The UK government’s carbon capture, usage and storage (CCUS) strategy is based on optimistic techno-economic assumptions that are now outdated, Carbon Tracker has warned.
In a new report, the financial think tank claims that cost estimates have more than doubled since the strategy was announced last December, and that the need for carbon capture could be much smaller.
For example, it suggests that the need for gas plants with CCUS could be one-third of previous assumptions due to the growth of renewables, battery storage and flexible technologies.
Similarly, the report warns that the government’s bioenergy with carbon capture and storage (BECCS) strategy is heavily exposed to one single project: converting the giant Drax power station in North Yorkshire.
It claims that BECCS is unproven at this scale – the largest current project, a 50MW biomass power plant in Japan, is dwarfed by the 2,600 MW Drax plant – and that the resulting electricity would be up to three times more expensive for consumers than offshore wind power.
Failure to recognise these risks could lock consumers into a “high-cost and fossil-based future”, despite the existence of cleaner and cheaper alternatives, according to the report.
“CCUS technology has proven to be much more complex and expensive than thought, while renewables cost reductions have dramatically changed the landscape,” said Carbon Tracker associate analyst, Lorenzo Sani.
“While the government is playing an important role in de-risking new projects, it urgently needs to revisit its targets and focus its resources on high-value applications such as cement and hydrogen.”
The think tank argues that plans to use CCUS to decarbonise steel production and gas-fired power plants should be abandoned, with both applications likely to be out-competed by cleaner alternatives.
It claims that Tata Steel and British Steel are already moving away from plans to install CCUS at their UK facilities in favour of a move towards electric arc furnaces, and that hydrogen turbines are likely to be cheaper sources of flexible power generation than gas-CCS plants by 2030.
Carbon Tracker’s research also highlights the importance of fixing the UK’s carbon market in order to make CCUS profitable, finding that most applications require a stable carbon price of at least £100 per ton to compete with unabated technologies.
“Fixing the UK’s carbon market – either by establishing a rising price floor or, preferably, linking it back to the EU scheme – is the single most important action needed to deliver the government’s vision of a self-sustaining and competitive CCUS sector,” Sani added.
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