Carbon Capture and Storage – A ROADMAP FOR SCOTLAND Progress Report – May 2011 Produced by Scottish Government Energy Markets Unit in conjunction with Scottish Enterprise Purpose The Carbon Capture and Storage Roadmap for Scotland, published in March 2010, set out the Scottish Government’s and Scottish Enterprise’s view for a timeline of: what needs to happen and by when; who is involved and what the main drivers and milestones are. The Roadmap, which can be found at: http://www.scotland.gov.uk/Publications/2010/03/18094835/1 also highlighted the main areas where progress was needed: funding demonstrations transport network planning and development regulation/legislation storage assessment engagement and public acceptance economic opportunity and skills This paper aims to provide a brief update on activity in each of the above areas over the past 12 months. A summary highlighting the achievements is presented first followed by further detail of each achievement including links to the various outputs. SUMMARY ACHIEVEMENTS, MARCH 2010 – MARCH 2011 Funding Supporting major Scottish projects for the EU New Entrants Reserve in 2010-2011. Working with UK Government on the support for 4 demonstrator projects across the UK including the Electricity Market Reform plans for carbon floor price, Contract for Difference / Feed in Tariff and Emissions Performance Standard. Ensuring clear Scottish discretion is retained. Demonstrations Longannet now effectively the only viable CCS demonstration project that can be funded by the UK Government’s £1bn CCS competition. Scottish Government lobbied effectively for the UK Government to support a gas-fired CCS plant as part of the demonstration programme will allow Peterhead to test CCS on gas. Scottish Enterprise commissioned an Economic Impact Assessment on each proposed Scottish based CCS demonstrator project (Longannet, Peterhead, Hunterston). Transport network planning and development SCCS / ARUP won EC tender to create blueprint for an EU-wide carbon transport network. North Sea Basin Task Force published study into North Sea cross-border CO2 transport and storage. Scottish Enterprise developing a ‘CCS Cluster Investment plan’ to consider options to develop CCS infrastructure in Scotland. New EU CCS Regions Network launched May 2011 with key focus on permitting and licensing of CCS projects across EU and development of EU CCS network. Regulation / Legislation Formed CCS Regulatory Group - meets every 3 months. CCS Regulatory test exercise held in August 2010, followed by CCS Regulatory Test Toolkit published in conjunction with SCCS and Global CCS Institute. Rolling out Toolkit to industry - Scottish Government has had meetings with EU Project Network in Brindisi, ZEP Government Group, Berlin Forum, EC CCS Regulators’ Information Exchange Groups. Established Programme Monitoring Board to ensure delivery of CCS demonstration projects within funding timescales. ‘Draft Electricity Generation Policy Statement’ sets out analysis and policy framework for our future electricity generation mix, including clear role for CCS on baseload, progressively fitted to 2030. Working on transposition of the EU Directive on the Geological Storage of Carbon Dioxide - three regulations have been agreed by Scottish Parliament. Storage Assessment ‘Progressing Scotland’s CO2 Storage Opportunities’ report (published March 2011) delivers new insights on Scotland’s storage capacity. SiteChar project (launched January 2011) will further site characterisation of a multi-store site in the Moray Firth (UK North Sea). Engagement and public acceptance ‘Toward a Public Communication and Engagement Strategy for Carbon Dioxide Capture and Storage Projects in Scotland’ report published by SCCTS Devt. Study. SiteChar project will advance public awareness. Economic opportunity and skills Scottish Enterprise appointed a CCS Champion in Scotland. Scottish Enterprise Energy Team conducted foresighting exercise. Scottish Enterprise developing CCS Scotland profiling document highlighting Scotland as a globally competitive CCS location and partner. Scottish Enterprise updating Scottish CCS Supply Chain Map. ACHIEVEMENTS IN MORE DETAIL 1. Funding and Demonstrations The UK Energy Bill received Royal Assent on 8 April 2010 and proposed a levy on generation to be charged in order to fund 4 CCS demonstrator projects across the UK. During the summer of 2010, DECC carried out a market sounding process for the UK’s CCS Demonstration Programme. Following the Market Sounding exercise, DECC and the Treasury have reviewed support for CCS demonstrations and have concluded that the levy will not be required and future demonstrations projects 2-4 will be funded via general taxation. Scottish Government is seeking clarification from DECC on the role of Scottish Ministers in determining future financial support for the demonstrations in Scotland. We welcome, however, the proposals in the Energy Market Reform for long term financial support for CCS deployment via the Contract for Difference / Feed in Tariff mechanism. We will be working with the UK to ensure Scottish discretion in this process. On 8 November 2010, UK Government announced their decision to support a gas-fired CCS plant as part of the demonstration programme. The Scottish Government lobbied strongly for this move, since reducing emissions from gas will be as important as those from coal to meet our climate change targets and maintain security of supply. With this announcement, stations such as Peterhead will be able to test CCS on gas. Longannet is now effectively the only viable CCS demonstration project that can be funded by the £1 billion. On 18th February 2011, Charles Hendry stated that subject to the quality and value for money of Scottish Power’s Longannet bid for the UK CCS competition it is hoped that a contract be awarded for the first demonstration project in the Summer 2011. Through the Scottish European Green Energy Centre (SEGEC), we are engaging with the European Commission and partner countries in supporting policy development and securing project funding for Scottish CCS projects. The New Entrants Reserve (NER 300), launched on 9 November 2010 with a closing deadline of 9 February 2011, will provide substantial financial support for at least eight projects involving carbon capture and storage (CCS) technologies and at least 34 projects involving innovative renewable energy technologies. The aim is to drive low carbon economic development in Europe, creating new 'green' jobs and contributing to the achievement of the EU's ambitious climate change goals. The European Investment Bank (EIB) is collaborating with the Commission in the implementation of the programme. Scottish Enterprise commissioned an Economic Impact Assessment of each of the three proposed Scottish based Carbon Capture and Storage (CCS) demonstrator projects. The study findings indicate a potential for strong positive impact on GVA, employment and supply chain development in Scotland resulting from the delivery of Scottish projects at Longannet, Peterhead and Hunterston. The findings of the study were used by developers to support their applications to DECC for inclusion in the short list of projects from the UK recommended for entry into the first call for NER300 funding. The findings will also be used to inform the creation of a strategy and prioritized action plan for the development of the Scottish CCS Supply Chain. The Scottish Government are currently working with UK Government to assess Scottish projects that have bid into the EU New Entrants Reserve in 2011-11. Three major projects have been submitted in Scotland : Longannet; Peterhead and Hunterston covering a range of technologies and storage options. 2. Transport network planning and development We have achieved a great deal in this area since the publication of the Roadmap last year including: The Scottish Centre for Carbon Storage / Arup study, carried out between February 2010 - October 2010, was commissioned by EC Directorate General Energy (DG-ENER) for European Commission. The study built on previous studies of storage capacity and focussed on CO2 transport infrastructure - looking at future EU CO2 network planning including North Sea. It was - published 19 October in Berlin and aimed to identify a “blueprint” for transport infrastructure at 2030 and 2050, for each high, medium and Low capture scenarios and matching sources to sinks. http://www.geos.ed.ac.uk/sccs/publications.html In June 2010, the North Sea Basin Task Force published a new study into North Sea cross-border CO2 transport and storage. The study highlights the potential for North Sea countries to become natural leaders in the development of CCS in Europe and finds that rapid deployment of large scale low cost CO2 infrastructure by 2030 is technically feasible and necessary for full deployment of CCS. The CCS Regions group for EU discussed network planning coordination and transboundary projects at their meeting in November 2010 in Edinburgh. They agreed that overall EU-wide knowledge sharing on CO2 transport was potentially very useful and important to CCS development. The regions Group has now met 3 times since 2010 and has secured agreement from the EC to support the development of the network to complement the activity of the EU’s CCS Project Demonstration Network. This will be launched in Rotterdam in May. A joint UK and Scottish Government consultation on the pipelines and storage sites used for the transport and storage of carbon dioxide, in which the Scottish Government are part, was carried out between December 2010 and February 2011. This will now be followed with the laying of relevant regulations. Part of this consultation sought views on what organisational structure is best suited to the development of CCS infrastructure. Scottish Enterprise are currently carrying out a study entitled “CCS Cluster Investment Plan”. The main objective of this study is to develop and consider options for the development of CCS infrastructure in Scotland. Phase 1 is focused around the existing proposed CCS demonstrator projects, assessing the likelihood of shared usage of infrastructure including the setting out of any economic benefits from such an approach. Estimated costs will also be produced. Phase 2 will consider these issues beyond the initial demonstrator phase, and will look at options in the longer term. Initial findings from Phase 1 will be available by April 2011 with a plan to complete the Phase 2 work by mid 2011. 3. Regulation / Legislation In anticipation of several large scale CCS projects coming forward in Scotland, the Scottish Government formed a Regulatory Group in 2009 to consider the various permits required to robustly consider the entire chain of CCS activities from Capture, Transport, Storage through to final Decommissioning. The Group continues to meet every 3 months to map the permits required and ensure the necessary legislative provision is aligned with the EU Geological Storage Directive. The key objective of the Regulatory Group is to encourage the exchange of permitting knowledge and enable a structure and coherent approach to processing CCS project applications. An outcome from this Group was to test the regulatory system by taking a CCS project application through every stage of the approval process in a regulatory test exercise. This test exercise maximised learning opportunities by involving the organisations, government departments, regulatory agencies and NGOs. This was conducted in August 2010 and the output report was published. Following the success of this test exercise the Scottish Government in conjunction with the Scottish Centre for Carbon Storage published a CCS Regulatory Test Toolkit. This Toolkit was funded by the Global CCS Institute and has been endorsed by the European Commission as a model of best practice for regulation that could be used by other member states. We are currently working with the Romanian Government and with the European Commission to roll this out to other Member States. Another outcome from the Regulatory Group has been to set up a Programme Monitoring Board. This Group first met in January 2011 and its overall objective is to ensure that Government, regulators and developers agree a timetable for project delivery that is consistent with the requirements of funders and with the statutory processes set out in regulations. This objective will be reconciled with a strong focus on community engagement, considering and recommending how to ensure that communities affected by the project are properly engaged by developers and regulators across the whole CCS activity chain. The Programme Monitoring Board is now meeting to discuss a common approach to regulating and consenting the Longannet CCS demonstrator, which is likely to be the first to be funded and built in the UK during 2011. Scotland’s National Planning Framework 2 identifies a need for new baseload generating capacity to replace the power stations programmed for closure over the next 20 years. We have a clear regulatory commitment that new coal fired power stations in Scotland must fit CCS to a minimum of 300MWe of their capacity from day one of operation. This is consistent with the UK Government and means that new unabated coal power stations cannot be built in Scotland. This demonstrates the strength of our commitment to CCS. New gas power stations need to be built carbon capture ready. The Scottish Government recently published a draft Electricity Generation Policy Statement which sets out our analysis and policy framework for our future electricity generation mix. This envisages that 80% of Scotland’s electricity demand will be met by renewables by 2020, backed up by 2.5GW of thermal generation, progressively fitted with carbon capture and storage to ensure decarbonisation of the whole power sector by 2030. This is consistent with the targets set out in the Climate Change (Scotland) Act 2009. We are currently working on the transposition of the EU Directive on the Geological Storage of Carbon Dioxide (2009/31/EC). This involves laying Scottish Statutory Instruments, the first three of which have been approved by the Scottish Parliament and will come into force ahead of the. transposition date of 25 June 2011. The regulations include:o o o o o 1. Amendment of the Energy Act (into force 1/4/11) Licensing of CO2 (Scotland) regulations (into force 1/4/11) Third Party Access and transfer of obligations (in progress) Consequential Modifications (into force 25/6/11) Chapter 7 Amendments These regulations flow from the provisions of the Energy Act 2008, which already designates the Scottish Ministers as the competent authority under the Directive for CO2 storage in Scotland. Three of these Regulations which have been laid before Parliament (at the time of printing) are :The Energy Act 2008 (Storage of Carbon Dioxide) (Scotland) Regulations 2011 http://www.legislation.gov.uk/sdsi/2011/9780111011911/introduction 2. The Storage of Carbon Dioxide (Licensing etc) (Scotland) Regulations 2011 http://www.legislation.gov.uk/ssi/2011/24/contents/made 3. The Environmental Liability (Scotland) Amendment Regulations 2011 http://www.legislation.gov.uk/ssi/2011/116/contents/made Relevant links / publications (relating to Regulation / Legislation):Regulatory Test Exercise Output Report http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Energysources/traditional-fuels/newtechnologies/SGactionCCS/CCSRegulatoryExercise CCS Regulatory Test Toolkit http://www.scotland.gov.uk/Topics/BusinessIndustry/Energy/resources/Publications/CCSRegulatoryToolkit Draft Electricity Generation Policy Statement 2010 http://www.scotland.gov.uk/Publications/2010/11/17094217/0 Energy Act 2008 http://www.legislation.gov.uk/ukpga/2008/32/contents 4. Storage assessment The second phase of the Scottish CCTS Development Study, published on 14th March 2011 assessed the potential storage capacity of the North Sea for carbon dioxide in more detail. The report estimates that the Captain Sandstone located under the Moray Firth could store up to 100 years worth of CO2 output from Scotland’s power industry. The study shows the continued commitment of government, industry and academia coming together as a partnership to deliver new insights on the potential for carbon capture and storage projects and a link to this report can be found at : http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Energysources/traditional-fuels/newtechnologies/SGactionCCS/ScotlandsCO2Storage/Q/EditMode/on/Forc eUpdate/on A number of potential future projects include: CASSEM 2 (CO2 Aquifer Storage Site Evaluation and Monitoring) – looking at aquifer storage injection worth £2.5m over 3 years. SIMCOLAB – involving working with France on a test injection laboratory. SiteChar is a project part funded by the EU's Seventh Framework Programme (FP7) - starting 1 January 2011 for 3 years. It consists of several work packages including: a full-chain characterisation of a multi-store site in the Moray Firth (UK North Sea); advancing public awareness and investigating public perceptions of CCS and acting as the independent regulator for licence applications and economic assessments. Broadly, the objective is to bring our level of knowledge of CO2 storage in the North Sea to a position where we can begin injecting, advance public awareness and investigate concerns on CCS. There are 19 partners across several EU countries contributing to this project and the Scottish Government is committing £100,000 towards it. Details on this project can be found at http://www.ufu.de/en/home/sitechar.html 5. Industrial Engagement and public acceptance The Thermal Generation and CCS Industry Advisory Group has met several times during the past year and details of meetings can be found at: http://www.scotland.gov.uk/Topics/BusinessIndustry/Energy/resources/working-groups/energy-advisoryboard/thermalgenerationandCCS A toolkit entitled “Toward a Public Communication and Engagement Strategy for Carbon Dioxide Capture and Storage Projects in Scotland” was recently published by the Scottish CCTS Development Study. This report is a review of research findings, CCS project experiences, tools, resources and best practices. A link to this report can be found at http://www.geos.ed.ac.uk/sccs/publications.html Sitechar project as detailed above will also advance public awareness of CCS. We are also working directly with DECC and ZEP on the EU Government Communicators’ Group. Over the past two years TUV NEL, which is based near Glasgow, has been leading research in the field of CO2 flow measurement on behalf of the UK Government’s National Measurement Office (NMO). The company also developed and manages the CCS Club which involves 70 key stakeholders throughout industry, including policymakers, regulators, power stations, CCS demo plants, capture technology manufacturers, oil and gas sector, academia, research and test institutes, metering/sampling manufacturers, measurement specialists, geologists, transportation/pipeline companies and support services. 6. Economic opportunity and skills The work of the Scottish Energy Advisory board highlights significant employment growth and skills requirements within the wider energy and low carbon economy. The EAB is working with partners to address the challenges of making sure we have the right skills, in the right place, at the right time. As such, the Board tasked Skills Development Scotland to lead on the development of a Skills Investment Plan to support the sector. SDS launched the plan on 2 March 2011 and a copy can be found at:http://www.skillsdevelopmentscotland.co.uk/media/331209/sds_ener gysip_final.pdf The Scottish Enterprise Energy Team recently conducted a foresighting exercise, completed October 2010, which highlighted the major opportunities for Scottish companies. This recognised the need to develop a sustainable and profitable CCS industry, for which there will be a requirement to ensure that supply chain, infrastructure and skills set are fit for purpose. Scottish Enterprise announced in September 2010 an agreement with Glasgow based TUV SUD NEL to drive forward the development of carbon capture and storage (CCS) opportunities in Scotland. As initial step in this contract, TUV SUD NEL Senior Consultant, John Morgan, has been seconded to work alongside Scottish Enterprise's energy team and act as CCS Champion in Scotland. His role will specially focus on establishing close links with major industry and academic partners, as well as the broader stakeholder community, with current involvement or potential interest in development of CCS and advise them of future opportunities. He will work towards building strong working relationships with potential funding partners to ensure that maximum available funding in support of CCS is attracted to Scotland. Scottish Enterprise are developing a CCS Scotland profiling document that highlights Scotland as a globally competitive CCS location and partner. It highlights Scotland’s 40 + years oil and gas, subsea, reservoir and well engineering expertise, the vast storage potential of the North Sea in depleted hydrocarbon reservoirs and saline aquifers, and the world leading academic and industrial research position within Scotland. Scottish Enterprise are also updating the Scottish CCS Supply Chain Map that was developed in 2006 that outlined Scotland’s strengths and weaknesses in terms of Design, Build, Operate & Decommission. Current plans include supply chain development activities (awareness & partner brokerage) focused on the potential opportunities that may arise from the proposed 3 Scottish based full chain CCS demonstration sites. The data-set outputs from the Economic Impact Assessments will also inform their planned work on supply chain development for the sector. FORWARD LOOK o Through connections set up by the Global CCS Institute, the Scottish Government will engage with representatives from Romania and Canada who have expressed an interest in using the CCS Regulatory Test Toolkit. We are also working with the European Commission (DG Energy and DG Clima) to promote the Toolkit amongst other member states and amongst networks of EU energy and environment regulators. o We will finalise the remaining secondary legislation and regulations in relation to the implementation of the EU Directive on the Geological Storage of Carbon Dioxide ahead of the deadline of 25 June 2011. o The Programme Monitoring Board will continue to meet every two months in preparation for the announcement of funding from the UK CCS competition for the Longannet plant. If either of the other two proposed CCS plants in Scotland is successful in securing funding under the EU New Entrants reserve competition, they will also be considered by a similar Monitoring Board. o The UK Government has recently proposed significant changes to the functioning of the electricity markets in the UK. The Electricity Market Reform package could create a substantive move towards a target-led approach for the UK market, with far greater government intervention in driving the decarbonisation objective. The reforms are likely to substantially alter the framework for investment in the power sector in the UK, and a range of measures have been proposed to support the carbon price, provide funding for a range of low carbon technologies (including CCS), and to drive down emissions. Many of these policies fall within areas that are the responsibility of the Scottish Government, and we are working closely with the UK Government to agree the future framework, with the clear objective that it must incentivise low carbon generation and meet our 2030 decarbonisation goal. The Scottish Government’s initial response can be found here: http://www.scotland.gov.uk/Topics/BusinessIndustry/Energy/Infrastructure/Grid-Connections/EMR-consultationUK/Initial-SG-response