Final report for One North East And NEPIC 21/12/10 - The Carbon ...

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The case for a Tees CCS networkFinal Report6 Project structuring and ownership ................................................................................ 556.1 Single „midstream‟ promoter.................................................................................... 586.2 Joint venture approach ............................................................................................ 586.3 A joint venture development in practice .................................................................. 616.4 Tariff setting and market regulation ......................................................................... 626.5 Onshore and offshore development ........................................................................ 636.6 The role of the EU and UK Government ................................................................. 647 Conclusions and Recommendations ............................................................................ 657.1 Barriers to delivering a North East CCS network .................................................... 657.2 Recommended actions to deliver a North East CCS network ................................ 668 Acknowledgements ...................................................................................................... 712
The case for a Tees CCS networkFinal ReportTable of FiguresFigure 1 Timeline for potential development of a joint venture for a CCS network in theTees Valley (coupled to the construction of an „Anchor‟ CCS project). ................................ 1Figure 2 CO 2 emissions and emissions intensity by UK region (2008). ................................ 7Figure 3 Emissions and value at stake for existing and proposed CO 2 sources in Teesside.............................................................................................................................................. 10Figure 4 Gross value added at risk in carbon intensive industries in Teesside .................. 11Figure 5 Key elements of CCS are capture (from fossil power stations and industry),pipeline transport and storage deep underground. ............................................................. 14Figure 6 Value chain for CCS comprises sources, transport and storage .......................... 17Figure 7 High density of large (red circles) and medium (blue circles) existing and potentailCO 2 emitters in the Tees Valley. ......................................................................................... 19Figure 8 Proximity of diverse storage options (green circles) in the North Sea. ................. 21Figure 9 Schematic of „Anchor-only‟, „Small‟, „Medium‟, and „Large‟ onshore networkoptions. ................................................................................................................................ 23Figure 10 Baseline CCS uptake scenarios for Teesside .................................................... 27Figure 11 Interplay of % utilisation and % discount rate on cost of service of Tees ValleyMedium CCS network. ........................................................................................................ 28Figure 12 Cost of service of investment in offshore CO 2 pipeline infrastructure compared tobaseline scenario. ............................................................................................................... 29Figure 13 CCS marginal abatement cost curve for a „Large‟ network of emitters in the TeesValley. Each bar corresponds to an individual emitter connected to a common transportand storage network. ........................................................................................................... 31Figure 14 Capital outlay for the four Tees Valley CCS network scenarios. Peak capacities(Mt/yr) and average system £/t CO 2 abated costs are also shown. .................................... 33Figure 15 Commercial risks across the project lifecycle ..................................................... 36Figure 16 Contractual linkages for a potential CCS network .............................................. 44Figure 17 Potential sources of finance for CCS projects .................................................... 48Figure 18 Potential ownership structure of the assets across the Tees Valley CCS networkchain. ................................................................................................................................... 61Figure 19 Timeline for potential development of a joint venture for a CCS network in theTees Valley. ......................................................................................................................... 703
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