Energy Transition Now Podcast – Episode 36 “Assessing the status of global CCUS policy”

David Linden [00:00:00] Hello everyone, again. You’re listening to Energy Transition Now I’m your host, David Linden, the Head of Energy Transition for the Westwood Energy Group. In the last few series, we’ve been diving into technologies that are going to be key to unlocking the energy transition. That began with offshore wind and then was followed by hydrogen. Thank you to all the guests who took their time to share their views. And to those of you who listened in. We now have over, 10,000 downloads. So thank you to all of you. Please do continue to give us a good rating, and share the podcast, with your friends and colleagues. So today, we kick off our latest mini series focused on CCUS. CCUS is expected to be used to permanently remove CO2, typically from sectors that have more limited options available to decarbonise, but also to remove directly, from the atmosphere, as well. The technology’s potential in tackling climate change has been championed by some. Development has lacked ambition. However, there now appears to be new momentum. So is this the CCUS moment we have been waiting for? To help us start to unpack things, I’m really pleased to welcome Toby Lockwood from the Clean Air Taskforce, as our first guest in this new series. Welcome to Energy Transition Now, Toby.

Toby Lockwood [00:01:30] Thanks, David. Good to be here.

David Linden [00:01:33] Perfect. Thank you and thanks for taking the time to come on. Maybe just to get the ball rolling from your side. Can you maybe just give us a minute on the, the Clean Air Task force? And your role in that?

Toby Lockwood [00:01:45] Yes. The Clean Air Task Force is an NGO, an environmental NGO, which is really focused on pushing changes in both policies and technologies that we need to get to, zero emissions society and affordable cost, whilst providing most meeting energy needs of everyone. It’s been around, since 1996. Originally set up in the US and as you can tell from the name, its original focus was really more on toxic air pollutants from, things like coal plants, and CATF did a lot of important work on that challenge and drove important policy change in the US. And then I think around the early 2000s, there was a shift towards looking at the next big problem, which was, of course, greenhouse gases and how we can meet our climate goals. I think the DNA of the organisation is to be pragmatic, look at all options. So we have a diverse team of experts looking at a number of different technology areas and carbon capture and storage, methane abatement, how to deliver the infrastructure needs, renewables deployment. Some of these challenges that we’ve identified as really being, critical roadblocks in the path to climate neutrality, which may not be being addressed so much by other organisations. And the organisation expanded globally a few years ago. So I’m based in the UK and I work on, both UK and EU policy here. And we have teams in several of the regions around the world, but particularly in Europe. So my role as part of the Carbon Capture and Storage program at CATF is to, work on developing, new analysis and materials which can assess, the case for using carbon capture and storage. Yeah. I mean, we try to be, as context dependent and as adaptable. Often different regions do need very different approaches because, you know, the best we often say the best policy is one that works. And policies that work are different in different places. In the EU and in the UK we have, carbon tax. That’s not the case, internationally, at least in the US. So yeah, there’s always a need to be adaptable and yeah, US origins, but definitely a global organisation, these days.

David Linden [00:04:32] Perfect. Yes, and I’ve enjoyed reading a lot of your materials that you’ve put out. I think it’s just the reasons I definitely wanted to have you come on. So thank you. So maybe let’s just start off with some of the basics around, CCS itself. Right. So there is, you know, at its most extreme level, you’ve got some people saying we don’t need CCS, to decarbonise or net zero. And then the flip side is, you know, we look at all these different IPCC scenarios that are out there and actually you need a lot of CCS. I mean, maybe just calling back to you. First of all, looking at the basics around why do we even need CCS? In your mind in the first place?

Toby Lockwood [00:05:12] Yeah. I mean, there’s there’s a few ways to look at this. And as you said, it’s often about an appeal to the, the numbers to the and the kind of hard science that’s been done on pathways to, climate neutrality to reduce CO2 emissions. And there’s really pretty overwhelming evidence that carbon capture and storage, and in particular, geological storage of large quantities of CO2, is going to need to be a part of that. You can see that, as you said in the IPCC reports, the sixth assessment, report came out. I think it was two years ago now, which look which looks at, abatement pathways. And, you know, they look at a large number of sort of model modelling pathways, looking at different ways, to reach different temperature targets. But if you look at it, pathways compatible with 1.5 degrees of warming, then you see across all those pathways a kind of median amount of CCS, which looks like around 7 billion tonnes of CO2 being stored per year by 2050 and over the period to 2100 – which is the period they assess – there’s over 700 billion tonnes and closer to 700 billion tonnes stored over that period. So that’s a median amount. I mean, those scenarios which have less than I think is one that I mean, often the publications on, the IPCC reports look at the illustrative mitigation pathways, which they say have a bit more evidence on. And you can see even in those that they all have significant amount of CCS, apart from one scenario which, you know, you could potentially seize upon, but it’s really quite an outlier. And, if you look a bit deeper into that scenario, you can see that it requires a massive reduction in energy consumption to 2050. So that’s the kind of reality we’re looking at, the kind of choice. And I think you have to look at that scenario and think, that’s maybe not the greatest scenario for, large parts of the world. And it’s probably not very likely to actually, to actually come to pass. So with the pragmatic hat on I think we need to look at the message that this modelling is telling us. And that’s that energy consumption is probably going to continue to grow, maybe, you know, remain stable at best and CCS will need to be part of this. And you can see similar results from organisations like the International Energy Agency, who identify a need for, 6 billion tonnes of CO2 captured and stored by 2050. In their, that’s in their net zero emissions by 2050 scenario. There’s an organisation called DNV, the pathway to net zero as well, and they have 8 billion tonnes. So I think you can see the consistent message that we can argue about the numbers. Hopefully we would need less CCS, I would say, but it looks like we may need on the order of billions of tonnes of CO2 being stored every year, as I’m sure we’ll get to that in this conversation, we are, it depends how you measure it, but probably at around, 30 or 40 million tons.

David Linden [00:08:40] That’s million not billion, yeah.

Toby Lockwood [00:08:42] Exactly. So there’s a huge scale up required, and I think it’s a bit of a no regrets action to get started with that now. So yeah, I think that’s so the basic but I mean you have to get into why those numbers are so big because I guess that’s you know, just saying comes to the modelling isn’t really enough. As you alluded to in the introduction, there are some sources of emission, need CCS to decarbonise. One that’s often cited is the cement sector, which produces, you know, you hear a lot about hard to abate industries. And cement is one of the hardest to abate because, a lot of its emissions are associated with CO2, which is, driven off limestone into the process. And that’s calcium carbonate. And so the CO2 really comes from that chemical process rather than any fossil fuel combustion. There is also fossil fuel combustion. It’s about a third of the emissions at the moment. That’s a sector which is really looking at CCS very seriously. And I’m sure we’ll talk about that a bit more. There are other sectors, some, chemical sectors and waste incineration, which certainly have a strong case for needing CCS as well. They have kind of these emissions which aren’t associated with fossil fuels, other applications for CO2 storage, which as you mentioned, there’s a lot of what we’re seeing in these projections for meeting our warming goals comes from just pulling CO2 out of the atmosphere. That could be via biomass, or it could be direct air capture  directly taking it out of the air. There’s also just a question of we have so many polluting sources today. Big power plants is a major one, heavy industry, even when there’s potentially alternatives like you often hear about, green hydrogen as and alternative to decarbonising some industries. Even when there are alternatives, can we roll them out fast enough to meet our climate goals, or do we need to have CCS kind of helping at the same time? It’s really just about options on the table and tackling the problem with more than just renewable energy, because that may not be enough. There’s really so much locked in, so many assets which have just locked in emissions.

David Linden [00:11:01] Okay, let’s break down some of that. Actually, just a little bit more in the sense, one of the ways I look at it, I guess a little bit is it’s essentially where we’re starting to move towards more of what I think the IPCC calls the overshoot scenarios. Right, the ones where you’d like to be on the perfect pathway downwards because everything’s decarbonising and it all looks fine, but essentially where the demand is still going up, for fossil fuels now. And that gives you on a trajectory essentially, we’re going to overshoot the pathway you’d ideally like to be on before you then have to use things like CCS, etc. to get you down, fast enough, to a world where parts per million look more sensible again, from a CO2 perspective at least. What was always interesting was, is that people talked about hard to abate sectors, but easy because it’s the lowest cost option that these guys have or there are no other options. You talked about alternatives, but ideally you want to do it in the cheapest way, and CCS doesn’t happen overnight. It takes, its infrastructure, build its pipelines, and, you know, all those sorts of things need to be built. Is it really because there is nothing else and it’s not happening fast enough? Or is it essentially actually this is the lowest cost option that these guys should take, because alternatives themselves are actually more expensive and not as good at doing the job of decarbonising in the timeframe that we need.

Toby Lockwood [00:12:36] Yeah, I think there’s a lot there, but I think, you’ve got good points. You know, for some industries, lowest cost option, obviously you know, I mentioned cement, I mean, it’s kind of the only option. I think there are other sectors where, there are other options available but CCS is lower cost, and I think it really depends a bit on what you mean by lower costs. You know, often the alternative cost is dependent on the availability of green hydrogen, large amounts of renewable energy. So that’s often not it’s usually not a lower cost solution today. And that’s why one of the other applications, as you see in the modelling is there’s a route towards, decarbonised fuels. So you can instead of, using available energy to produce green hydrogen, which is a, you know, a great low carbon fuel, you can convert natural gas to hydrogen and store the CO2. And then, you know, it also produces an alternative low carbon fuel. And that’s something we can do right now. So I think a lot of it is what’s the lowest cost option now, the lowest cost option though rather than and yeah, of course decarbonising industries are going to have to make those assessments and look at whether they can potentially lower cost route available in ten years. But I think it’s important that we cut our emissions as fast as possible. And we look at solutions which can deliver at lowest cost today. So there is a little bit of a changing playing field as we build more renewable energy. But at the moment it’s fairly scarce. Green hydrogen is ’ery scarce and very expensive. So that means CCS really becomes relevant in a larger range of applications. And even in the power sector. I mean, you can look at the impressive cost reductions we have from, solar and wind, it’s a no brainer to just roll those out. There’s challenges associated with that. As I mentioned. You know, we’re looking at trying to, improve infrastructure build-out, which can can help accelerate that process. But at the same time, if you look at decarbonising an entire electricity system, you do still have a need for other forms of energy that aren’t wind and solar and don’t depend on the weather. That could be energy storage, it could be nuclear, which we also work on. Essentially, looking at the cost of decarbonising the power system is different from looking at the lowest cost way of generating electricity. And that lowest cost mix may include some CCS. So I guess I’ll just use that to illustrate the point, that really depends. Talking about what’s the lowest cost option, it depends what your, your parameters are and what your criteria are.

David Linden [00:15:25] And I guess it will depend on each country in each situation, very much. I just raised it because cost seems to be a big discussion point in certainly in politics and in the UK, and other parts as well. Right now, how much this is going to cost the end consumer. And then how much will they feel it? And I remember seeing something on your website like some analysis you’d done or maybe somebody else, and you’d republished it around, you know, there were individual plant costs that you saw which looked like you’re having to sort of, you know, put carbon capture onto it. And it was going to raise the plant cost price by 60%, etc.. But actually what you were doing was achieving 50% reductions in emissions across the lifecycle and only 1% increase in the cost of the end product itself. I can’t remember the example off the top of my head. There’s that’s a good illustration. The round actually. Yeah, it might look costly to the external eye, but actually when you get to the end consumer, that’s achieved a lot for not only individually kind of costly price.

Toby Lockwood [00:16:29] Yeah. I mean that’s a really interesting conclusion, that you see in decarbonisation of heavy industry that could be by CCS or other methods. But even if you add, if they double the cost or add 50% of the cost of something like cement or steel, that cost increase becomes most significant. When you look at adding products like a car or a building. And that analysis was done by SINTEF the for Research Institute in Norway. There’s been similar studies done by a few other research groups, but it’s kind of to illustrate the facts that we can maybe find ways of funding these decarbonisation technologies, which don’t obviously, society’s still paying the same, but it doesn’t, it’s not so difficult to bear when it’s, potentially the consumer seeing a very small increase in, the price of a fairly high-cost end good. And we could also drive that through, you know, regulation on those sectors which require lower embedded carbon, for instance.

David Linden [00:17:35] Yeah. I thought it was a fascinating bit of analysis because it highlighted the difference to some of the debates that we have around renewable electricity and the the cost of their electricity bills versus how it sort of played through to, to other end products here for the consumer sees, sells.

Toby Lockwood [00:17:54] Yeah, I should say the reason for that is because there’s so many other cost inputs into those for, you know, the supply chains and the workforce and that kind of thing.

David Linden [00:18:06] Great. Thanks Toby, so let’s look at maybe where, CCS is developing in the world. If you could give us a bit of a kind of insight as to where in the world that’s happening and which regions are important.

Toby Lockwood [00:18:19] Yeah, well, the USA has really been a frontrunner in developing the technologies that are used for carbon capture and storage. And a lot of that historically has been driven since as far back as the 1970s by enhanced oil recovery, which is a technology where CO2 is injected into depleted oil reservoirs to increase production. So it’s not exactly the kind of CCS we want to see for climate purposes today, but, it’s helped develop a huge amount of knowhow in CO2 storage and capture and developed a lot of CO2 infrastructure across the US. So there’s a large number of projects in the US doing that. Normally taking CO2 from, sort of low cost, easy to capture sources. But more recently, we’ve seen a real shift in the US towards more climate driven projects, and that’s driven by really pioneering legislation and the Inflation Reduction Act, which has increased the level of a tax credit you can receive for storing CO2. And the value of that credit is actually increased if you don’t do it for enhanced recovery, but purely for the purposes of storage. The tax credit has been around for a while, but under the Inflation Reduction Act, that’s been increased significantly. And there’s also, additional provisions for, building out CO2 transport and storage infrastructure under the Inflation and Jobs Act. So lots of policy incentives in place in the US. But that is, you know, important deciding factor in whether it’s a promising pathway in a particular region. But there’s a lot of a great geology in California, in the Midwest. So we’re seeing kind of developments around those regions in the US. In Europe, North Sea has a lot of potential for CO2 storage, and that’s really the centre of activity in Europe at the moment. There’s been a couple of Norwegian projects have been storing CO2, one of them since 1996. And that’s because that is kind of for climate reasons, because there was a CO2 tax in Norway for oil and gas production, which really drove that. We’re seeing now a lot of interest across all across Europe, which will maybe get into later because that’s my kind of focus. And that’s particularly in the last couple of years, I’d say we’ve seen, you know, a huge number of policy announcements, both at the national level and the EU level, which, recognising a role for CCS in meeting Europe’s ambitious climate targets and dedicating funding towards, specifically toward CCS for scaling it up. So other regions, there’s, you know, worth noting, Japan last year announced, a CCS roadmap, which identified seven industrial cluster areas where they were interested in deploying CCS. There’s a lot of challenges in Japan, particularly around storage, but definitely there’s potential there. And something they’ve identified, they’re looking at, you know, scaling up to, up to 240 million tons of annual storage by 2050. There’s been a few projects kind of ticking away at various scales in China for many years, but I think in the last couple of years, we’ve seen real concerted interest in developing kind of large scale commercial CCS projects. We’ve seen some kind of global oil players getting involved in developing offshore, large scale offshore storage projects in China. I think as kind of notable landmarks, there was the first million ton per year scale project in China kicked off last year, and they started their first offshore CO2 storage project. So those those are really I mean, yeah, I guess the other two major regions to mention in the Middle East, where in particular Saudi Arabia has, set some very ambitious targets for scaling up stakes. They are looking at, of the top of my head, I think, 9 million tons of annual storage at that, at their Jubail industrial hub on the East Coast. In the short term and long term, they’re looking at 4 to 5 millon tons per year. It’s also of potential in Southeast Asia. A lot of activity there, around both, depleted gas reservoirs and, dedicated CO2 storage sites. There’s a few regions leading the way and, gathering momentum and in many other parts of the world.

David Linden [00:23:05] That’s a very nice summary. Thank you. I mean, it sounds like essentially the US has led the way Europe is following and other regions are putting plans in place, but they’re maybe not quite there yet. In the same way that you see in other regions, they’ll get there. Do you see this being led, essentially, I mean, certainly outside of, let’s say, Europe and even in Europe. But is this an oil and gas player kind of driven market? I asked that simply because you mentioned briefly just on China, a couple of oil and gas players who come in and are looking to develop something there. Is that is that essentially the group of companies that’s driving this as well?

Toby Lockwood [00:23:50] Yes, as I said that I kind of thought there’s a lot of unpacking to be done there. I mean, it’s true that geological storage is something which requires, a lot of expertise in dealing with what we call the subsurface. It’s very specialised and it is today largely oil and gas companies who have both the financial resources and the expertise to develop those storage sites. Not exclusively, I mean, you see sites developed by, you know, research institutes as well. And there, kind of engineering companies who have that expertise, who can provide that service if, you know, if companies are willing to pay. But but oil and gas companies are definitely involved in a large number of projects on the storage side. And it’s yeah, normally requires and sometimes they can use their own emissions. A lot of early projects are really simply just taking CO2 out of natural gas. So the one that the ones I mentioned in Norway, situations where you have natural gas coming out of the ground is contaminated with CO2, and they have to remove that to, make those that natural gas saleable. So these companies have been for years removing CO2 and just venting it. So just take something like, a CO2 tax to force them to return it to the, to the ground. And, that’s a situation where I know the gas company is obviously dealing with the entire thing. But as we look to use CCS more to decarbonise heavy industries and other sectors, obviously it involves a partnership, between several companies that may be a company that deals with CO2 transport by pipeline. If the industry isn’t right next the storage site. So you often see consortiums of, several companies dealing with different parts, and you may have a dedicated company which comes in to do the CO2 capture as well, which is the separation process.

David Linden [00:25:48] Yeah. So there’s actually quite I mean, this one thing often people forget I find in the CCS discussion is, is actually there’s a lot of different companies needed across the value chain. We have to talk about the storage side. And as you rightly said, it’s the oil and gas players who have got the expertise and the money to, do that effectively. But the whole value chain has a whole range of different players, typically involved, especially on the capture side, because obviously the different technologies involved as well, to make that work.

Toby Lockwood [00:26:16] Yeah. I mean, we’re certainly interested in promoting a more diverse set of players involved in CO2 storage as well, and it’d be great to have a competitive space where it’s not just oil and gas players, but also I think it’s important not to see their involvement, the involvement of those companies as a big negative, as if they’re kind of, you know, leading the dance. These are companies which, are responsible for producing polluting fossil fuels. And it’s good that the use their expertise and the resources to do something about that problem and to, to address that. And that’s where a lot of policies are looking as well at the moment as well which I’m sure we’ll get to.

David Linden [00:27:01] Yeah. No, absolutely. Certainly couldn’t agree more on that one. Okay, so, your absoloutly right. So let’s let’s shift maybe to a bit of a deep dive on the EU, specifically, as you say, that that’s one of your core areas of expertise as well. And you’ve something you’ve been looking at and if you’re following closely, should we say from behind the US, could you maybe just give us a bit of a rundown around what’s happening, with EU policy, how’s that evolved to sort of bring CCS into the fold?

Toby Lockwood [00:27:30] Yeah. So obviously you have the member state policy and EU policy. And that’s not always, exactly the same. But to focus on the EU, there’s been some really significant developments, early this year. First of all, the EU published an industrial carbon management strategy, which is really laying out a set of, a kind of legislative program for, how to scale up both carbon capture and storage and carbon carbon capture and utilisation, which is where you turn the CO2 into the other products. And it set some quite ambitious targets for scaling that technology. The, and those were really tied to a communication they released at the same time on the EU’s climate targets for 2040, which are based on a lot of internal European Commission modelling. So long story short, this the communication on carbon management targets 250 million tonnes per year of CO2 storage by 2040 and, getting towards 2050. That’s, accompanied also by a very large amount of carbon capture and utilisation, I think another 200 million tonnes roughly, a number of proposed legislations were put forward to bring that about, things like looking at a regulatory framework for CO2 transport, mapping geological storage potential across, across the region, possible ways of funding more projects. But it really is more of a kind of strategic goal. And we’ll see that will have more teeth as it turns into, kind of legislation over the course of the next commission. But a really important piece of legislation that was finalised at around the same time as the Net Zero Industry Act, which, you know, it’s kind of headline focus of the act is to promote the development of clean energy technologies domestically in the EU, one of which can be CCS. But, you know, obviously renewables and, electrolysers and all kinds of other things. But an important part of that act for CCS was it also set, a binding target on CO2 storage capacity for 2030 of 50 million tonnes per year. So that kind of has more teeth than the strategy, which was an important landmark statement by the commission. But it’s right in that industry at which we might see to see immediately starting to drive investment. And the interesting thing about that 50 million tonne target is that it was as an obligation on oil and gas producers. So in proportion to your share of oil and gas produced between 2020 and 2023, you have to deliver a fraction of that 50 million tonnes for you. You know, you could exchange that obligation. You could procure, capacity from from another entity that’s able to deliver that. If, for instance, the certain oil and gas producer wasn’t in a position to develop CO2 storage themselves as potential for coming to, other commercial agreements on that. So there were a lot of other provisions of that. And that was the industry at to its should accelerate CCS deployment things around faster permitting that requirements around setting up, on sort of better reporting from member states. So they have to say what they’re doing on CCS and, how many projects are developing and if they’re not choosing to discuss what else they’re doing to decarbonise, heavy industry and things like that. So it’s a really important piece of legislation. We worked a lot on getting both those over the line, and we think it’s really valuable to kind of harness the resources and expertise, as I said, of these big oil and gas producers. I mean, interesting thing is that it’s really focused on EU production, and EU production is not really, significant. Most of the oil and gas consumed in the EU is, is actually from, from other places, like Norway.

David Linden [00:31:40] So it doesn’t encompass Norway within that, even though Norway is officially in the European economic community as such.

Toby Lockwood [00:31:49] That’s right. I mean, I think it’s really targeted at, I mean, Norway is developing a lot of CO2 storage, and there’s an expectation that CO2 will be exported from the EU, particularly to Norway. It’s much more difficult to export to the UK because of Brexit. But, Norway’s there as a kind of willing partner to accept EU CO2. But I think the idea of the net zero an industry act which we support is to also promote CO2 storage in the EU, because it is much cheaper if you have CO2 storage closer to home. And I think we will need all the storage we can get. So, and there are opportunities within the core EU member states, particularly Netherlands, Denmark which have North Sea storage like Norway and UK, but also there’s a pretty significant project being developed by Italy in the Adriatic. A lot of these are offshore projects, I should say, for a number of reasons.

David Linden [00:32:48] Though, it’s fascinating simply because I think the EU was a little lukewarm on CCS for a long, long time relative long time. And it looked like the UK was driving ahead. But individual member states, as you say, like Denmark and Netherlands, really started to pick up and develop the first projects essentially. I mean, but before the UK and obviously Norway was first. But, you know, there was some real development. Do you see this because you mentioned things like regulatory frameworks and funding, and those things, is essentially what the EU is proposing, a little more similar to the way that the UK system works. So if I think about it in my head, right, the US simplistically is less regulation heavy, more financial incentive heavy. UK is very regulation driven in some respects, with obviously financial incentives to back it up. But it’s not like here’s a tax break, go and make it happen. You know, the models have evolved slightly differently. What’s the EU one starting to look like?

Toby Lockwood [00:33:48] If you put it in terms of, you know, carrots and sticks, as people often like to, there’s certainly a lot of stick in the EU compared to the US, there’s this obligation on oil and gas producers. But the big thing, the big driver is really the, the price on carbon. And there’s a lot of emitting industries which, you know, they’re looking down the face of a phase out of free allowances, which is so far kind of protected them from the carbon price and increasing carbon prices. You know, last year we saw the carbon price go up to €100 per ton, so if you’re a cement company, then you need to find a way around that. So that looking to develop projects. And it’s great that we now hopefully have oil and gas producers getting a bit more, speeding up a bit on making the storage sites which can which can go together to make a value chain there. But there are carrots from the EU, as well as called the Innovation Fund, which takes proceeds from the ETS and puts it into, decarbonisation projects, innovative decarbonisation projects and a lot of that money for in the large scale project category is going to CCS at the moment. A lot of them, a lot of it to cement projects, in fact, I think is about depending how you count it, maybe about 15 CCS projects in that, over various rounds of funding there. But that said, the real kind of money for deployment, which we think is certainly important to have on the table at this stage of any industry, we saw renewables as well at the beginning to get an industry going, you do need to, kickstarts it with some subsidies. You know, the way EU works is that that’s really coming at the member state level. And we’re increasingly seeing that the Netherlands has was really a pioneer in having a funding system which covers all kinds of like the innovation Fund, that covers all kinds of part funding called SD++, which can go to all kinds of, decarbonisation projects. But a lot of it is going to CCS projects because they do actually deliver big cuts at competitive prices. So that’s interesting to see. And we have the first final investment decision on a new CCS project in the EU was the, one associated with the port of Rotterdam, the Porthos project. And in Denmark, you know, has also announced significant out of project funding. So that’s more of a national thing. And know in the UK there’s also a lot of funding on the table. We saw £20 billion announced in the budget for last, I think, which will go towards these very, a set of very carefully thought out kind of what they call business models, essentially subsidy systems for various types of CCS projects. I think maybe some headline things to say about this is that the reason for the shift in momentum globally, and particularly in Europe, I think, is climate targets net zero by 2050. You often hear that when there were targets, even sort of 80% decarbonisation. Everyone thought they could be in the 20%. Lots of industries that were like, well, you know, we’re really hard to abate. So we’ll, you know, be protected from those cuts. But when it comes really about getting to net zero, I think governments across Europe and across the world are seeing that you kind of need CCS to make it work, and that’s why there had to be a complete change of heart. You see that most dramatically in Denmark where CCS used to be against the law. And then they kind of looked at the numbers and, you know, that’s the net zero numbers climate arithmetic and realised they needed to do a U-turn on that. And we’ve seen that in Germany as well. You know, Germany released a carbon management strategy, or a kind of preview of it I think earlier this year. And again, they’ve had to come back to technology, which was dismissed about ten years ago. So a lot of countries moving, France, another one hasn’t done the same kind of U-turn. But that definitely, you know, has released a carbon management strategy as well and recognises a role for technology. So big shift. And I think it’s really brought about by looking at those there’s kind of uncompromising net zero goals.

David Linden [00:38:03] No thank you. No, that’s really just. I mean, I completely agree with you. I remember, you know, looking at CCS not too long ago and thinking, good luck in many countries. And actually, there’s been such a sea change of mentality around CCS from governments that has shown, you know, the opportunity. But of course, there’s still the challenge of delivery. Right. And as you kind of, you know, noting there, there’s the subsidy side of things, but there’s also, you know, questions around the long term business case, you know, so places like the UK as an example are saying here’s our initial set of projects are going to be subsidised. But then we want a free market, you know, no subsidy, nothing. Maybe a carbon price, but I don’t know where the carbon price is going to be. Can you really build a business case on that? So maybe just just to round things off, right at the end. I mean, what’s the biggest challenge in your mind to ensure that CCS takes off? Because you’ve got good policy coming along the way? Or maybe your argument is it’s not good policy, but we’ll see. But what’s the one thing in the EU let’s just say that’s needed to really now accelerate it from here’s a nice strategy… How do we make it happen?

Toby Lockwood [00:39:14] Yeah. Great question. There are still challenges for sure. I think the EU ambitions do depend a lot on member states coming forward with, funding. You know, just funding through this innovation fund isn’t going to be enough. You got projects, you know, here and there, you can’t build kind of large scale shared infrastructure based on kind of piecemeal announcements for, you know, one projects in Greece, one project in south of France I think. It really requires member states to come forward with funding approaches, which can support the development of shared CO2 infrastructures. That could mean pipelines with enough or shipping, you know, as a solution. There lots, projects. Looking at them as a kind of easy fix is to ship the CO2 to storage sites in Norway or something. But to make any of that happen, you really need enough a kind of critical mass of projects which have a business case in one region which can, make it worthwhile to build infrastructure, and that gets the costs down for everyone. If you just have, you know, projects here and there building their own infrastructure, small scale stuff, then you get very high unit costs, you know, you get much higher, unit costs of abatement. So it’s important to work together. It’s important to find business models which encourage that working together, the UK has looked at that really closely and is kind of funding on a very much sort of regional level. I think we’ll see more of that in other European countries, but it is a policy challenge. So I think infrastructure is the key. The EU can do a lot to pave the way there, it’s working on things like standardising CO2 specifications. So all the infrastructure can, you know, it’s compatible, it’s working on standardising regulation. And, you know, in terms of how much you can charge for and who could access this infrastructure. But I think ultimately it comes down to finding a way, particularly to build infrastructure ahead of demand. We need storage development in particular, to kind of get off the fence and hopefully that allows the industry out to help with this. Stop waiting for sure thing contracts with carbon capture plants to go ahead and invest. But to really just invest in the knowledge that there is going to be demand for CO2 storage, you know, all the numbers are saying and the political directions, and it’s going to be big demand for CO2 storage. I think CO2 storage now does really need to get going. I think there’s a number of things that you can do to help with that. And it’s already done some of it.

David Linden [00:41:52] Yeah. I mean it’s I mean, we also look at hydrogen quite a bit in the last series. You know, we asked I think what’s the most important thing to each of the folks. And one of them said supply, the other one said infrastructure and the other one said demand. I think it’s a question of where you sit and what you’re trying to achieve and how you’re trying to do it. And, you know, I completely get your point around infrastructure and then demand and those things and it sounds quite similar, right? It’s the same kind of I hate to use it chicken and egg in some respects problem though. But that’s ultimately the core challenge with all of this is ensuring that there is well, it’s not necessarily lack of supply, but plugging that supply into a infrastructure that then reaches a demand, sorry, a storage site, in a cost effective way is, is ultimately the only way you’re going to get this done.

Toby Lockwood [00:42:42] Yeah. I mean, we hear a lot about chicken and egg in CCS as well. And I think that the, the storage obligation, development obligation was an attempt to, you know, to break that cycle, get storage developed, also fund capture and have it all come together. And hopefully that will work. You know, so far, the only place we’ve seen the cycle really broken in Europe is Norway, which just decided to just put up money to fund a capture project and a storage project. And the clever thing there is that the storage project also has lots of spare capacity that it can use to to help other parts of Europe decarbonise. So it was really a clever move to kind of fund that one kind of anchor projects a seed project which justifies sort of CO2 storage but also to have spare capacity. That’s allowed other players like, you know, plants in Denmark, Netherlands, to feed into that same storage site. So there’s a bunch of ways you can approach this. I think we do need to make decarbonising industry have a business case in the long term. And as you said, the carbon price could maybe do that. You know it’s expected to, it has to anyways up for the carbon price. But there are maybe needs to come back to something we were talking about the beginning an interesting way to do that. Maybe a more effective way to to drive change alongside that would be to have things like low carbon product standards and, you know, require a certain, a certain percentage of decarbonised cement on the market by buyers to purchase a certain percentage of decarbonised cement. And that could increase over time. And, or you could have, you know, things like carbon take back obligation, which is, again, an obligation on hydrocarbon producers to store a growing percentage of the carbon they produce. So I think it’s interesting to look not just the carbon price, but, kind of regulatory drivers, which can drive a small amount of high abatement action. Like not wait, so we do have to wait for the carbon price to get to €200 per ton, before everyone starts investing, but we invest in a bit of the high cost technologies. We know the higher cost technologies so that we know we’re going to need today and have that as a kind of ramping proportion. That’s the kind of policy approach I think we should be looking at in terms of the business model.

David Linden [00:45:03] All right. Toby, thank you so much for that. I think we have reached the end of our allotted time. Thanks for sharing your thoughts and for giving us, such a generous amount of your time. I think there’s a hell of a lot going on in CCS. Many different ways you can look at it, but certainly has a lot still to do in the EU, despite the, the recent momentum. And it’s exciting to see in which direction it’s going to be going. So, thank you, Toby.

Toby Lockwood [00:45:27] Thank you. Thanks for having me.

David Linden [00:45:29] Perfect. And thanks everyone else for listening as well. I hope you enjoyed it. Please make sure you subscribe, give us a good rating and share with your friends. Talk to you next time.

 

 

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