Nor­way’s am­bi­tious scheme to sink car­bon be­low the waves

Na­tion bids to in­ject all Europe’s car­bon emis­sions into salt cav­erns be­low the seabed, finds Jil­lian Am­brose

The Sunday Telegraph - Money & Business - - Front Page -

The stench of tons of com­pressed waste is some­thing you get used to. High above the ware­house floor, tightly packed bales of Bri­tish rub­bish are stacked and wait­ing to be burned, across the North Sea from the homes in Bris­tol and Birm­ing­ham that pro­duced them.

In a mod­ern plant wedged be­tween pine and gran­ite on the edge of Oslo, Nordic power com­pany For­tum is us­ing Bri­tish rub­bish to gen­er­ate elec­tric­ity and warmth for a nearby dis­trict-heat­ing project. This en­er­gyfrom-waste plant alone in­cin­er­ates 45 tons of rub­bish at 850 de­grees Cel­sius every hour.

“It’s the smell of money,” laughs Pal Mikkelsen, the plant’s di­rec­tor.

For years Nor­way has charged Bri­tish cities to take their waste while cre­at­ing a valu­able source of heat and en­ergy on the side. Now it has plans to cre­ate a third source of in­come from UK rub­bish.

Mikkelsen is ea­ger to ex­plain how the work be­ing done at his plant could play a role in help­ing his coun­try take Bri­tain’s car­bon emis­sions too.

The For­tum plant is vy­ing with other high-car­bon in­dus­trial play­ers to be part of a rad­i­cal na­tional pro­gramme to turn car­bon cap­ture into a new pan-euro­pean in­dus­try, with Nor­way in the driv­ing seat.

Nor­way’s plans are au­da­cious.

Its gov­ern­ment be­lieves that within the next five years it will be able to de­velop a sys­tem to rid the whole of Europe of its un­wanted car­bon emis­sions.

Un­der the scheme, CO2 from fac­to­ries all across Europe could soon be piped on to ships and brought to Nor­way. Cut­ting-edge car­bon stor­age sites will then in­ject the gas deep into salt cav­erns un­der the seabed.

The in­di­vid­ual el­e­ments of this chain are tech­ni­cally proven but car­bon cap­ture and stor­age (CCS) has so far failed to gain trac­tion across Europe. In­vestors have balked at the eye-wa­ter­ingly high costs and daunt­ing risks. Gov­ern­ments, too, have quickly lost their nerve.

It is al­most two years since the UK Gov­ern­ment abruptly pulled the plug on £1bn worth of fund­ing for two ma­jor CCS power plant projects backed by some of the big­gest en­ergy com­pa­nies in Europe, for in­stance.

Nor­way be­lieves that by push­ing ahead with its own CCS plans the tech­nol­ogy may find its way back on to the agenda. This could pro­vide a new in­dus­trial av­enue for the coun­try in a sim­i­lar way that Bri­tain’s rub­bish helped cre­ate an en­ergy-from-waste in­dus­try.

The Nor­we­gian “CCS High­way” has a bet­ter chance of suc­cess in large part by cir­cum­vent­ing the need to court ner­vous in­vestors. It ben­e­fits from di­rect gov­ern­ment fund­ing.

The in­dus­trial part­ners tak­ing part in the first phase of the scheme will be re­spon­si­ble for up­grad­ing their plants to trap CO2. The state will take on the con­sid­er­able risk in­volved in cre­at­ing a trans­port and stor­age net­work, how­ever. This will in­clude gas­car­ry­ing ships, sub­sea pipe­lines and a stor­age fa­cil­ity some 40 miles off the coast of Nor­way, in sa­line cav­erns be­neath the seabed. The set-up bill is es­ti­mated at €1.4bn (£1.2bn) and the sys­tem is ex­pected to cost €100m a year to op­er­ate. Trude Sund­set is chief ex­ec­u­tive of Gass­nova, the state en­ter­prise cre­ated to meet this tall or­der. “A lot of Euro­pean coun­tries have tried and, to be hon­est, failed. The only projects we now see are in Nor­way. We will prove that CCS is pos­si­ble, but also that it is nec­es­sary to com­bat cli­mate change,” she says in Gass­nova’s Pors­grunn of­fices.

“We’re tak­ing a holis­tic ap­proach. We be­lieve that you can­not build one full-scale project. Each project’s learn­ing needs to feed back into re­search for big­ger projects. That’s when the tech­nol­ogy providers can re­ally see that it is worth­while to find new ways to make things more ef­fi­cient. You’ll never see costs re­duce un­til you cre­ate a mar­ket,” she says.

Nor­way it­self uses hy­dropower to meet 90pc of its elec­tric­ity needs. Its re­lent­less com­mit­ment to “green” in­no­va­tion means it has a car­bon foot­print so small it would only need to use 1pc of its sub­sea stor­age – so it is call­ing on Europe to use the salt cav­erns too, and has found a re­cep­tive au­di­ence. A key to res­ur­rect­ing Euro­pean CCS am­bi­tions has been a shift in fo­cus from power gen­er­a­tors to in­dus­trial sites and gas net­works. The pace of car­bon cut­ting in the elec­tric­ity sec­tor is fast gain­ing speed as re­new­able en­ergy sources come on stream, but for big in­dus­trial plants CCS is the only known so­lu­tion.

In the UK, heat­ing and in­dus­trial emis­sions make up al­most half of the to­tal green­house gas emis­sions. The pro­por­tion is likely to grow as re­new­able power and elec­tric ve­hi­cles take off.

“The UK has cer­tainly tran­si­tioned from where CCS was be­ing in­ves­ti­gated to pro­vide a new fleet of coal-fired power sta­tions – that is long off the agenda now,” says Bruce Ad­der­ley of the UKCCS Re­search Cen­tre.

“The ar­eas of fo­cus that are com­ing through strongly now are both in­dus­trial CCS and the po­ten­tial to use CCS in con­junc­tion with con­vert­ing the gas grid from run­ning on meth­ane, to hy­dro­gen,” he says.

Leeds City coun­cil has al­ready taken steps to con­vert the gas grid to run on hy­dro­gen, rather than nat­u­ral gas or meth­ane. The process will in­clude car­bon cap­ture tech­nol­ogy to trap the CO2 pro­duced. Sim­i­lar plans are afoot to cre­ate a “hy­dro­gen clus­ter” in Manch­ester and Liver­pool. “The Nor­we­gians have seen what we in the UK have done in adapt­ing nat­u­ral gas to hy­dro­gen and have done some strate­gic think­ing of their own. They have an enor­mous gas in­dus­try and they want that in­dus­try to con­tinue in the fu­ture,” Ad­der­ley says.

Nor­way is the UK’S largest for­eign source of gas. It also re­lies heav­ily on its oil and gas ex­ports to fuel its wealthy econ­omy and sup­port al­most 200,000 jobs. Last year oil and gas ex­ports ac­counted for NOK350BN, or £34bn, of which gas was worth al­most £12bn. Its prized nat­u­ral re­source is ex­pected to gush at record rates this year af­ter the Nor­we­gian gov­ern­ment raised a pro­duc­tion cap at its gi­ant Troll gas field.

Nor­way’s state-backed oil com­pany Sta­toil said last month it has be­gun look­ing at the pos­si­bil­ity of work­ing with power gen­er­a­tor Vat­ten­fall to con­vert its Mag­nus gas-fired power plant in the Nether­lands to burn hy­dro­gen while stor­ing the left­over car­bon emis­sions in a stor­age fa­cil­ity.

“For them, it’s a win-win. They are hop­ing to make use of the nat­u­ral gas they have, and se­cure use for the car­bon stor­age as­sets they are de­vel­op­ing. The same model could be used in the UK if the rel­e­vant com­pa­nies de­cided they wanted to do that,” he says.

A gov­ern­ment hand in CCS is what could mean the dif­fer­ence be­tween whether the UK is able to use its own nat­u­ral as­sets rather than rely on Nor­way.

“The Nor­we­gians have of­fered to be the so­lu­tion for the whole of North­west Europe and are gal­vanis­ing in­dus­try to do just that. ‘Bring us your car­bon,’ they’re say­ing. But there’s no rea­son that the UK couldn’t do that it­self,” he adds.

In Bri­tain’s in­dus­trial heart­land, busi­ness lead­ers have been em­bold­ened by fresh po­lit­i­cal sup­port for CCS and are in­ves­ti­gat­ing whether they could do just that in Teesside.

The Tees Val­ley is home to the largest chem­i­cals com­plex in Bri­tain, and the se­cond largest in Europe. Its green­house gas emis­sions are also three times as large as any other part of the coun­try. Ef­forts to forge a fu­ture in a low-car­bon world are mov­ing ahead apace, says Sarah Ten­ni­son, from the Teesside Col­lec­tive.

The clus­ter in­cludes ma­jor em­ploy­ers in Teesside, such as Lotte Chem­i­cal UK, BOC, CF Fer­tilis­ers, Sem­b­corp Util­i­ties UK and SABIC UK. It is also home to the UK’S largest hy­dro­gen re­former work­ing to­gether to es­tab­lish Teesside as one of Europe’s most at­trac­tive lo­ca­tions for fu­ture clean in­dus­trial de­vel­op­ment.

Ten­ni­son says it could save 11m tons of CO2 over 15 years if its first phase plan moves ahead. This would take an in­vest­ment of £110m to con­struct the cap­ture sites, and £29m every year to op­er­ate, but at £58 for every ton of car­bon saved it is still a bar­gain, Ten­ni­son says.

It would prove cheaper than present day off­shore wind farms and pro­jec­tions for new nu­clear plants. In re­turn UK plc would also gain an an­nual eco­nomic boost of £2.5bn, ex­port £4bn worth of prod­ucts and gen­er­ate a £2bn trade sur­plus every year.

“I think gov­ern­ment is tak­ing this se­ri­ously,” Ten­ni­son says. They un­der­stand that the trans­porta­tion and stor­age el­e­ments of this plan may need new busi­ness mod­els to suc­ceed. So, yes, it would be a rel­a­tively new thing for gov­ern­ment to own reg­u­lated as­sets but it wouldn’t need to be long term. Once the risks have been man­aged and the costs are bet­ter known the hope is that project fi­nanc­ing could flow into the newly cre­ated mar­ket.

“The Gov­ern­ment re­ally needs to take that ap­proach if it’s go­ing to suc­ceed at CCS. It would be a mas­sive step-change but it would also be a mas­sive win for the UK as well,” she says.

‘“Bring us your car­bon,” Nor­way is say­ing. But there’s no rea­son that the UK couldn’t do that it­self ’

Nor­way’s Mongstad in­dus­trial site, above, hosts the coun­try’s am­bi­tious CCS re­search project

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