Industry coalition demonstrates the financial case to seed clean industrial growth in Tees Valley

  • Teesside Collective publishes viable finance proposal to support unique Industrial Carbon Capture and Storage (CCS) network.
  • Finance mechanism would see Government and industry share costs to clean up energy-intensive facilities.
  • Total cost of this model, including access to a transportation and storage network, is £58/tonne CO2 – making Industrial CCS as significant as offshore wind (£200/tCO2) and new nuclear power (£128/tCO2) in enabling Government to meet its carbon reduction obligations.
  • Project would transform Tees Valley economy and be replicated across the country as part of the UK’s Industrial Strategy.

The Tees Valley could be the birthplace of vital clean industrial growth, attracting inward investment and job creation, under finance proposals published today by industrial cluster Teesside Collective.

The report, funded by the Department for Business, Energy and Industrial Strategy and commissioned from Pöyry Management Consulting, sets out the business case for an Industrial CCS support mechanism that would grow the UK’s industrial base while substantially reducing carbon emissions.

Paul Booth, Chair of Tees Valley Local Enterprise Partnership and board member of Tees Valley Combined Authority, said:

“There is no doubt the technologies involved in CCS are tried and tested and that Teesside has the concentration of facilities that make it the ideal place to start. The benefits in terms of long term industrial growth and emissions reduction are also clear.

“The question this report answers is whether there is a cost-effective way of making this a reality. The answer is a resounding yes. We know the demands on the public purse are great, but these are also lean industries with low margins. Working together, sharing the costs and risks opens up vast opportunity for all involved.”

Lord Oxburgh, who chaired the cross-party Parliamentary Advisory Group that published a report on CCS in 2016, said:

“Applying CCS to industry represents some of the cheapest available carbon abatement in the UK economy. The Teesside Collective proposals offer a triple win – the greening of energy-intensive industry, meeting national carbon reduction targets and local industrial rejuvenation. I strongly recommend that Government commits to helping finance the project as a cornerstone of its emerging Industrial Strategy.

EEF, the manufacturers’ organisation, stated:

“As the UK continues to develop its post-Brexit Industrial Strategy, this proposition for industry and government to work together to sustain and regenerate manufacturing hubs around the country in a carbon-constrained world is welcome.

With Industrial CCS essential to the decarbonisation of many energy-intensive manufacturing sectors, affordable ways must be found to get projects underway. This proposal offers a valuable insight as to how that might be achieved.”

The total cost for this model, including access to a transportation and storage network, is £58/tCO2, making Industrial CCS a less expensive form of carbon abatement than offshore wind (£200/tCO2) and new nuclear power (£128/tCO2). For Government to meet its carbon reduction obligations, Industrial CCS needs to be implemented alongside low carbon energy sources.

Teesside Collective’s proposed model is designed as an attractive proposition to both Government and energy-intensive industries, with a compelling business case for both parties to invest while also considering compatibility with other sectors such as power. Teesside Collective’s model proposes:

  • Government – A Government-run CCS Delivery Company would provide 50% of upfront capital in the form of a grant. Government would also provide capex support and 100% opex during the 15-year lifetime of its contract with energy-intensive industries. Incremental operating costs, including payment for use of the transport and storage network, are covered by Government.
  • Energy-intensive industries – Investing a portion of its 50% capex contribution up-front, energy-intensive industries would then receive a payment from Government to pay back the capital with an agreed return on investment. Some EU-ETS downside protection is included as carbon savings are shared. After the 15-year support period, energy-intensive industries gain a CCS system long-term that they can use without additional Government payments.

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Notes for editors

  1. For media enquiries or for an embargoed copy of the report please contact Kira Scharwey (kira.scharwey@madano.com or 020 7593 4000). The full report can be viewed at http://www.teessidecollective.co.uk/teesside-collective-report-a-business-case-for-a-uk-industrial-ccs-support-mechanism/.
  2. This finance model is presented as a framework and preferred approach to deliver the infrastructure for Industrial CCS in the UK. While broad options have been identified with varied parameters and evolutionary expectations, elements of the model will need to be finalised and negotiated to reach agreement.
  3. This model takes account of existing documented work on Industrial CCS financing, storage and regulation, including Teesside Collective’s Blueprint reports published in July 2015.
  4. Teesside Collective is being led by Tees Valley Combined Authority and the Tees Valley Local Enterprise Partnership, working with major employers in Teesside including Lotte Chemical, BOC, CF Fertilisers, Sembcorp Utilities UK and SABIC. All face stiff competition internationally and the prospect of escalating carbon permit prices in the future. These organisations are all members of NEPIC, the industrial cluster also active in the Collective.
  1. Pöyry is an international consulting and engineering company. It serves clients globally and locally in the UK across the energy and industrial sectors. It delivers strategic advisory and engineering services, underpinned by strong project implementation capability and expertise. Its focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation, water and real estate sectors. poyry.com
  2. Teesside’s concentration of industrial emitters and proximity to potential storage sites under the North Sea mean the area is industrially and geographically suited to be the starting place for large-scale industrial decarbonisation in the UK. It would have far reaching benefits in terms of maintaining and growing the industrial base and workforce in the Tees Valley and the wider UK. It would also contribute to the significant cuts in emissions required to reduce UK carbon emissions by 80% by 2050. For more information on how low carbon technologies would impact the region:
    • An animation outlining the benefits low carbon technologies would bring to the region.
    • “Teesside 2030”, a short film exploring the economic and environmental benefits the scheme would have, from the perspective of the 2030s.
  3. CCS is a group of proven technologies that can capture, transport and permanently store up to 90% of the CO₂ emissions produced by burning fossil fuels, preventing them from entering the atmosphere. To date, the focus in the UK has been on commercialising CCS for electricity generation. Teesside Collective is an important departure. Its premise is that a range of industries would be able to capture their emissions, plug them into a shared pipeline network, and send them for permanent storage under the North Sea.