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

The case for a Tees CCS networkFinal ReportExecutive SummaryTees Valley manufacturing industries are critical to the overall prosperity of the North Eastof England. Recent years have seen inward investment of more than £800m frominternational businesses and further investment worth £8 billion pounds is underconsideration.The future prosperity of the Tees Valley is threatened by rising CO 2 prices within the EUemissions trading scheme. Nearly forty wealth generating businesses in the Tees Valleyemit more than 50,000 tCO 2 /year and eight of these are forecast to emit on average morethan 1 million tonnes (1 Mt) of CO 2 each year. If the impacts of future CO 2 prices andregulation are not addressed it is possible that business will be unable to continue as usualfor some of these „carbon-intensive‟ industries. Inaction could lead to reducedcompetitiveness, profitability and viability of these carbon intensive businesses. Somebusinesses will relocate production to jurisdictions with less stringent environmentallegislation to reduce costs. This would significantly undermine the economy of the TeesValley and North East of England, and the objective of climate mitigation policies.CCS technology offers the potential for substantial cuts in CO 2 emissions from the powersector and energy intensive industry at affordable cost, globally, in the UK and specificallyin the Tees Valley. A parallel engineering study has identified extensive technical potentialfor CO 2 capture at nearly forty sites in the Tees Valley – densely clustered within a fewkilometres of each other. Stakeholders in the region are familiar with CCS technologiesand several key emitters consider that they could deploy CO 2 capture facilities in theperiod 2018-2030.A range of CO 2 transport options can be developed to various levels of ambition/capacityto connect capture with storage offshore. An integrated pipeline network could transportCO 2 from a range of sources through a common hub and offshore pipeline much morecost-effectively and conveniently than would be the case if each emitter built their owndedicated pipeline. Indeed it is unlikely any point-to-point solution would be economicallyviable. CO 2 transport by ship is also technically feasible as suitable port facilities exist inthe Tees Valley.UK and European public funding for CCS demonstration provides an early window ofopportunity to develop a „future-proofed‟ CO 2 pipeline network in the period 2015 to 2020.Both public and private investors in a CCS network will consider opportunity costs ofinvestment, and will have diverse priorities for investment criteria including:Overall economic and strategic benefit (value at risk, replicability, alignment withwider objectives).Environmental benefit (i.e. how much CO 2 abatement is likely).Costs (e.g. up-front, ongoing, financing costs, costs of service, and the differencebetween system costs and expected carbon prices).Flexibility (e.g. incorporating additional CO 2 supply or connection to alternativestorage sites).Robustness of investment case (e.g. if utilisation falls below expectations).Overall complexity (e.g. planning issues, requirement for regulation).The ability of stakeholders to agree on system design and business models anddeliver infrastructure in a timely manner.5