Carbon capture and storage: is the government wasting money?

• Heather Plumpton, head of research, Green Alliance
• Liam Hardy, head of research, Green Alliance

Liam Hardy: Hello. Welcome to the Green Alliance Podcast. We’re the charity and think tank dedicated to achieving ambitious leadership for the environment. I’m Liam Hardy, one of the heads of research at Green Alliance, and today I’m going to be talking to our other head of research, Heather Plumpton, about carbon capture and storage or CCS for short.

She has recently published a briefing called “Is the government wasting money on CCS?” So as you can tell, this is a pretty controversial topic among climate campaigners and experts with some arguing that we definitely need it to meet our climate targets and others saying it’s nothing but fossil fuel industry greenwashing. The government has made it a core part of their offering to industrial heartlands and a central plank of their net zero plans. So what’s going on?

Today we’re going to answer questions like: what actually is this technology and how does it work? Do we need it? Who’s going to pay for it? What’s the role of the oil and gas industry, and what is government getting right or wrong? And what needs to change?

Let’s kick off by introducing ourselves and our interests in CCS. I’ve been working on how to decarbonise heavy industry for the past three years, particularly looking at the chemical industry in the UK, and more broadly, the potential for many industrial processes to be directly electrified, removing the need for fossil fuels in the first place. This is where CCS comes in. So while some processes are ready to be electrified, some are not, and we might need other solutions in the mix as well, like clean hydrogen, and in some cases CCS, if we want to reduce those emissions from these industrial processes.

Heather, thanks for joining me. Would you like to introduce yourself?

Heather Plumpton: Thanks, Liam. So yeah, I come from a slightly different perspective in that I led our work for a few years on phasing out fossil fuels from the UK. So looking at things like oil and gas licensing regulation in the North Sea, the tax system, and how they have acted to incentivise oil and gas extraction. Among other things, we campaigned for the windfall tax on the record breaking profits oil and gas companies made following the Ukraine War. I then started leading our work on CCS aiming to reduce our reliance on it as much as possible.

Liam: So let’s start with what CCS is. Can you give us a simple explanation?

Heather: I’ll try my best. So yes, it’s not one thing. It’s not a single technology. It’s actually the name we give to a whole bunch of different technologies that seek to deliver the same outcome, which is carbon emissions stored deep underground. So you can basically split this family of technologies into three categories.

First up, you have the carbon capture. So this is where carbon emissions are captured either from the air directly – the atmosphere – or from a stream of waste gases that come from an industrial plant or a power station. So imagine that you’re burning gas in a power station. The outflow of fumes from that gas power station could have carbon capture technology attached so that the carbon doesn’t get emitted into the atmosphere. It gets caught by the technology, it gets captured, and this is why this is a technology that has the potential to reduce emissions, and that’s why it’s included in climate plans. So that’s part one – capture.

Part two – transport. Those captured emissions then need to be taken to where they’re going to be stored. The carbon emissions are probably still in gas form at this point. They might be compressed. But you either need to use pipelines or containers on ships or trucks or maybe rail to move those emissions around. That’s the transport part.

And then finally we get to storage. So where are those pipelines actually going? The carbon emissions have to be stored deep underground. And most of the time plans for this are either using old oil and gas wells like we have in the North Sea or saline aquifers deep under the sea, and once the carbon is injected in there, it’s either trapped physically by like kind of cap rocks or it’s dissolved chemically into salt water or trapped in tiny spaces between rocks. And this is the absolute key part to making this technology work for the climate. So the emissions need to be stored in this deep underground store permanently so that they’re not going back into the climate, into the atmosphere.

Liam: Some people have said that this whole thing is unproven. So does this technology actually work?

Heather: It is a fair question. Let’s split it into those three categories again. So first up, capture. There are lots of different techniques for capturing carbon, some of which are in the very early stage of development, others are already in use in the fossil fuel industry today. So they use them already to kind of take pollutants like carbon – carbon is classed as a pollutant in this case – out of fossil gas. So they process fossil gas using a kind of carbon capture technology.

But it’s probably worth noting that the technologies that we have currently do tend to under-deliver against what they’ve been promised that they will do. So new CCS projects today in the UK will say they can capture 95% of all the emissions that they’re trying to capture. But actually real world data from existing sites shows that no project has captured more than 80% of those emissions.

Liam: So there’d always be some residual emissions released. Is that right?

Heather: We’re not talking at the moment at all about 100% emissions reduction. This is 95% in the best possible case, possibly lower than that depending on the actual application. And you know, winding the plant up and winding it down again introduces inefficiencies and things like that. So it’s not 100%.

So then we have the transport bit, which is pipelines. Effectively, pipelines is the cheapest option to transport carbon emissions around. And they do exist. There are pipelines in the US that transport carbon around. There’s 5,000 miles of them in the US at the moment. They currently are used in fossil fuel production, so in a process called enhanced oil recovery, where they pipe carbon into an oil well in order to pump more oil out of the ground.

However, there have been leaks in the US with quite serious health implications of these pipelines, so it’s not totally risk free and it needs really careful regulation and monitoring to make sure that doesn’t happen. Also worth noting that you might have noticed across these two texts we’ve talked about so far that yes, the technologies do exist, but they are mostly used for fossil fuel production at the moment, particularly internationally.

Liam: And just to clarify, we’re talking about carbon in the form of carbon dioxide. That’s what’s being piped around, pulled out and piped around.

Heather: Yes.

Liam: Great.

Heather: So then there’s the last bit, which is storage. So the last element of the carbon capture process, and Norway is a country that’s been running carbon storage projects for a couple of decades with geological studies on site that even with all of those studies, scientists have still been surprised by movement of emissions underground. So there haven’t been any leaks of carbon from those storage sites – not saying that – but it does show that there is still probably a lot of learning to be done.

So, I think what you’re saying is that there are places where different bits of this technology are being used, mostly in the fossil fuel industry. Have any of these technologies been tested at a kind of commercial scale for new applications outside the fossil fuel industry – for the cement industry, for example?

Yeah, that’s exactly it. They haven’t really been tested at large commercial scale in the industries where we actually need CCS like cement rather than the fossil fuel industry. That’s the stage we’re at.

Liam: Okay, okay, so let’s talk about that.

Let’s talk about which of those industries do we need CCS for? And which ones might have easier or cheaper ways to eliminate those emissions? I know, for example, from my own work on chemicals, that there are some processes that are just really, really difficult to decarbonise by any other means. So that must be one of the good candidates for ccs, right?

Heather: Yeah, I think it is. So we can split this up into different types of applications. For CCS, you’ve got chemical processes that produce carbon emissions, so making cement is a good example of that and some other kind of chemical products too. These are, basically chemical reactions that produce CO2, not because they’ve necessarily burnt a fossil fuel, but because of the compounds in that reaction. So there are academics working on new technologies that might mean the whole process doesn’t produce CO2, which would be great, but we are a very long way off commercial scale on those options yet. So the only real option for these types of processes to reduce emissions in the near term is ccs. So that’s a good one. Secondly, greenhouse gas removals, which basically means sucking carbon directly from air and then trying to store that underground. All modelled pathways to a stable climate require some of this technology. So this is a good reason to develop it, basically for the long term. We’re going to need this in the long term. Then thirdly, you’ve got burning biomass. You may well have heard of the Drax biomass plant in the UK that burns wood imported from Canada.

Liam: I have, I have, yeah.

Heather: Well, eventually the plan will be to stick CCS on that effectively and burning waste fits into this category too. So currently we incinerate a huge amount of household waste and, much of that actually could be recycled if we had better systems in place. It’s currently one of the dirtiest forms of power on the system in the uk, but the long term plan for those plants as well is to stick CCS on them. So there are obviously wider sustainability concerns about both of those options that aren’t purely about CCS. It’s land use questions and there’s waste and recycling and reuse kind of questions as well. And then lastly, fourth category is continued use of fossil fuels. So that might be burning gas in a boiler and putting CCS on it, or burning gas in a power station, putting CCS on your power station. Or it might be using fossil gas to produce hydrogen, which is called blue hydrogen. This is a tricky category because it obviously sustains the need for fossil fuels and therefore props up continued extraction of oil and gas. But on the other hand, there aren’t many obvious ways to reduce emissions from these options in the near term without using CCS.

Liam : Yeah, so that last one is really tricky, isn’t it? Because we can, and we are putting more and more renewable technologies into our power system in the UK and we’re trying to displace as much gas as possible, but we still need and will need some form of flexible power to back up the grid when the sun isn’t shining and the wind isn’t blowing. And at the moment, that role is played by gas power plants with their associated emissions. So we either need to find another way of delivering that clean, flexible power if we want to eliminate those emissions, or we could put CCS on those power plants. One of the alternatives could be hydrogen power plants. They come with zero emissions when they burn that hydrogen. But will there ever be enough clean green hydrogen to be made from renewables and stored to then be used in those hydrogen power plants? So either of those options, then, we’re talking about CCS, aren’t we? You know, at Green Alliance, we’ve looked into pumped hydropower and compressed air energy storage and a few others, but they’re fairly limited in either scale or maturity. So as far as I can tell, experts from across the energy sector agree that some level of hydrogen or CCS gas power plants are going to be needed. So it’s a bit tricky, isn’t it?

Heather: Yeah, exactly. It kind of feels like you’re stuck between a rock and a hard place with this. Either we continue to use unabated fossil gas power plants, we use abated, or to a degree abated gas CCS power plants, or we use hydrogen power plants, which will need to run on a dirtier form of hydrogen produced using fossil gas and CCS, at least for, probably the next 10 years. So either way, you’re locking fossil fuels into the system, which is obviously not what we want.

Liam : Yeah, yeah, There’s a really difficult question here about lock-in. I mean, you just said that we’re locking fossil fuels into the system, so what is the risk that we’re balancing with CCS? Are we simply locking in high carbon infrastructure that will then continue to cause some emissions, albeit significantly less than today, but for decades to come, probably well beyond 2050? So, yeah. What do you think?

Heather: Yeah, this is a fascinating question and there are so many things we could say and talk about on this topic, but I think the first thing I want to say is the elephant in the room here is that the oil and gas industry has been using its vast lobbying power for decades to convince politicians that they don’t need to reduce oil and gas production. You know, first it was climate change isn’t real. Then it was this concept of a personal carbon footprint that kind of placed all the responsibility on the consumer to deal with climate change. And now it’s the idea that we don’t need to stop using fossil fuels at all, we can just do CCS and everything will be fine. And we see this international climate negotiations, right, where oil and gas companies and petrostates try to prevent language on fossil fuel phaseout or they add caveats that we only have to kind of phase out that which doesn’t include abatement like CCS. And all the while, oil and gas companies put pitiful amounts of money into actually developing CCS themselves and, and say they can’t do it. We couldn’t possibly do it without chunky kind of handouts from governments and subsidies to help fund it. So, when you look at it from that perspective, CCS is a giant greenwashing scandal and we can’t ignore or forget that that is the global context that we’re operating in.

Liam : Yeah, absolutely, that makes a lot of sense. And I think you’re saying then we should basically be wary of any type of CCS that prolongs fossil fuel use because it’s being used by those oil and gas companies and some governments even as an excuse not to turn down the extraction of oil and gas.

Heather: Yeah, I think that’s definitely one argument. Right. But it also goes wider than that. We should be careful about supporting any kind of CCS because it plays straight into oil and gas industry lobbyists’ hands. That’s the challenge we have with that context is we go out and say, oh, well, you know, CCS is finer on the cement plant. And the oil and gas industry say, oh look, it’s fine. Green NGO says CCS is good. So that’s. Yeah, that’s our challenge on the types of CCS that prolong fossil fuels specifically and that risk about high carbon lock-in. Yes, these projects come with that kind of health warning that they’re going to lock in decades more fossil fuel use, which is obviously highly problematic. So, to avoid that, as you were saying, you could continue with unabated gas power on the system and throw all the money we’re currently putting into CCS into fast tracking other things like hydrogen produced from renewables, like green hydrogen. Like you were saying, could we ramp that up faster if we just put the whole CCS budget onto that instead? But I think there are problems with that too. So, first of all, we have to sit and wait effectively with gas on the system for longer, pumping out 100% of emissions, rather than the reduction we would get from putting CCS on it. So even if they’re only reducing emissions by 80%, that means we’re still taking the vast majority chunk of those emissions out of the atmosphere.

Liam: And I think that might mean even building new unabated gas power plants. Right. Because of the growing system and the growing demands. That’s one of those risks, isn’t it?

Heather: Yeah. So, you’ve got that first problem of continued emissions from gas plants. If we don’t put CCS on them, then you’ve got the problem of we don’t actually definitely know that putting more money into green hydrogen would solve the problem. Again, I think this is a point that you made quite well. The current rate of renewables we are building in the UK is already being pushed to its limits just to get as much gas off the grid as we possibly can for the kind of clean power 2030 target. So, there isn’t really going to be spare renewables capacity for making green hydrogen until at least the mid-2030s. That’s what the UK Climate Change Committee says anyway. So, the question we have unanswered is which one of those scenarios has the higher emissions over the really long term? If we look out to 2070, or you want to look at 2100, for example, the Climate Change Committee modelling that we have certainly suggests that up to 2050 the route with CCS has lower emissions. But beyond that, if we were to look at the long, really long-term implications of putting gas CCS baking it into the system effectively for decades versus waiting a decade or a bit longer without it, I haven’t seen a good answer to it and I would love to see some numbers on it.

Liam: Yeah. And that’s just emissions. Right. I mean, there’s also questions about air pollution, jobs, the economy, et cetera, et cetera. So, it’s an impossibly complex question. I wanted to just come back to something you said earlier which touches on one of these important questions. You said that oil and gas companies have put barely any money into funding CCS and they keep asking for government subsidies. So, who’s paying for CCS in the UK at the moment?

Heather: This is the crux of the fairness at the heart of this issue for me, I think. So, currently, government has set up five different business models for ccs, which is basically a polite way of saying subsidy systems for different industries to adopt CCS and some of those business models are taxpayer funded. So, for industrial things, industrial applications like cement and some aspects of the chemicals industry, waste incineration and the networks they need to build to transport the emissions and store them, that’s all taxpayer funded. The other two are funded through levies on bills. So, hydrogen production, which can involve ccs, the cost of that business model is planned to be levied onto gas shippers, basically people that ship gas around with the assumption that they will basically pass 100% of that cost onto household and business gas bills. So, hydrogen production, the cost goes on gas bills. For the gas CCS power plants, the cost is levied on electricity bills directly. So, in fact, of the nearly £22 billion that the government committed to the first set of CCS projects last year, roughly 75% of that is due to come from levies on bills.

Liam: Wow. So, the household energy bills are what’s going to subsidise companies to build gas, CCS power plants and hydrogen production plants. Adding these levies onto energy bills in the middle of a cost of living crisis certainly feels unwise politically.

Heather: Exactly. And with the levies on gas bills, there is further risk basically that as there will be households moving away from gas, so those who can afford a heat pump, for example, are going to switch away from a gas boiler and get their heat pump, which runs on electricity. So, as that happens increasingly over the next decade, there will be fewer and fewer households still on gas and there will therefore be fewer and fewer households still paying the levy, which means they’ll all have to probably contribute more. And those households are likely to be the lower income groups who can’t afford a heat pump.

Liam: So that feels deeply unfair, doesn’t it? It doesn’t feel like a good solution. Do you think the cost of CCS should come off levies and just go straight onto the government books and be spread across all taxpayers?

Heather: That is one way of resolving that specific issue. Yeah. But I think more broadly what we want to see, what we need to see is that the polluters pay to clean up the emissions that they have caused. Right. Oil and gas companies have made extremely high profits from oil and gas extraction for decades while knowing the risk to the climate, talking a big game about CCS and actually doing nothing. So, it seems fair to me that they should shoulder the burden, for cleaning up these carbon emissions by funding CCS themselves.

Liam: Where does that leave us? There are obviously concerns about CCS, particularly that connection with the fossil fuel industry and how they use it as a sort of get out of jail free card without wanting to actually pay for it. But it also sounds like we’re probably going to need it in some areas. So how are we going to square that circle?

Heather: Yeah, it’s tricky. It’s tricky. But there are things the government can do. So, in our new briefing we are asking government to do three things. The first is make polluters pay for this. So, make sure that the oil and gas companies are the ones footing the bill for this technology, not energy consumers or taxpayers. Secondly, make sure any further money spent on CCS is directed to industries that really need it. So, for example, cement, which doesn’t really have another option right now rather than more gas, power plants and then three. And Liam, you’re going to like this one because it speaks to your stuff to rebalance policy support across the different technologies for decarbonising industry. So, at the moment CCS gets a lot of money allocated to it and currently directly electrifying processes, which is often the kind of greener, more efficient option through things like heat pumps, receives far less government support. So, they should at least level the playing field so that the kind of greener, more efficient option, electrification, gets the same level of support as CCS and hydrogen.

Liam: Excellent. So, can you give an answer to this question then? Is the government wasting money on ccs?

Heather: I can try. So, I think it’s both yes and no on the no side. No, because we are going to need some CCs. We do need to spend some money on it effectively. But yes, they are wasting the money in that. First of all, they’re not directing it to where it’s absolutely necessary and needed. So, in places like the cement industry, which doesn’t really have any other options, so the money isn’t being used strategically in that sense. And then secondly, they’re not making the oil and gas companies, the polluters, pay for this. So, we are using taxpayer money and consumer energy bill levies to pay for this. And that doesn’t feel right either. So, it’s yes and no.

Liam: Okay, so the government’s wasting the wrong money on the right thing. Yeah, that definitely sounds like something I would say.