Energy Transition Report 2018

CCUS will be key in delivering a low carbon future

CCUS is a key technology for the next phase of the energy transition. Successful implementation will provide the following benefits:

Allow decarbonisation across the whole UK economy which will be essential if the Government is to achieve its ambition of net zero emissions by 2050.

Boost regional growth in industrial heartlands and align with the Government’s Industrial Strategy, boosting investment in skills, industries and infrastructure across the UK.

Create a world-leading industry , maximising existing UK assets and skills, building on the offshore wind success story and aligning with the Government’s Global Britain agenda.

Following the release of the Carbon Capture, Usage and Storage Cost Reduction Task Force Report in July 2018, it is critical the government acts on the proposals and publishes a clear, ambitious and deliverable deployment pathway by the end of 2018, in order to achieve CCUS at scale by the 2030s.

A broad-based hydrogen economy is essential Natural gas has already provided significant emissions reductions to the UK and worldwide, having replaced coal as the most competitive, large scale method of power generation in many OECD countries. This is as, when combusted, natural gas produces half as much carbon emissions and provides other benefits such as improved air quality around major power generation hubs. Given the reliance of the UK domestic and industrial heating requirements on natural gas, the pre-existence of some of the required infrastructure and the lack of viable alternatives which can command public support, the development of decarbonised gas in the form of hydrogen is central to the next phase of the energy transition. It is recomended the government facilitate a hydrogen roadmap, building on and reciprocating the success of the CCUS TF reduction report and the H21 feasibilty studies. The roadmap should look to incentivise investors through a policy framework that is broad and scalable. Such measures are likely to require primary legislation. It is recommended that government should already begin to work towards a Hydrogen Bill to establish the regulatory and commercial framework for the production, transportation and supply of hydrogen at scale. The role of carbon pricing should be revived The establishment of a price for carbon has been a key element of government policy in both the EU and UK, but its effectiveness has been undermined by conflicting policies in other areas and led to low prevailing certificate prices during Phase III. This, in turn, caused governments to bring forward additional bespoke policies which further undermined EU ETS, creating a vicious circle. The reforms of EU ETS contained in Phase IV provide an opportunity to break this cycle. Carbon prices have already increased such that these provide a better incentive for consumers and businesses to respond. This should mean that overlapping and competing policies can be re-evaluated.

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