Tim Probert, Associate Editor
Carbon Capture & Storage
PEi: The UK government-backed carbon capture & storage (CCS) competition starts in earnest this month. What is the government’s ultimate objective for the competition?
Malcolm Wicks MP: The key objectives of the demonstration competition are to deliver a successful demonstration of the full chain of CCS technologies on a power plant at a commercial scale; and demonstrate technology that is relevant and transferable to key global markets à‚— particularly in emerging economies.
Ultimately, we wish to contribute to the acceleration of the global deployment of CCS technology as an important climate change mitigation technology. This is vital, as despite the growing use of low-carbon sources of energy, fossil fuels will continue to play a significant part in meeting the world’s energy needs for the foreseeable future. Governments urgently need to find ways to reduce emissions from fossil fuels.
PEi: Some observers have said that the CCS competition is misconceived. How can a subsidized project prove the viability of CCS on a commercial basis?
Malcolm Wicks MP: The lack of commercial-scale, full-chain demonstrations of CCS have been highlighted as an important barrier to the commercial deployment of the technology, and the requirement for demonstration has been emphasized.
The learning from first-generation demonstration plants will likely bring the cost of CCS technologies down and provide further confidence that the technological elements of CCS can be combined successfully. This will be important in encouraging the commercial deployment of CCS as the carbon produced in electricity generation is increasingly reflected in its cost.
PEi: Why not just increase funding on R&D?
Malcolm Wicks MP: We recognise the importance of ongoing R&D funding for the development of carbon abatement technologies, including CCS. That’s why as well as announcing our support for a CCS demonstration project, the government has implemented a wide-ranging programme of activities designed to drive forward CCS development.
For instance, at the level of basic research, the Natural Environment Research Council and Engineering and Physical Sciences Research Council are funding a à‚£2.2 million ($4.3 million) project consortium led by Imperial College London to explore issues related to CCS, particularly storage of carbon dioxide (CO2).
The newly formed Energy Technologies Institute also considers CCS one of its possible future technology themes. With a potential billion-pound budget for investment across a broad range of low-carbon technologies, it is bringing together government and some of the world’s biggest companies with a view to accelerating the development of low-carbon energy technologies towards commercial deployment.
PEi: Why did you exclude pre-combustion projects from the competition when, according to the Carbon Capture and Storage Association, several such projects were already well advanced in development, and with a significantly larger capacity as proposed in the competition?
Malcolm Wicks MP: We received strong legal advice that it would be difficult to run a competition that would allow different CCS technologies to compete on a level playing field. We had to select one technology to ensure the competition is effective. Working within these parameters, we chose to support a post-combustion project (which includes oxyfuel) because it is the capture technology that is relevant to the vast proportion of existing and planned coal fired power stations globally.
Tackling climate change is a global issue à‚— and it is very important that we consider the need to mitigate carbon emissions on a global scale. A key factor is that [post combustion] can be retrofitted to existing plants, tackling emissions from plant that will be in operation for 30-40 years. This will be crucial as globally the use of fossil fuels is set to rise. The International Energy Agency’s 2007 World Energy Outlook suggests that coal use could increase by 73 per cent by 2030.
PEi: Will the government retain some intellectual property (IP) rights or other legal rights to the winning project?
Malcolm Wicks MP: The government is fully aware of the importance of issues such as IP rights and the sharing of knowhow for the UK demonstration project. It is unlikely that the government would retain IP rights or other legal rights. However, there will be a number of contractual obligations to ensure that the final project delivers UK objectives.
PEi: Will the technology be transferred to industrializing nations, for example to Chinese coal fired power plants?
Malcolm Wicks MP: We believe that the global deployment of CCS technology is an important measure in mitigating climate change and recognize the importance of technology transfer to other countries in achieving this. This principle was a driver towards the major objective of the UK project; to demonstrate technology that is relevant and transferable to key global markets à‚— particularly in industrializing economies.
The UK aims to share as much learning as possible from our demonstration à‚— project developers will be expected to put forward proposals for knowledge transfer to third countries. The UK is working towards technology transfer in other ways, too.
An example of this is UK support of the Near Zero Emissions Coal initiative, which was announced under the UK presidency of the European Union (EU) as part of the EU-China Partnership on Climate Change in September 2005. This aims to develop and demonstrate in China and the EU advanced, near-zero-emissions coal technology through CCS.
We are currently working hard to seek out opportunities in other key countries for deployment, such as India, as well as being active on the international stage in supporting CCS and measures that will support its global deployment, such as its inclusion in the Clean Development Mechanism (CDM) framework.
PEi: Westminster has repeatedly denied it would subsidize the construction, operation or decommissioning of a new generation of nuclear plants. Aside from slashing planning red tape, what else can you do besides hand over subsidies or offer financial guarantees to implement energy policy in a liberalized market?
Malcolm Wicks MP: You are right that the government’s approach to meeting our energy challenge is to allow the private companies in the energy market to decide on the most cost effective energy mix. It is the government’s job, and my job as Energy Minister, to set a framework that allows producers and consumers to interact together in a way that promotes secure energy supplies and CO2 reduction.
You are also right that we have been very clear that energy companies, not government, will fund, develop and build new nuclear power stations, including meeting the full costs of decommissioning and each operator’s full share of waste management costs. Indeed, the Energy Bill includes provisions to ensure this. When we announced our decision on nuclear, we invited energy companies to come forward with proposals to build new power stations. We also said that the government should take active steps to facilitate this. You call this “slashing planning red tape”, I disagree. Our reforms to the planning system will improve the speed and efficiency of the planning system for nationally significant infrastructure, including new nuclear power stations, whilst giving local people a greater opportunity to have their say.
Other facilitative actions include an assessment to identify the most suitable sites for new build, and continuing to work with our EU Partners to strengthen the Emissions Trading Scheme, to give investors confidence in a continuing carbon market. These are all set out in our White Paper.
John Hoffman, Romney Marsh photographer
PEi: The average age of nuclear engineers in the UK is over 50. Many employees with the very skills most in demand are on the verge of retirement. What is your government doing to ensure the nuclear industry has the workforce to move forward with its expansion plans?
Malcolm Wicks MP: We know that across the energy sector as a whole in the UK, large numbers of workers will be retiring in the next decade. New nuclear build is challenging, but if nuclear power stations are not built, alternative capacity will be needed anyway and we will need similar skills to do this.
The situation is manageable. There is time to ensure we have the necessary skills, but we must start soon.
Specifically on nuclear, government has worked with the Sector Skills Council, Cogent, employers and the Nuclear Decommissioning Authority to set up the national Skills Academy for Nuclear, which I (and David Lammy MP) launched last month. The Academy will start over 1000 students on apprenticeships and 150 on Foundation Degrees in the next three years and deliver shorter courses to up-skill 4000 existing workers.
Within industry, the nuclear industry has a leading skills strategy and is well positioned to meet the challenges to come. As for professionals, we know that the engineering and science base is ageing, but 11 institutions now offer Masters courses and enrolment is growing strongly.
Renewables & climate change
PEi: Do you think the UK will hit its 2020 renewables target? If not, will the UK simply import renewable electricity, perhaps through the UK-Netherlands link set to be commissioned in 2010?
Malcolm Wicks MP: The 2020 target is for the EU as a whole; the Commission has proposed a target for the UK of 15 per cent, and, like all the other member states, we’re now going to be negotiating about various parts of the Directive. But, yes, as the Prime Minister has made clear, we’re completely committed to meeting the 2020 target. Now, we start from a relatively low base in renewables à‚— unlike, for example, Sweden with its history of hydro.
So our target is certainly hugely ambitious, requiring something like a seven-fold increase in renewable generation. We’ve made rapid progress on renewables in the last five years, but we will certainly have to redouble our efforts and more. In terms of the government’s role, that means ensuring that the conditions for investment are right and that the planning process is fit for purpose.
As for importing electricity, we do of course already import some, and if it’s a cost-effective way to reduce carbon emissions then importing more may be attractive. But, no, the vast majority of the progress we have to make by 2020 will be through new renewable projects here in the UK.
PEi: Feed-in tariffs are widely accepted as the most effective way to promote the uptake of renewable energy yet devised. Germany has become a world leader in renewables, exporting its technology around the world while creating jobs and cutting CO2 emissions. Has the UK missed a trick?
Malcolm Wicks MP: Government has heard arguments in favour of feed-in tariffs and recognizes they have delivered in some other countries. But not all countries are alike, and it is not the magic answer to the renewables problem. A feed-in tariff is just another way of supporting renewables in a similar way to the Renewables Obligation (RO).
There are barriers to the deployment of renewables, such as planning and grid connection, but the RO is clearly working, delivering a doubling in renewables generation between 2002 and 2005, with another 11 GW of capacity in the pipeline.
PEi: Does the government have any plans to phase out formal state subsidies on, say, the installation of solar PV, in favour of increased feed-in tariffs that would shift the burden from the taxpayer to the consumer and encourage uptake?
Malcolm Wicks MP: The low carbon buildings programme (LCBP) is our capital grants scheme that we use to subsidize the purchase and installation of microgeneration technologies in households and also in the public and third sectors. The LCBP supports not just solar photovoltaics (PV), but also solar thermal hot water, ground source heat pumps, biomass boilers and wind turbines.
Energy suppliers, acting as agents, are now offering more attractive export tariffs based on our proposals to increase Renewables Obligation Certificates for PV. For example, Scottish and Southern Energy will offer 18 pence ($0.35) per kilowatthour of power exported. The LCBP will continue to offer grants until spring 2009, so there are no plans to phase these grants out.
PEi: With the recent announcement that E.ON has been given the go-ahead to build the UK’s first new coal fired power plant for 30 years, what is the government’s position on coal new build?
Malcolm Wicks MP: Coal currently provides around a third of our electricity supply, and although many of the UK’s existing coal stations will close in the next ten years, it will remain an important part of our energy mix as we develop lower-carbon sources. We need to use coal as cleanly as we possibly can, and that’s one reason why we’re investing in the world’s first major demonstration project for CCS for post-combustion coal.
PEi: Can you foresee a time when in the UK there will be either a formal ban on the construction of new coal fired power plants or a de facto moratorium due to the carbon-related economic implications?
Malcolm Wicks MP: Assuming that CCS is successfully demonstrated, then I think the UK coal industry may actually continue for quite some time à‚— and India and China will be burning so much coal in the coming decades that for the sake of the environment we’d better hope that CCS is rolled out globally. We are working hard to achieve this.
Without CCS, I could imagine coal eventually becoming economically unviable in the UK and elsewhere in the EU as the cost of carbon is more accurately reflected.
PEi: Some observers have remarked that it seems the UK is pinning its energy policy hopes on the EU fixing a carbon price. How will you work with the UK’s partners to strengthen the EU Emissions Trading Scheme (EU ETS) to give potential investors confidence in a continuous carbon market?
Malcolm Wicks MP: We certainly are working with our EU partners to strengthen the Emissions Trading Scheme, and we think it’s vital that carbon reaches a meaningful price, not least so that companies do have the certainty they need to invest in big projects. We are working to ensure that the second phase of the EU-ETS will achieve that. But no, I don’t agree that it’s an attractive proposition for the price to be fixed à‚— I think investors would far rather see a successful carbon market.
Malcolm Wicks MP is the UK’s Minister for Energy at the Department for Business, Enterprise and Regulatory Reform (DBERR) à‚—formerly the Department of Trade & Industry.
DBERR was created on 28 June 2007, and is headed by John Hutton. Its annual budget is just over à‚£3 billion ($ 7 billion). Half of this is spent on nuclear decommissioning; the rest on a range of issues from trade promotion to energy security supply, to championing entrepreneurial businesses through the Regional Development Agencies. For more information visit www.berr.gov.uk.