The costs of electricity from fossil fuels with CCS are uncertain, due to the relative lack of technological development. However, estimates suggest that if a significant amount of technical and commercial development takes place, through a successful demonstration programme and subsequent commercial scale development, the cost of electricity generated from fossil fuels with CCS could be near those of other low carbon sources by 203054.
Continued use of fossil fuels
As described in chapter one, unabated gas can only provide around 15 to 33 per cent of electricity in 2030 (under 50 and 100 gCO2/kWh scenarios respectively). Beyond 2030, its use will need to be very low if emissions targets are to be met. CCS
technology would allow the use of gas and coal to continue and grow beyond 2030, which has several benefits.
Making fossil fuel generation compatible with carbon targets would diversify future supply. This would have both security of supply and affordability benefits, by allowing coal and gas to remain a part of the mix should future prices stabilise or fall.
Fossil fuel power stations provide supply flexibility, which will become increasingly important as use of intermittent sources such as wind, solar and marine energy increases, and patterns of demand shift due to the electrification of transport and heating. Coal and gas plants fitted with CCS may be able to provide these services at lower cost than alternative options, without the carbon penalty of unabated plants.
CCS for gas power
Technologies for CCS on gas are likely to be crucial for the power sector in the UK, given the continued role of these plants in the UK supply mix. Developing CCS for
carbon targets and more costly abatement in other sectors or via purchases of emissions permits. The ability to retrofit CCS cost effectively would open up the potential to run these plants at higher load factors without compromising carbon budgets. Recent analysis suggests that post combustion CCS on gas could be one of the most cost effective forms of CCS with fossil fuels55. It also has the advantage of substantially lower residual carbon dioxide emissions than coal (around 50 rather than 100 gCO2/kWh)56, which will increasingly translate into an additional affordability benefit as carbon prices increase.
One of three solutions for producing large amounts of low carbon power
DECC estimates that to achieve a 50 to 100 gCO2/kWh power sector carbon
intensity by 2030, 65 to 80 per cent of electricity will need to be generated from low carbon sources57, with this share increasing to 92 per cent to meet the UK’s 2050 carbon target58. The Government’s strategy sees fossil fuel power stations with CCS as one of the three main options for delivering this capacity, along with nuclear and renewables59.
More choice, less risk
The value of CCS in the power sector comes into its own in the event that one of the other options fails or under-delivers. A gap in low carbon generation could appear, for example, if new nuclear fails to be built or offshore wind costs do not reduce as expected. Without CCS, a consistent message across energy system models is that stretching remaining low carbon technology options to high levels of deployment would increase costs dramatically60,61,62.
Having a diversity of options is especially crucial given the expected increase in electricity demand by 2050, as its use in heating and transport increases. Estimates in the Carbon Plansuggest that by 2050, supply may need to increase by 37 to 77 per cent (on 2011 levels) alongside significant gains in energy efficiency63. The analysis also showed that a future system heavily reliant on one option will likely be more expensive than one composed of a balanced mix64. Costs may increase as practical and physical constraints are reached. For example, it is thought that a maximum of 40 gigawatts new nuclear capacity could be added around existing sites65, with new locations for more power plants likely to face issues of public acceptability and higher costs. Site availability for onshore and offshore wind and feedstock supplies for biomass could constrain the maximum deployment of these technologies66, whilst a large deployment of fossil fuels with CCS would also require an extensive network of pipelines to carry carbon dioxide from new plants to storage facilities, which may face public acceptability issues. Although high levels of deployment of each group of technologies is technically possible, a diverse mix reduces the need to push deployment to levels that are less economically and politically palatable.
55 CCC & Mott MacDonald (2011) Costs of low-carbon generation technologies 56 CCC (2010) Fourth Carbon Budget
57 DECC (2013) Impact Assessment: Contracts for Difference; p67 58 AEA (2011) Pathways to 2050 – Key Results
59 DECC (2011) The Carbon Plan
60 AEA (2011) Pathways to 2050 – Key Results (MARKAL Model Review and Scenarios for DECC’s 4th Carbon Budget Evidence Base
61 ETI (2011) Modelling the UK energy system: practical insights for technology development and policy making 62 UKERC (2013) Low-carbon, resilient scenarios for the UK energy system in 2050
63 DECC (2011) The Carbon Plan 64 DECC (2011) The Carbon Plan
65 ETI (2011) Modelling the UK energy system: practical insights for technology development and policy making 66 CCC (2011) The Renewable Energy Review
Finding 11
There are substantial benefits to keeping fossil fuels in the power mix if emissions can be limited using CCS. Electricity supply will likely need to rise significantly by 2050, and decarbonising the power sector beyond 2030 without CCS would be expensive and politically challenging.
combustion, providing different options for power generation and additional by- products, as described above.