LONDON |
LONDON (Reuters) - Britain should move forward with developing carbon capture and storage (CCS) demonstration projects to help meet climate change targets, the government's advisory group on climate change said, just weeks after a UK project was canceled.
David Kennedy, chief executive of the Committee on Climate Change (CCC), said CCS should play a part in decarbonizing Britain's economy ahead of targets to cut emissions by 80 percent from 1990 levels by 2050.
"We have a set of demonstration projects here in the UK and we are still committed to doing that so it is very important for the government to come out with its proposals to get forward demonstration projects up and running," he said.
"I think it needs to happen because there is a lot of interest in putting investment into CCS here so we need to take advantage of that before investors look elsewhere."
In October, the UK government scrapped a demonstration project in Longannet, Scotland.
The government is still committed to getting a demonstration project up and running as soon as possible, energy and climate change secretary Chris Huhne told a select committee on Wednesday.
"It was clear to us we simply couldn't make it work at Longannet within the budget set out," Huhne said, adding that the 1 billion pounds of CCS funding were still available.
"All the people involved in the negotiations recognize we can build the first CCS demo within the 1 billion pounds allocated. We have already had expressions of interest offering that," he added.
But last week some members of parliament (MPs) on the Energy and Climate Change Committee said they had doubts the UK could deliver.
CCS involves trapping carbon dioxide otherwise emitted by fossil fuel power plants, and piping it underground for long-term storage in spent oil fields or aquifers.
It is still commercially unproven but is seen by some as a key mechanism to fight climate change.
Investment prospects for CCS in the UK remained positive Kennedy said, adding the technology may be boosted by EU funding from the sale of carbon permits (NER300).
"We expect there will be some European subsidy in the CCS demonstration projects here, but over and above that more funding will be needed and that will come out through the electricity market arrangements, which will put a levy on the electricity price to pay for CCS and other low carbons."
Some analysts suggest a carbon price of 40 euros ($54.70) a tonne would make CCS a viable technology to help cut carbon emissions after 2020, but Kennedy declined to say explicitly what carbon price would make CCS viable.
Current carbon prices are around the 10 euro per tonne mark. The December 2011 EUA contract was at 9.74 euros per tonne at 1537 GMT.
"I don't think we know at the moment. The economics of CCS are very uncertain and what that would lead you to say is there is a very wide range of carbon prices you might need."
"There is a difference between the price you need for demonstration, which would be very high, and the deployment of that technology," he added.
"But the key thing is that we just do the demonstration now. We will learn about the economics and then we will be able to take a view ," he said. ($1 = 0.731 Euros)
(Additional reporting by Nina Chestney; editing by Jason Neely)
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