Thursday, 12 November 2009

Climate change Thursday #15

Is there a case for carbon capture and storage?

So carbon capture and storage is finally happening. Scientific American reports on the first power station to not only capture carbon dioxide- which in this case you do by liquifying the gas with bakers' ammonia then separating it- but also store it 2,375 metres under West Virginia.

The New Haven 'Mountaineer' project (pictured right) only captures 1.5% of the CO2 currently. When it is expanded to 20% of the Alstom's plant, it will cost an extra 4c per Kilowatt hour on top of the 5c that the plant currently costs. The research and development outlay will be $700million. This isn't cheap but it is becoming a reality and that is what is important- with some Federal funds thrown in.

This is all good news for the UK government. The Department of Energy and Climate Change published its Framework for the Development of Clean Coal earlier this week alongside a series of National Planning Statements on energy policy.

Coal currently provides almost a third of our energy and is extremely polluting and this is not a trivial issue. My instinct is that we should build no more coal-fired power stations at all. Given the uncertainty about whether technology will actually reduce carbon emissions at an affordable cost and if the carbon can stored safely and without leakage I had a degree of initial scepticism. It just sounded too good to be true.

However, that would be the right policy response if the UK was the only country in the world but it's not.

The reality is that others will continue to build coal-fired power plants regardless of whether we do or not. Just take China (sorry China I'm always picking on you which is mean): 80% of its energy comes from coal-fired power stations; it now consumes more coal that Europe, Japan and the US combined; it may build some of the most efficient power stations in the world but its emissions are still forecast to increase by 3% per year according to the IEA; and it is building these power stations at an eye-popping rate of one per week.

So we need to have a crack at developing the technology. It might as well be here in the UK. Ed Miliband's plan is for any new power plant to be completely CCS from 2020 with the four proposed CCS demonstration projects fully retrofitted by 2025.

Of course, there is not just an environmental consideration here but there is naked economic self-interest involved as well. There could be a £40billion market in this creating 30,000 to 60,000 jobs in the process. In the dry inhuman language ofeconomics, I guess you could describe that as a 'positive externality.'

In the context of the credit crunch and as we look to re-balance our economy away from an over-reliance on financial services that is no bad thing. It is important to state though that the economic opportunities offered by clean coal are not sufficient reason to pursue its technological development.

However, when you combine the environmental benefits with the economic and our energy requirements then what might seem like a policy of evasion becomes a compelling proposition instead. If we all going to keep on building coal-fired power stations then we have to do something about the emissions. This may be a solution; it's worth a try.

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