British businesses seek to cash in on carbon capture

UK firms in strong position to run CCS projects around the world

Alok JhaGreen technology correspondent
guardian.co.uk, Monday 11 May 2009 13.27 BST

Britain could take a leading role in developing and managing the nascent market for carbon capture and storage projects around the world, after the government's recent announcement that all new coal plants must be fitted with the green technology. Industry experts believe the UK is in a strong position to run the financial, legal and consulting aspects of the projects for international utility companies.
"Out of a major CCS capital project, the biggest added value is in the management and services – and we have that in abundance," said Jeff Chapman, chief executive of the CCS Association, which lobbies on behalf of companies in the field. "You're talking about project management and engineering. The money gets processed through the UK, for example, and we have legal, management and environmental consultancies. All of which is much higher added-value than making widgets."
After years of wrangling over carbon capture, governments have started to back the technology with policy and money, sparking a potential gold rush of contracts for well-placed suppliers.
The international market for CCS in 2007-08 was £13.28bn, of which the UK's share was £468m, according to a recent report for the Department for Business, Enterprise and Regulatory Reform. This accounts for less than 1% of the international low-carbon technology sector, but there is huge potential for expansion, particularly as governments announce funding mechanisms for the first generation of demonstration plants. The sector is predicted to grow by around 4% a year between now and 2015.
The International Energy Agency predicts the world's use of power will increase by 50% by 2030, with 77% of that coming from fossil fuels. At its best, CCS could trap up to 90% of a power plant's carbon emissions, but only two small-scale demonstration projects are anywhere near operation – one at Schwarze Pumpe in east Germany and the other at Lacq in the French Pyrenees.
Building bigger CCS plants is crucial if the technology is to become commercial – but it is expensive and risky, owing particularly to a lack of clear direction from governments.
In Britain, that direction began to emerge with energy and climate secretary Ed Miliband's recent announcement that no new coal power stations would be built in the UK unless they captured and stored at least a quarter of their greenhouse gases immediately and 100% of them by 2025.
Four "clusters" of CCS-enabled power stations on the east coast of Britain will eventually generate a total of 2.5GW, a marked change from previous policy in this area, which was to fund a single CCS demonstration plant through a competition.
"What we're beginning to see at long last from governments are the beginnings of an ongoing policy," said Chapman. "There's a sense among all the companies that CCS is absolutely inevitable. It's not a question of 'will it happen?', it's 'when does it happen?'"
The interest and commitment from government has been important in stoking up interest in industry. "Quite a lot of people have bought into the information stream on CCS," says Alistair Rennie, a project director at AMEC. "I think companies will convert their knowledge to actually doing work quite quickly when the financial incentives are in place."
Established engineering companies were the first to enter the CCS field. Those that already build complex power plants for electricity utility companies spotted the potential early and virtually all are working on one or more of the three basic approaches to the technology.
Alstom, Siemens and Mitsubishi Heavy Industries (MHI), Fluor and BASF have designs for post-combustion technology, where the CO2 is extracted from the exhaust gas of a standard coal station and then piped away to be buried. Alstom in particular leads the field with Schwarze Pumpe and Lacq both based on its technology.
Siemens, along with GE and Shell, also has advanced designs for a pre-combustion power plant where coal is gasified to produce hydrogen that can be burned to make electricity. During gasification, the CO2 produced can be easily separated and taken off for burial.
The third type of CCS is called oxyfuel, where the fuel is burned in an atmosphere of almost pure oxygen, producing an exhaust gas that is almost entirely CO2. Alstom and Doosan Babcock Energy are among the leaders in the proprietary boiler designs required for this method.
Mike Farley, director of technology policy at Doosan Babcock Energy, said the race was already on to scale up CCS activities. His company has about 65 people working in its R&D department at Renfrew but Farley says there are already plans to increase that to 200 and, if bids for large-scale demonstration projects across Europe, US and Australia are successful in the coming years, that figure could easily rise to 500.
Philippe Paelinck of Alstom said his company was already working on more than 10 demonstration CCS projects between 10-30MW. "The next step has already started with the funding announced at the EU level. That's for large-scale demonstrations and that's where we'll see the first pre-commercial deployment of the technology. We still think we will be ready with a commercial offering by 2015 provided we gain the necessary experience on the large-scale demonstration."
Perfecting capture technology is just the start of the global opportunity on CCS – as implementation ramps up and regulation of new power stations increases, Paelinck says many other industrial sectors will get involved. This includes gas suppliers such as BOC and Air Products to provide the oxygen for oxyfuel boilers; compressor and pipeline companies to transport CO2 and make it more manageable for storage; and geological consultancies such as Schlumberger that have, until now, been big players in the fossil fuels industry, in prospecting for suitable storage sites.
Though there is much basic scientific research on identifying the geological storage sites for CO2 and also industrial experience in transporting the gas in the UK, those most likely to take advantage of any CCS boom are the services industries.
Relatively small-scale start-ups such as Progressive Energy, a project developer that focuses on emerging technologies and is planning a 800MW CCS-enabled power plant at Teesside, are already starting to take advantage of the coming CCS opportunities.
"What we do and what a lot of these projects will be is bolting together existing equipment that works, so it's a process engineering job," says Peter Whitton, Progressive's managing director. Fortunately for British businesses, he says it is a "very exportable" skill – British companies are already receiving approaches from international partners.
But though the opportunity is clear, Whitton says it will not be plain sailing. "Three years ago we were ahead of the game but, sadly, we've marked time for three years and I think the US, with Barack Obama there, is going to be a major player and I'm not sure how we'll manage to compete with them. The UK is in a reasonably good position, but only if we get on and do it."