Is carbon capture and storage in the last chance saloon?

In a move that really did take the industry by surprise the new Norwegian government has announced that it is shutting down its full-scale carbon capture project at Mongstad.

From a Norwegian industry standpoint this is a major setback but the government has said it will continue to fund the research centre at Mongstad to enable it to test various carbon capture concepts and will commit 400million Kroner over four years – roughly £10m per year.

Needless to say, despite the cancellation of the main project this is still considerably more than the UK is currently spending.

According to the Carbon Capture Journal a number of big names have expressed interest in using the Mongstad amine plant to test their own technologies and the list of companies lining up includes Aker Solutions, Hitachi, Mitsubishi and Siemens.

Recently ousted Norwegian PM, Jens Stoltenberg, whose Labour Party lost the recent election, said in 2007 that Norway wanted to lead the world in carbon capture but a report by Norway’s Auditor General this week criticised the Norwegian state’s total spending of 7.4billion crowns on carbon capture and storage projects from 2007-12 and suggested that the costs had risen substantially.

That’s actually not that far off the £1billion or so that the partners in the Peterhead CCS project are hoping to win from the UK Government.

Stoltenberg had also claimed that implementing the Mongstad project would be Norway’s equivalent of performing a “Moon landing”.

Perhaps inevitably then, Frederic Hauge, of the Norwegian environmental group Bellona, said of the decision to drop the carbon capture plan: “This is one of the ugliest political crash landings we have ever seen.”

Well it made me smile!

So, putting all the politics aside, the question is, of course, what does it actually mean for other CCS projects if Norway has concluded the technology is too expensive?

After all, Norway has a powerful reputation when it comes to developing and commercialising energy technologies.

So perhaps we should sit up and listen to what they’ve said particularly given that, as I’ve said before, the impact on electricity prices of implementing CCS on coal or gas-fired power stations could be prohibitive.

In addition, I’ve also said before that I am totally unclear as to what the economic benefit of the Peterhead project to Scotland would be given that the critical bits of CCS technology are effectively imported.

Shell and Scottish and Southern Energy – who are fronting the Peterhead project – claim that the joint Government and Industry CCS Cost Reduction Task Force said that “gas and coal power stations equipped with CCS have clear potential to be cost competitive with other forms of low-carbon power generation”.

That is of course not really very encouraging because, reading between the lines it means that all generating costs will be going up – renewables and conventional. There has to be a better way and I believe the Australians have found it.

Algae Tec Ltd will build an A$150million (£90million) algal oils plant to process emissions at Macquarie’s coal-fired power station in the Hunter Valley, which is north of Sydney.

The algae converts the carbon dioxide into oils which can then be “refined” into a range of liquid fuels including bio-kerosene and diesel.

Russell Skelton, chief executive and managing director of Macquarie Generation the owner of the power station, said: “Carbon is now our single largest cost – this technology should reduce our carbon output, reduce our carbon bill, and at the same time improve our bottom line.”

We should be taking this seriously especially given the level of investment is relatively low. In fact, it’s a pittance compared with the cost of the Mongstad plant and the UK Government’s £1bn CCS demonstration budget.

That said, we must recognise that carbon capture technologies are already available. Cansolv Technologies Inc. (a Canadian company and subsidiary of Royal Dutch Shell), working in partnership with the German company RWE npower, is already capturing CO2 at the Aberthaw coal fired Power Station in South Wales.

It’s the world’s first integrated sulphur dioxide and carbon dioxide capture plant.

Interestingly – or depressingly for the UK – RWE in Germany is, as one might expect of German companies, already running a major R&D programme on carbon capture including the use of algae.

Self-evidently RWE also recognises the potential of algae to reduce the cost of carbon capture by providing an income stream from the products that can be produced from algae.

So, given all this activity in Wales, Germany and Norway and bearing in mind that all the technology involved will come from overseas companies then one has to wonder whether the UK Government will really cough up that £1billion to fund the Peterhead power station project.

Now I could be wrong but I actually disagree with those who believe that now the Mongstad project has been killed off then it’s inevitable that Peterhead will go ahead.

I think the UK Government is far more likely to take the view that if the normally adventurous and risk taking Norwegians think such a project is too expensive then that’s a good enough reason for them to take the same view.

Personally, I see no benefit in funding the demonstration of technologies that are already being demonstrated elsewhere especially given they can’t be sourced in this country. We’re too late for that – as usual.

However, I would not like to see the UK Government let off the hook completely and would much prefer to see that government funding going into new ideas such as the development of algae-based carbon capture.

Why? Because I believe it provides the potential for developing indigenous companies that could both benefit and gain an advantage from our exceptional scientific talent.

Scotland’s life sciences research is world beating. Let’s use it to develop a global business.

(First published in the Press & Journal Energy supplement - 7th Oct 2013)

Aberdeen – Nice try, but no coconut.

Apologies in advance but I’ve come over all parochial and am going to discuss Aberdeen itself. I’ve spent the best part of forty years either working out of or in Aberdeen and have watched it evolve into what it is now. Indeed, when I started working here the A90 was a single lane road, the airport terminal was on the East side of the field and flights to London still used some propeller aircraft! I also seem to remember Aberdeen harbour still had a dock gate which we had to wait to open before venturing out into the N Sea. This meant more time in the pub so it didn’t cause too much hardship!

Things have of course changed a great deal since then. From wondering what on earth had hit it in the early seventies Aberdeen has certainly gained confidence and stature and nowadays even calls itself the “Oil and Gas Capital of Europe”. Whether or not that’s deserved is a moot point.

During the run up to the decision on whether or not to redevelop Aberdeen’s Union Terrace gardens I clearly remember Ian Wood claiming that the redevelopment would help turn Aberdeen into “the Houston of the East”. I didn’t laugh – well not for long - at such a suggestion because whilst Wood must have realised that such a goal was impossible; when I thought about it I realised he was actually quite correct in that it is what Aberdeen should be aiming for. But does Aberdeen’s recent history suggest that’s ‘doable’ or not?

In the last month or so there has been a flurry of media praising Aberdeen’s success in doing so well out of the oil and gas industry with one broadcaster talking about “Aberdeen's central role in the North Sea oil industry”.

It’s an interesting turn of phrase. Aberdeen certainly has played a central role in that it has acted as host to the vast majority of oil and gas operators, service companies and manufacturers. Nearly all the important players are here in one shape or another. They’ve created jobs, spent money in our shops and had a huge – some would say negative - impact on our housing market. They’ve also kept our car sales people happy and filled our restaurants almost every night of the week. Our hotels, bed and breakfast providers are booming and our shops and supermarkets are also thriving. Aberdeen airport is constantly busy with both domestic and international flights as well as all those helicopter trips out to N Sea platforms, rigs and so on and so forth.

On some levels then Aberdeen has been a huge success but something niggles me about how deep that success actually is and how well rooted it is. Fact is that if it hadn’t been for firstly the Americans then the Norwegians and to some extent the French and others including the Danes, Italians, Dutch, Swedes and others Aberdeen would have been nothing like as buoyant as it has been.

Aberdeen then is like the oil and gas industry itself in that it’s certainly international. However it also means that because of oil and gas its economy is nothing like broad enough.

This brings with it some considerable risks. Firstly any downturn in the oil and gas sector regardless of what it’s caused by can have a large adverse impact on the Aberdeen and Aberdeenshire economy because there’s little to fill the gap. Secondly, companies can up sticks and move out at any time. Anchoring companies here is critical and because Aberdeen is a source of great engineering and other skills this is a major factor in our favour when it comes to deciding on where to invest. That said, it doesn’t always work like that. Witness Technip’s decision to establish an R&D centre in Paris and not Aberdeen where it has a major operations base. R&D operations are of course another essential element when it comes to anchoring companies anywhere. Where they’re based tells us a lot about where a company’s loyalties really lie.

So what to do?

Well I’m not first one to have talked about the need to broaden Aberdeen’s economy as much as we need to broaden the entire country’s economy and I’m sure I won’t be the last.

However, the time is now ripe to start developing a sensible strategy to actually do this drawing on the skills we have where possible but recognising we may need to develop or “import” others.

I had always hoped that ACSEF (Aberdeen City and Shire Economic Forum) would drive this forward but frankly, that organisation is turning out to be about as much use as the proverbial chocolate teapot.

For example, I’m still staggered that whilst it has a plan to develop a “Hydrogen Highway” as part of the “Energetica” global energy technology corridor, stretching from Aberdeen to Peterhead there is no plan to develop or even bring in a company to manufacture and trial hydrogen refuelling systems, fuel cells, electrolysers and so on and anchor that technology in Aberdeen for the future.

The same applies to their ideas on geothermal energy. Geothermal has huge potential, but where’s the plan to manufacture at least some of the hardware?

ACSEF desperately needs someone to press its restart button and revitalise it.

Ian Wood’s aspiration to turn Aberdeen into another Houston is possible only perhaps on a smaller scale. Houston has major aerospace and electronics sectors – Aberdeen is very good at electronics. Houston has a major medical science sector – as it happens both universities in Aberdeen are very adept at medical science and medical devices. Houston also has a powerful petro-chemical sector. I never have understood why Aberdeen doesn’t.

Of course, being a forward looking City Houston is attracting renewable energy companies to base themselves there as well and companies offering wind technology and low power LED lighting are typical of the ones that have moved in or set up already.
Ian Wood will be surprised to read this but I agree with him. Aberdeen has to emulate Houston and it has to start now.

(First published in the P&J Energy supplement & on EnergyVoice.com, Sept 2013)