Umar Ali (UA): What’s the difference between CCS and CCUS?
Oliver Barnes (OB): The difference is the U! That’s the utilisation side of things. And that’s very much been brought in over the last two years. Before we just had two CCS projects back in 2015 which got unfortunately cancelled.
And then from that, the government relooked at it and introduced the utilisation side of that, turning CO2 from a waste material that is just stored underground, and actually bringing that into a raw material that could be used in kind of chemical processes or the food and drink industry.
UA: In your report, you mentioned that CCUS also provided diversification options for companies within oil and gas with offshore wind. What are those options?
OB: What we’ve seen in recent years is a lot of oil and gas companies moving into offshore wind because of the huge number of projects that are going here in the UK and the subsea expertise that they have.
I think there’s a lot of optimism that oil and gas companies could make a similar move to the CCUS sector. Because again, there’s a lot of synergies between the two, given a lot of the storage expertise that we have on the oil and gas side. We are one of the world leaders in that.
Stuart Broadley (SB): Companies have learned not to be over-reliant on one sector or another. Because obviously they’re vulnerable to cycles, particularly in oil and gas- so if they’re over-reliant on oil and gas and the cycle declines and the oil price crashes.
That’s exactly what happened in 2014, the crash was severe. Hundreds of companies went out of business, tens of thousands of people lost their jobs. So, companies these days don’t like to rely on just oil and gas.
CCUS is one of those opportunities that would allow those companies to take similar skills, using similar products and services as needed in oil and gas, and readily apply them into CCUS.
However, the industry is still new, so there’s not actually a lot of project changes today. But if they were to happen, it would be a good diversification option.
The second point on diversification, an important one for government and industry to be aware of, is that as Ollie rightly says that there has been huge success in the UK growing our offshore wind, but the UK government also missed opportunities on the technology side.
UA: What are these missed opportunities?
SB: We are the world’s largest producer of offshore winds, but- and that’s a big “but”-we are mainly an importer of technology for offshore wind. We have no manufacturers of offshore wind turbines in the UK.
In terms of the technology side, actually, we have very little technology it was all controlled largely by companies based in Denmark.
This is because ten years ago or more the UK government failed to set a policy when they knew that offshore wind was coming as a technology. If you go back 10 years, we didn’t have a large renewable play in our power generation, and they knew offshore wind was the key to that. But they chose not to invest, so now we don’t have many companies with the skills, whereas Denmark that had a policy to focus on that and invested heavily in that seven years ago.
So I think diversification around CCUS really is all about whether the government sets up policy now not just to use CCUS as a means of all capturing and storing CO2, which is fine, but also whether they set a policy to say that the UK will have all of the key aspects of the technology to do it in the UK as opposed to us choosing to buy the technology from abroad as we did with offshore wind.
That is the fundamental point of policy right now. The British government is already indicating that it will support the policy of investing in CCUS projects, but it has not yet said that it will also make sure that we invest in the technology in our universities, as manufacturers in our supply chain.
So that in 10 years’ time when we look back, we can then say we are a world leader not only in the CCUS storage, but also that we are a world leader in exports because we developed the technology.
UA: Are there any limitations to CCUS in its current state?
OB: The big barrier at the moment is cost. Something that hindered the previous competition a few years ago is that at the moment, projects are too expensive and it’s hard to justify these costs on company balance sheets.
I think the key to this is going to be deployments to get those costs coming down. It’s not going to be about R&D, it’s going to be getting underway with projects. And as we see more and more projects come forward, those costs will come down.
But yes, I think they’re going to need support- whether that comes through subsidies, I think that’s something for the government to look at.
Certainly cost is going to be the big issue when it comes to CCUS as it is in many other technologies in the energy sector. Nuclear, for example, is one of them. And I know the government is looking at the moment about how they want to go about funding these projects, whether it’s through the route module or using CFPB [Consumer Financial Protection Bureau].
UA: How can CCUS help hydrogen become a more viable energy source?
OB: Hydrogen completely depends on the deployment of CCUS. Without CCUS hydrogen will not meet the potential that it really has.
I think that, again, things like costs of the technologies for hydrogen are still going to be quite a big barrier to deployments, and technologies like electrolysis still are still expensive to deploy. But again, it’s going to be about deployment.
Hydrogen is key because it can decarbonise things like transport and heat, which the government has found really difficult to decarbonise so far, as well as very energy-intensive industries.
The two come hand in hand- without CCUS, you won’t see hydrogen doing all it can to decarbonise industry, power and transport across the whole of the UK.