Let's learn to love carbon capture, before it's too late

Progress on CCS technology has stalled, but with coal and gas generating much of our electricity for years to come, we need it

• James Smith
• guardian.co.uk, Monday 17 December 2012 12.48 GMT
• Jump to comments (27)

American Electric Power's coal power plant in New Haven, West Virginia, which stores about 100,000 tonnes of CO2 a year, 2.1km underground. Photograph: Saul Loeb/AFP/Getty Images

Last week the prime minister laid out the importance of carbon capture and storage to the setting of a 2030 carbon target, and in helping resolve the current debate on how much gas in the UK it is safe to burn. Just a month earlier, a report concluded that carbon capture and storage (CCS) could cut the annual costs of meeting our carbon targets by up to 1% of GDP, or about £42bn per year, by 2050.

Yet despite the words and reports the technology has made disappointing progress over the past ten years. Not one integrated, large-scale electricity-plus-CCS project has yet been implemented anywhere in the world.

It is a technology with few friends and apparently no natural owners. It's easy to see why. It's big and capital intensive, and it keeps unloved fossil fuels going. It has none of the instinctive attraction of solar panels, wind turbines, or wave and tidal power devices.

You can't blame electricity generators for not liking it – it's a substantial additional capital cost on their sites and reduces the flexibility of their plants. Generators do not get revenue support for the additional costs in the way they do for windfarms. So with a weak carbon market, the commercial incentive for electricity generators to build CCS is pretty well non-existent.

In Alberta, Shell is building a billion-dollar CCS project linked to oil sands production, with government financial support. But most coal and gas producers are wary about whether electricity markets will deliver a decent commercial return on their CCS investment. That might explain why their advocacy for CCS is currently muted.

But carbon capture and storage matters because, like it or not, relatively cheap coal and gas will be the major fuels for the next few decades in generating electricity. Unless CCS is used to stop the resultant carbon dioxide getting into the atmosphere, man-made climate change cannot be contained.

We also need "negative carbon" technology – removing CO2 from the atmosphere – if the worst of climate change is to be avoided. CCS, together with sustainably derived biomass for electricity generation, is by far the best game in town for that.

Of course, it's not that nothing is being done. The UK's energy bill has provisions to support the technology. R&D costing £125m is underway and a £1bn government competition is being run for a demonstration project. This has linked up with European effort to run demonstration projects. Unfortunately the number of candidate projects has been diminishing and the years have been slipping by. The goal of getting tens of demonstration projects running worldwide by 2020 now looks highly improbable.

So what must be done? We all must get real and get behind the technology. Government and industry must work together urgently to build the essential demonstration projects over the next few years. The carbon market, post-2020, must be underpinned now with very strong signals for a carbon price that will stimulate all kinds of low-carbon investment, including CCS. And the government must continue with R&D to reduce costs and risks.

The UK has much to gain. We have two of the world's top oil companies, skilled in the injection and storage of carbon dioxide. The UK is home to a highly capable process engineering industry. And we have a very strong university research base. Research co-ordinated by the Carbon Trust has found that CCS industrial development could contribute £3bn-£16bn to UK GDP cumulatively up to 2050.

But needless to say we are not alone. The US is a world leader where capture technology has been running in large-scale plants for decades, and the CO2, based on a well-established 6,000km pipeline network, is used both in fizzy drinks and enhanced oil recovery. The US government is sponsoring major research into improving CCS technologies. Governments and companies in Asia also recognise the commercial opportunities. But we do have the capacity to compete provided we get on with it now.

So to help save the planet, keep down the costs of low-carbon energyand to create a new and exciting commercial opportunity for British industry, let's learn to love CCS – before it's too late.

• James Smith, chairman of the Carbon Trust and former chairman of Shell UK