What would you think if I said that right now we at Yorkshire Forward are working on something that could make Yorkshire a world leader in a cutting edge form of technology within the next decade? You might say we’ve been there before – when Yorkshire, with its coal and textile industries, was the epicentre of the Industrial Revolution that made Britain a world leader.
You might also add that we are still clearing up from such developments all these years later, with redundant buildings, scarred landscapes, and towns and villages that, perhaps because of their history, don’t always seem best located for 21st Century industry. There is also the ongoing pollution. And yet the technology we have in mind deals specifically with that, and at the same time could make many of these polluted areas the focus of attention and investment as the world and business grapples with climate change.
Let me put it to you plainly. Two years ago, Yorkshire Forward formed a carbon capture and storage (CCS) partnership with some of the biggest players in the energy industry located here, including Conoco Phillips and Powerfuel, to look at the possibilities of building a CO2 transport network across the region.
CCS works by separating out the CO2 that is produced by burning fossil fuels into a highly concentrated, liquid-like state. This would then be piped along the south bank of the Humber and under the North Sea, where it could be injected back into redundant gas fields. We could be storing up to 60m tonnes of carbon a year.
This technology is proven. It has been used in the USA, Canada, Norway and Algeria. This is not a new silver bullet piece of kit that we have invented that could go wrong. The only thing that is different about what we are proposing is that it is on a much bigger commercial scale than anything that has been done before, and has never been done on this scale underneath the sea.
But geologically, there is no difference between such material being trapped under the sea and under the land. If you think about it, we are just putting gas back in where it was taken out. What’s more, both national and European governments are latching onto this idea.
In January, the European Commission unveiled a shortlist of potential CCS demonstration projects which could win its financial backing. An initial project, which would see CCS demonstrated at a new power station Powerfuel is building at Hatfield, was one of them. We will find out before the end of this year whether we have been successful. But why, you may ask, is Yorkshire so suitable for this kind of technology? Well, you can look across Europe, possibly the world, and you probably won’t find anywhere else where there are clusters of big single-point sources of carbon – places like the Corus plant in Scunthorpe, which is the second biggest emitter of carbon in the UK after the Drax power station – in such close proximity to places where you can store it.
A lot of the cost of carbon capture is the transportation. There are obvious benefits too: the hydrogen, for example, that is a by-product of the process. We could power a whole fleet of buses for a city the size of Sheffield just using hydrogen from the one plant at Hatfield. There are jobs too. Our study suggests this project could create 55,000 of them.
Most will be in the construction phase, but that will last 15 years.
And the study also suggests that the long-term operational benefit could be worth £31bn to the regional economy because of the many spin-offs that would follow. When you consider that the current scale of the regional economy is about £85bn, that’s a huge amount. Of course, the cost of such a scheme has always been a big question mark. We have been working on a cost model and currently suggest that our proposal could cost up to £4bn. It would be paid for by a carbon trading levy on carbon-intensive businesses. We believe you could generate £1bn of credits a year under the current EU trading scheme. So it’s a relatively quick return.
It would be local businesses who would be paying this, of course.
But if you are a carbon-intensive business you are currently looking at carbon trading systems that either are, or soon will be, mandatory and that some estimates say could cost you €60 euros per tonne by 2020.
We believe our scheme can be viable at half that price, and so could have created a honeypot effect for the local area. Then look also at the alternatives. The 60m tonnes of carbon we will be storing a year represents 10 per cent of all UK output; something close to our Kyoto responsibilities. How else are we going to get to this point? Do you price people off the road, build very expensive nuclear power stations, invest more in renewables, or retrofit insulation en masse? All of these will have their place, but CCS now stacks very well against them. There will undoubtedly be some who will question why we should be so focused on this in the current recession.
But just because we are, it doesn’t mean we are neglecting our duties to support business. We have shifted our budgets as much as we possibly can to help viable businesses on the ground stay trading, and to save key regeneration schemes. We are also focusing on big ticket items, like working with Lloyds Banking Group to make sure the impact of the merger with HBOS doesn’t have a hugely negative effect on the region. But it would be daft just to concentrate on the here and now.
We have to look at when things are going to turn, and make sure we are best placed to take advantage of that.
That’s why, for example, along with concentrating on carbon capture and renewables, we have invested in next generation broadband in South Yorkshire.
There will also be a small minority who remain to be convinced about whether the predictions on climate change can be relied upon. Whatever the political imperatives, the world has accepted climate change as a reality. When the UN asked the scientific community about climate change action, the majority felt it was fundamental, and that action has to happen sooner rather than later. There will always be a risk that someone will come up with an answer that solves the problem that isn’t carbon capture. If this did happen, it would actually be private sector judgements that had taken on the investment, not huge amounts of public funding. Yorkshire Forward’s total investment in this project to date is £400,000. We are acting as a facilitator, bringing the consortium together.
They previously thought they were competitors, but they can now see that collaboration is important. And China alone is building two coal-fired power stations a week. Whatever the risk, the greater imperative is that we can show the world that you can deal with climate change and still have an energy industry, as we do in Yorkshire. This is what really excites me.
There has been criticism in the past that regional development agencies have not focused sufficiently on their strengths and what will give them comparative advantage. This is a prime example of doing that. No one else has a cluster like we do. No one else has the engineering and energy skills, or the topography with proximity to the redundant gas fields. And we are also the only potential project in the UK bidding for money where the project at the heart of it all – Hatfield – has already invested in the preparatory work. That’s why I am happy to say that we can initiate a CCS network in the region by 2014. Most people elsewhere in Europe don’t see this happening on a commercial scale before 2020, so I can’t emphasise enough how this is truly world leading. If this comes off, it will be the most value-for-money piece of intervention any Government agency has done in Yorkshire for the past 30 years.
Tom Riordan was speaking to Peter Baber