Infrastructure Horizons: CCS. A practical guide for contractors seeking to enter the Carbon Capture & Storage civil engineering sector.

Transcription

1 Infrastructure Horizons: CCS A practical guide for contractors seeking to enter the Carbon Capture & Storage civil engineering sector.

2 Contents 01 CONTENTS 02 INTRODUCTION 03 WHAT IS CARBON CAPTURE AND STORAGE? 04 DEPLOYMENT OF CCS IN THE UK 05 TACKLING BARRIERS TO DEPLOYMENT 05 CCS DEVELOPMENT FORUM 06 THE OFFICE OF CARBON CAPTURE AND STORAGE 07 CCS COMMERCIALISATION PROGRAMME 08 PETERHEAD CARBON CAPTURE AND STORAGE PROJECT 09 WHITE ROSE CARBON CAPTURE AND STORAGE PROJECT 10 SKILLS AND SUPPLY CHAIN 11 FUTURE SUPPLY CHAIN EVENTS 11 ADDITIONAL RESOURCES 01

3 Welcome Carbon Capture and Storage New Entrant Information Pack This pack has been delivered with support from the CITB Growth Fund. The fund provides financial backing to encourage innovative ideas that deliver management training benefits across the industry. CECA would also like to thank the following organisations for their help and support in the preparation of this information pack: Department of Energy and Climate Change (DECC) and Carbon Capture and Storage Association. The Carbon Capture and Storage New Entrant information pack was written by Marie-Claude Hemming. Introduction to the Toolkit Two projects (Peterhead Gas CCS and White Rose Coal CCS) have been awarded contracts by DECC to undertake Front End Engineering Design (FEED) studies. When these projects have achieved financial close (expected in late 2015), there may be opportunities for contractors looking to become involved in the projects. In the longer term (2020s and beyond) when a CCS industry is established in the UK there will be a growing market of opportunities in this sector. CCS enables 90% reduction in carbon dioxide emissions from fossil fuel based power generation and industrial processes, and as such has a valuable role to play in helping the UK achieve its carbon emission reduction targets. If developed at scale CCS will: Allow the safe removal and permanent storage of carbon dioxide emissions from coal and gas fired power stations; and Remove and permanently store emissions from large industrial sources such as steel or cement factories. The industry is currently at an early stage. To bring down costs and allow CCS to be more widely used, the full chain of capture, transport and storage needs to be built, operated and therefore developed on a commercial scale. Much is being done to develop a CCS industry in the UK. It was with this is mind that in 2013 the Civil Engineering Contractors Association proposed the creation of a guide to the sector for contractors who are looking to enter the market. Inclusion of CCS within a mix of low-carbon technologies is the lowest-cost route to decarbonisation. Evidence from the International Energy Agency (IEA) shows that without CCS, the cost of meeting a 50 per cent global CO 2 reduction target by 2050 would increase by 40 per cent. While the information pack is aimed at smaller firms, we hope that it will have a wider audience who may find its contents useful, whatever their position in the supply chain and experience level. The information pack is intended to provide an overview of the sector, identifying the key players. 2

4 What is Carbon Capture & Storage? Carbon Capture and Storage is a technology that has the potential to capture up to 90 per cent of the carbon dioxide (CO 2 ) emissions produced when fossil fuels are used in electricity generation and industrial processes. CCS can also be used with renewable biomass to achieve negative emissions by taking carbon dioxide out of the atmosphere. The CCS chain consists of three parts; capturing the carbon dioxide, transporting it to a licensed CO 2 site offshore and securely storing it below ground or under the sea bed in depleted oil and gas fields or deep saline formations. In the capture process the CO 2 is separated by either precombustion capture, post-combustion capture or oxyfuel combustion. It would then be transported by pipeline or ship for storage several kilometres underground or below the sea bed. It is estimated that, in specially chosen sites, carbon dioxide can be securely stored indefinitely. Carbon dioxide that is captured can also be used for Enhanced Oil Recovery (EOR). CCS in the power sector is also on progress to become an established industry in North America with two projects approaching the operation phase. Commercial deployment of CCS in the UK will involve the widespread adoption of existing techniques for each of the three parts of CCS, combined with robust monitoring techniques and Government regulation. Commercial deployment of CCS in the UK will involve the widespread adoption of existing techniques for each of the three parts of CCS, combined with robust monitoring techniques and Government regulation. 3

5 Deployment of CCS in the UK The UK is a world-leader on the development of CCS. The Westminster Government is keen to promote widespread deployment of cost-competitive CCS in the power sector and CCS on a variety of industrial applications in the 2020s. CCS represents a major green growth opportunity for the UK. In the future there will be clusters of power and industrial plants linked together by a pipeline network transporting CO 2 to suitable clusters of storage sites offshore. This is the only way to develop CCS costeffectively and ensure the cost-effective decarbonisation of power and industrial facilities. The UK has a number of key advantages that make it ideal for the deployment of CCS, including: Extensive storage capacity in the UK Continental Shelf, particularly under the North Sea. Clusters of power and industrial plants with the potential to share CCS infrastructure. Expertise in the offshore oil and gas industry which can be readily and easily transferred to the business of CO 2 storage. Academic excellence in CCS research. The potential for such clusters already exists in several regions in the UK, including the east coast of Scotland, Yorkshire & Humber, Teesside, and around the East Irish Sea. There are also other smaller clusters and other potential storage sites. The UK Government is working with industry to foster and create a new cost-competitive CCS industry in the 2020s. Government s support for the development of CCS includes: A 1 billion CCS Commercialisation Programme to support commercial-scale CCS. A 125 million, 4-year co-ordinated research, development and innovation programme, and an additional 60 million of funding for existing projects, which was announced in the 2014 Budget. Reform of the UK electricity market so that CCS will be able to compete with other low-carbon energy sources. The UK Government is also: Working with industry to take forward the actions of the CCS Cost Reduction Task Force. Working with industry to develop the supply chain, create storage and assist the development of CCS infrastructure, initially through the projects selected for FEED studies under the CCS Commercialisation Programme. Providing a regulatory regime for CCS. Sharing the knowledge and experience learnt from projects in the UK and around the world, to help reduce costs as quickly as possible. The Government s response to the recommendations of the CCS Cost Reduction Task Force focussed on the wider development of CCS and can be found at: 4

6 Tackling Barriers To Deployment The main hurdle is cost and the need to show a full chain commercial scale project. The steps needed to achieve cost competitive CCS-generated power versus other low-carbon power are addressed in the report from the CCS Cost Reduction Task Force. However, there are additional key barriers to address in order to successfully deploy CCS on a commercial basis in the UK. This will require: An enabling regulatory framework. A commercial framework which allows CCS to compete with other low-carbon technologies. The right skills and supply chains capable of providing the required goods and services. A clear vision of how, where and when to develop transport and storage infrastructure. CCS Development Forum Whilst the elements of the CCS chain use proven technology, the development and commercialisation of fullchain CCS still presents many challenges. The Government s aim is that CCS is cost competitive with other low-carbon technologies in the 2020s. This requires close working between industry and Government to overcome these barriers. The Energy Minister, Michael Fallon from DECC co-chairs the Forum with Michael Gibbons OBE of the Carbon Capture and Storage Association. For further details, visit: policy-advisory-groups/95#role-of-the-group. The CCS Development Forum was formed in July 2010 and re-launched in 2013, following a report from the Cost Reduction Task Force, with a more focussed membership to drive forward actions and resolve issues. Members are senior executives drawn largely from industry who are directly invovled in delivering CCS in the UK. 5

7 The Office of Carbon Capture and Storage Created in 2010, the Office of Carbon Capture and Storage (OCCS), sits within the UK Department of Energy and Climate Change. OCCS sets out the strategic path for the use of CCS, facilitates the delivery of CCS, creates the policy and support arrangements to stimulate private sector investment, as well as working with stakeholders to remove barriers to investment and development in the UK and globally. To accelerate the uptake of CCS, the OCCS also undertakes outreach and collaborative activities, including participation in a number of international forums, sharing experience from the UK commercialisation projects as well as research and development. To increase to overseas markets, OCCS works with UKTI and other partners to promote UK business. OCCS also has an important role in representing UK interests in Europe, helping to secure EU funding for the UK projects. Above all, the OCCS aims to implement measures to help drive down the cost of CCS so it can be cost-competitive with other low-carbon generation alternatives. CCS Roadmap In 2012 the UK Government published a roadmap on how it will achieve its goal of seeing commercial deployment of CCS in the UK in the 2020s. More information on the Roadmap can be found here: An update was published as part of the Government response to the CCS Cost Reduction Task Force in October 2013 and is available here: ccs-cost-reduction-task-force Scotland The Scottish Government supports CCS as a critical new technology that would transform the way power is generated, help reduce carbon emissions and ensure security of supply. Carbon Capture and Storage - A Roadmap for Scotland was published in March It sets out a vision for CCS in Scotland and identifies the key actions as well as how some of the existing challenges and uncertainties around CCS might be resolved. A progress report was published in May Further details can be found here: Energy/Energy-sources/traditional-fuels/new-technologies/ SGactionCCS The first focus will be on development of CCS for the power sector because it is the largest source of emissions in the UK. However, CCS on industrial plant is also important for meeting emissions reduction targets. 6

8 CCS Commercialisation Programme In order to bring forward the very first full chain commercial scale CCS projects in the UK, the Government launched a competition called the CCS Commercialisation Programme in April This competition makes available up to 1 billion capital funding for the competition leaders, together with additional support through a Contract for Difference ( CfD ) via the UK Electricity Market Reform, to support the commercialisation of CCS projects. Thus there is capital support available for construction and operational support available through the CfD. In March 2013, from an initial list of eight projects, the Government shortlisted two preferred bidders and two reserve bidders. In December 2013, the Government awarded the first Front End Engineering and Design (FEED) contract to the White Rose Coal CCS project. This was followed in February 2014 by the award of FEED to Shell for the Peterhead Gas CCS Project. FEED is a programme of detailed engineering, planning and financial work to finalise and de-risk aspects of the proposal ahead of taking final investment decisions, and proceeding to construction. Companies are expected to take final investment decisions in late 2015/early Further details on the Commercialisation Programme can be found here: Details of the other projects can be found here: current-projects/ 7

9 Peterhead Carbon Capture and Storage Project Shell UK Limited and SSE are looking to develop the world s first commercial-scale full-chain gas CCS project. Subject to securing the necessary approvals, and with the appropriate commercial arrangements in place, the project is expected to capture in the region of 10 million tonnes of CO 2 during its 10-year life. Shell and SSE will conduct an extensive public consultation throughout the development of the project. The project will capture CO 2 from one of the existing turbines at SSE s Peterhead Power Station and the CO 2 will be transported via existing pipelines to be stored in Shell s Goldeneye depleted gas field. Further information can be found at: environment-tpkg/peterhead-ccs-project.html A nominal timeline can be found below. Community consultations, Environmental Impact Assessments, and Front End Engineering Design Construction Q Q Q Government announcement of preferred bidders Planning application submitted Government/ Shell final investment decision Operations begin 8

10 White Rose Carbon Capture & Storage Project The White Rose Carbon Capture and Storage Project (White Rose) is a proposal to build a new state-of-the-art 426MW (gross) coal-fired demonstration power plant with full carbon capture and storage equipment deployed from the outset. White Rose would be one of the first large scale demonstration plants of its type in the world and could also have the potential to co-fire biomass alongside coal. The purpose of the White Rose plant is to prove that CCS technology can be used to generate reliable, low-carbon electricity competitively, helping to limit damaging climate change. The plant would generate enough low-carbon electricity to supply the equivalent needs of over 630,000 homes. The electricity would be distributed by National Grid s electricity transmission network on demand in the same way as occurs at conventional power stations. Located at the Drax Power Station site near Selby in North Yorkshire, the CCS technology at White Rose would be capable of capturing two million tonnes of CO 2 per year, some 90% of all CO 2 emissions produced by the plant. Should biomass be co-fired with coal, White Rose could emit zero or even negative net CO 2 emissions to the atmosphere. Capture Power, the consortium proposing the White Rose project, has been formed by three companies, Alstom, Drax and BOC. Alstom would be responsible for White Rose construction and Drax for the operation and maintenance of the power plant including the CO 2 capture facilities. BOC would oversee construction, operation and maintenance of the air separation infrastructure that provides oxygen for plant operations. The CO 2 captured for White Rose will be transported by a pipeline constructed and operated by National Grid to a permanent geological storage site beneath the Southern North Sea. The White Rose project will be the anchor project for National Grid s wider plan to develop a CO 2 transport and storage solution for the region - the Yorkshire and Humber CCS Trunkline.The UK Government have taken positive steps in this regard, as they have successfully made funding available (as part of the White Rose FEED contract) to the FEED study for this Trunkline. It is anticipated that the Trunkline would have the capacity to transport up to 17 million tonnes of CO 2 every year. The Yorkshire and Humber region is considered an ideal location for CCS project proposals due to the number of power stations and large industrial plants in relatively close proximity. A CCS pipeline network connecting such facilities could help to develop cost-effective CCS technology for other projects in the UK and abroad. White Rose would act as potential catalyst for development of the regional CCS pipeline network. The White Rose proposal has significant implications for the local economy. Expected benefits to the community include the creation of more than 1,000 new construction jobs over the four-year development period as well as at least 60 permanent, operational jobs at the plant. The associated, proposed Yorkshire Humber CCS pipeline is expected to create ~1000 construction jobs. The proposal would also help secure the area s on-going involvement with energy generation in the UK as well as acting as a centre of excellence for a wider CCS export industry that might be developed. The White Rose proposal is still at an early stage but the Capture Power consortium is confident that the will exists among all the partners to make the project a reality that will help pave the way for the commercial rollout of CCS technology in the 2020s. Companies interested in the opportunities the project will offer should register via the project website at www. whiteroseccs.co.uk. In their registration, companies should briefly describe the services they are offering. 9

11 Skills & Supply Chain There are clear advantages to economic growth from ensuring that local companies have the capability to supply technology and skilled workers to CCS projects, and attract new suppliers to set up and manufacture in the UK. The supply chain for constructing integrated CCS projects will be complex and a range of business and contractual relationships will emerge as the sector matures. The UK supply chain has the necessary expertise and capability to deliver a major part of the demand during the early commercialisation phase. However, the CCS capacity and corresponding demand for CCS-related components, services and skills are expected to increase significantly after that, and so the UK supply chain needs to develop in parallel to fill the gap. Much of the supply chain is expected to involve existing businesses activities, with the remainder in new applications of existing activities associated with CCS services. Similarly a wide range of skills will be required from a strong pool of skilled people for the successful development and deployment of CCS to proceed. Many of the skills needed exist in the UK workforce because they are already utilised by other related industries including power generation, chemical and process engineering, pipelines, offshore engineering and geological exploration; however many of these sectors report shortages of skilled staff. The challenge is to ensure that gaps in the UK skills base and supply chain are identified and addressed. To ensure that the UK is well prepared to deploy commercial CCS in the early 2020s the UK Government is investigating current initiatives such as the Advanced Manufacturing Supply Chain Initiative (AMSCI), the Regional Growth Fund (RGF) and other schemes as they are introduced, to see how they can support projects that will impact on supply chain, skills and economic growth, as well as projects which would support supply to a sustainable CCS industry. 10

12 Future Supply Chain Events Working with partners such as CECA the sector is staging a one-day supply chain conference in London on 12 May For further details, visit: This is intended as an introductory event and will be followed by further events in due course. Additional Resources The Carbon Capture and Storage Association: UK Carbon Capture and Storage Research Centre: Energy Industries Council: Department of Energy and Climate Change: department-of-energy-climate-change Zero Emissions Platform: 11

13 Infrastructure Horizons Infrastructure Horizons online CECA s Infrastructure Horizons: CCS guide represents an overview of the sector and its relationship with its civil engineering supply chain at a given point in time. Given the fast pace of change in the sector, it is essential that this guide is updated regularly to detail the latest developments that occur, whether it be in terms of new opportunities coming to the market, changes in the existing client base, or new thinking in relation to any of the issues covered by the guide. For this reason, CECA wll be reproducing all of the CECA Infrastructure Horizons series online at: This will allow appropriate updates and amendments to be made as and when they occur. Access to the website will be free to the public. For further information, please contact CECA chief executive Alasdair Reisner on , or alasdairreisner@ceca.co.uk. Infrastructure Horizons is a series of guides prepared by CECA to provide contractors with a snapshot of emerging markets in the UK. The series has been undertaken with the generous support of the Construction Sector Skills Council the CITB. About CECA The Civil Engineering Contractors Association is the representative body for companies who work day-to-day to deliver, upgrade, and maintain the country s infrastructure. With more than 300 members split across eight regions, CECA represents firms who together carry out an estimated per cent of all civil engineering activity in the UK, in the key sectors of transport, energy, communications, waste and water. About the CITB The CITB is the Sector Skills Council and Industry Training Board for the UK s construction industry, working with industry, for industry, to deliver a safe, professional and fully qualified UK construction workforce. The CITB works with construction companies to help them improve skills, increase their competitive edge, and respond to the many challenges employers face - from the low-carbon agenda, through to reducing costs on-site and recruiting the best and brightest talent for their sector. 12