By: Sarah Tennison, Low Carbon Economy Manager, Tees Valley Unlimited
Teesside Collective is a new face in the UK’s Carbon Capture and Storage (CCS) scene – comprising of a cluster of energy intensive industrial firms seeking to transform their part of North East England into Europe’s first CCS-equipped industrial zone.
It is a promising project, both industrially and environmentally, and has already won itself seed corn funding from the Department of Energy and Climate Change (DECC) as well as the backing of business and green commentators alike.
Teesside Collective challenges some common assumptions about CCS in two important ways.
Why CCS in Teesside?
Firstly, Teesside Collective is not your typical CCS project. Its focus is on capturing and storing emissions from chemical, steel and process industries – not the power sector. The project would be a national industrial asset, putting the UK at the forefront of the global drive to decouple growth from emissions.
An important part of the UK economy, the Teesside region of Tees Valley in Northeast England is home to 58 per cent of the UK chemicals industry and has a workforce of 12,000. Northeast England process industries contribute £26 billion to the UK economy.
While these industries have a long history in the region, UK and EU policy decisions mean that getting ahead of the curve is crucial to maintaining and further developing the area’s industrial base. Simply maintaining the status quo would threaten the UK’s ability to meet environmental obligations and motivate economic growth.
Decarbonising Teesside will be vital in the fight against climate change. The region is home to five of the UK’s top 25 CO₂ emitting plants and emissions per person are almost three times the UK average. In total, Teesside industries are responsible for 5.6 per cent of industrial emissions in the UK.
Facing stiff competition from other EU countries, UK industry will lose competitiveness as its national carbon floor price (CFP) makes the cost of electricity more expensive. The prospect of escalating carbon pricing permits as part of the EU emissions trading scheme (ETS) – which are expected to quadruple by 2030 – only adds to this burden on Teesside process industries and, ultimately, the UK economy.
In this context, the case around CCS for industry is possibly even more compelling than that for power. For industry there are few alternatives to using fossil fuels as either a fuel or feed stock. But closing down these industries would only serve to push the emissions abroad – i.e. carbon leakage – to countries where environmental regulations on greenhouse gases may be less stringent.
Enabling cleaner UK-based process industries would meet customers’ growing sustainability demands and provide the products needed for other parts of the UK’s low carbon economy. For example, Teesside not only produces polyester resin for 15 billion recyclable drinks bottles a year, it also produces steel and plastic – the materials needed to construct wind farms.
Industrial CCS as planned by Teesside Collective would act as both an environmental and economic win – stimulating substantial economic benefit in Teesside, the wider Tees Valley and the UK as a whole. Teesside Collective is a compelling opportunity to tackle the UK’s industrial and environmental challenges hand in hand.
The second big assumption Teesside Collective is determined to challenge is that CCS is somehow novel technology requiring further research, development and demonstration.
Not only are all of the technologies individually tried and tested, they’re also increasingly being used in concert. The Global Carbon Capture and Storage Institute (GCCSI) estimates that there are 22 CCS projects currently operating or under construction in the world.
Table 1. Industrial projects around the world (Source: Global Carbon Capture and Storage Institute)
|Process||Facility||Status||Scale (k Tonnes/year)||CO2 Use|
|Syngas||Weyburn Midale, US||Operational||3,000||EOR (50%)|
|Fertiliser from coke||Coffeyville, US||Operational||1,000||EOR|
|Oil refinery||Port Arthur, US||Operational||1,000||EOR|
|Biofuel||Decatur, US||Under development||1,000||Saline storage|
|Oil sands upgrader||Quest, Canada||Under development||1,000||Saline storage|
|Steel||Emirates Steel, UAE||Under development||800||EOR|
Most promisingly of late, we’ve seen the launch of SaskPower’s Boundary Dam Integrated CCS Project in Saskatchewan, Canada – the world’s first and largest commercial-scale CCS project of its kind. The project will integrate a rebuilt coal-fired generation unit with post-combustion amine carbon capture technology, resulting in low-emission power generation.
In terms of storage, Statoil has been capturing, injecting and storing around one million tonnes of CO2 annually since 1996 on the Sleipner oil field development in the North Sea, west of Norway. With this project, the CO2 is stored in a saline aquifer – as would be the case for the Teesside Collective project.
And – even more relevant to Teesside Collective – CCS is up and running on industrial plants elsewhere in the world outside of Europe. Initiating a project now would capitalise on a unique window of opportunity – giving Teesside a competitive edge before rival industrial locations in Europe start to develop CCS.
Industrial CCS is still new to Europe, but there is a competitive risk that other parts of the continent – Rotterdam for one – could develop their CCS plans more quickly to take the European lead. Tees Valley is the UK’s best and only hope for seizing the competitive advantage as the go to location for low carbon industry in Europe, exploiting its geographical advantage and proximity of storage resources in the North Sea.
Infrastructure already exists in Teesside that lends itself to the development of a CCS network. Some of the plants already collect CO2 as part of their processes – for example, one of Teesside Collective’s anchor projects, GrowHow, already captures around 600,000 tonnes of CO2 annually as part of its ammonia production operations.
Teesside Collective would also be able to benefit from important learnings following the first power plant CCS projects in the UK. The concentration of industrial sites and the infrastructure and skills already in place mean Teesside would have a running start. It is not as simple as joining up the dots, but there are at least dots.
Turning this potential into reality
Tees Valley Unlimited, the Local Enterprise Partnership which includes the Teesside industrial cluster, has been awarded £1 million in funding by DECC to develop a business case for deploying industrial CCS in Teesside and to make recommendations for a funding mechanism. This will be complete by summer 2015. Amec Foster Wheeler, Societe Generale and Pale Blue Dot Energy have been appointed to support the development of this work. Amec Foster Wheeler has been undertaking engineering design and cost estimations for the project. Societe Generale will provide expert advice to ensure that the project is financially viable and competitive. Pale Blue Dot Energy is providing expert CCS project development advice and is building the business case.
Teesside Collective’s four anchor projects produce steel, hydrogen, ammonia and polyethylene terephthalate (PET). With the desire for more plants to join the CCS network in the future, Teesside Collective wants to develop the framework for a ‘plug and play’ to attract new inward investment.
The project is in the early concept phase of the life-cycle and engineering definition. DECC’s initial funding will allow us to scope out and put some flesh on the bones of the project, improving understanding about its feasibility and reducing the uncertainty of its elements.
Work is ongoing, but initial findings from Amec Foster Wheeler indicate that retrofitting carbon capture technology to the four anchor projects’ different industrial processes is operationally and technically feasible.
The original premise of this phase of the project was to utilise the two UK stores in the CCS Commercialisation Programme – White Rose and Peterhead. The largest remaining uncertainty is around the characterisation of the store and assurance of its ability to contain the approximately 200 million tonnes of CO2 expected to be captured by Teesside Collective over the next 30 years or so. Definition of the store will form a key element of the next phase of the project.
A wide range of options have been considered for each element of the chain, and a selection of the capture options for an initial phase of build-out is summarised in the table below.
Table 2. Teesside Collective capture options for initial phase of build-out (Source: Teesside Collective)
|Industry||Option||Scale (k Tonnes)|
|Steel||Pre-combustion capture on excess blast furnace gas||2,200|
|Ammonia||Dehydration and compression of already captured CO2||375|
|Hydrogen||Post combustion capture with amine on flue gas from the steam methane reformer||300|
|PET||Post-combustion capture with amine on flue gas from the heaters||50|
The technologies useful for capturing CO2 from industrial processes are essentially the same as those that would be used to capture emissions from power stations –physical or chemical absorption either directly on flue gases or after a separation process such as gasification.
Teesside has also been assessed as being well-located for the transportation of the carbon to permanent storage facilities under the central or southern North Sea. It is likely that Teesside Collective will store CO2 in the same formations as those planned for the two stores under development for the UK’s power CCS projects in the area. Additional wells could potentially be required to inject the CO2 supplied from Tees Valley, and if so it is possible that some degree of dedicated facilities will be required.
The elephant in the room is, of course, financing this technology.
Societe Generale and Pale Blue Dot Energy are currently working to overcome challenges around commercial feasibility. There are two fundamental issues to resolve – how to pay for something that the market will not finance on its own, and how to share the costs and long-term liabilities between the government and the various facilities that would be involved in a shared network.
There is presently no persuasive economic rationale for industry to invest in CCS, which is why DECC has asked Teesside Collective to put forward recommendations for a funding support mechanism by the summer. Societe Generale is working with us on this, looking at financing, commercial, structural and risk issues.
On the one hand, the economics are very straightforward – customers of the process industries are not yet willing to pay a premium for low carbon products, consequently companies cannot withstand the additional costs associated with CCS and would go out of business if they were to try it alone. On the other hand, how much money the anchor projects invest will depend on the support mechanism agreed with government. This will need to address the allocation of risk along the chain as well as between the project developer, government and investors. To help determine this, Societe Generale will design an investment mechanism specifically for industrial CCS. Investment mechanisms such as Contracts for Difference are already established for low-carbon energy generation projects, such as wind and solar, but not currently for industry.
Realising the potential of industrial CCS
Teesside Collective’s work now revolves around increasing the level of certainty around the project. Our deadline to report back to DECC with our business case and recommendations for a support mechanism is this summer. Alongside this, we are continuing to build support for the project among wider stakeholders.
We currently estimate that the Teesside Collective project could be injecting up to five million tonnes of CO2 underground – instead of the greenhouse gases being released into the atmosphere – by the early 2020s. This is the best chance to realise the UK Climate Change Committee’s recommendation of widespread deployment of industrial CCS in the country by the second half of the 2020s.