fired power plant, maximising re-use of existing infrastructure and using a depleted gas reservoir offshore for CO2 storage. .
Peterhead will capture and store up to 90% of the CO2 emissions from one of the power station’s three turbines, cleaning up North Sea gas feedstock and providing a low-carbon source of electricity for homes and businesses across the UK. It will also take an important step towards establishing CCS as Best Available Technology (BAT) or Best System of Emission Reduction (BSER) for CO2 emissions from natural gas power stations.
This is the latest chapter in the north east region’s historical links to offshore resources – from whaling to herring fishing, from oil and gas production to renewable energy, and now CCS. In 2005, Peterhead power station was the focus of the first public CCS bid in the UK, at that time partnering with BP. The proximity to existing oil and gas infrastructure and potential CO2 storage sites, alongside established engineering knowledge and expertise in the area, makes Peterhead an ideal location. The project will be a pathfinder to reduce construction and operation costs for follow-on CCS initiatives, and will provide a cost-effective route to developing a CCS industry for the UK.
Professor Stuart Haszeldine, SCCS Director and Professor of CCS at the University of Edinburgh, said: “The Peterhead project is critical to reducing the cost of tackling the UK’s carbon emissions by demonstrating that full-chain CCS offers a viable and safe route to doing so. CCS on gas will become even more important, due to the UK Government’s emphasis on using more gas for electricity generation, and is inescapable if shale gas emerges as a fuel source for the UK.
“The flexible operation of this type of CCS linked to gas-fired power makes it an ideal complement to renewables, with the potential to infill electricity generation during variable wind output.
“The agreement of the FEED studies for both Peterhead and White Rose also helps give fresh momentum to CCS in Europe. The European Commission’s recent proposals for climate and energy policy for 2030 reiterated that accelerated efforts are required during the next decade to develop infrastructure so that CCS can be deployed on industrial sources of CO2 emissions as well as power generation.”
Although gas is frequently hailed as a low-carbon fuel, it is not a zero carbon fuel. CCS will be required on gas power stations to sufficiently reduce CO2 emissions, but the development of gas CCS projects has, until recently, lagged behind those focused on the use of coal. Despite offering several advantages – such as operational flexibility, cost of electricity and reduced volumes of CO2 for storage – the US Environmental Protection Agency ruled that CCS on gas is not yet ready for commercial deployment. The Peterhead project therefore carries wider international significance, opening the door to a step change reduction in CO2 emissions from power generation.
WWF Scotland director Lang Banks commented: "Demonstrating carbon capture on this existing gas power station would enable us to test the technology and cut emissions from our energy sector whilst we transition to a renewable future.
"Scotland is rich in renewable sources of energy and going forward could have a secure electricity supply without any need for fossil fuel power.
"However, as we transition to a 100 per cent renewable future, Scotland is also well placed to develop and test CCS - a potentially important global technology. It's great to hear that we might be about to start turning this opportunity into a reality."
Dr Luke Warren, Chief Executive of the CCSA, commented: “It is wonderful news that the second project in the Government’s CCS competition has successfully reached the next step. The Peterhead CCS project is an important part of the UK’s CCS story, as it will showcase CCS on a gas-fired power station – and gas is set to become an increasingly important part of the UK’s low-carbon energy mix going forward.
“We are also pleased to see that the Government has accepted all the recommendations in the Wood Review. In particular, the potential for CCS with Enhanced Oil Recovery can bring significant financial benefits to the CCS industry as well as helping to prolong the life of our valuable North Sea oil and gas assets.
“The White Rose and Peterhead projects will be the foundation for CCS clusters in the industrial heartlands of Scotland and North East England. Together with the projects outside of the current competition, these will deliver a significant boost to the UK economy. Indeed, the CCSA and the TUC have recently published new modelling, which shows that CCS can reduce household energy bills by £82 per year by 2030, creating up to 30,000 jobs."