The Energy and Climate Change Committee urge the Government to fast-track final funding decisions on two pilot Carbon capture and storage (CCS) projects at Peterhead and Drax by early 2015, after years of delay in the 'competition' launched to provide capital support for the industry. This delay has called into question the credibility of Government policy designed to support CCS deployment in the UK. The technology – which can be fitted to coal and gas power stations – is vital to limit climate change because there is more CO2 locked up in fossil fuel reserves than can be safely burnt without pushing global temperatures beyond 2 degrees Celsius – a dangerous threshold according to scientists.
The higher costs associated with fitting and running CCS means that it is likely to develop only in response to specific policy intervention and will need subsidy. The Government should be transparent about the costs of CCS and how they will be met. Guaranteed price tariffs for low carbon energy – called 'Contracts for Difference' (CfD) – will be essential to incentivise CCS projects and provide a route to market for non-competition projects. Deploying CCS in the UK early could also deliver significant economic benefits. It could increase UK plc's future share of the global CCS market and open up a potential 'storage market' using the UK's offshore geological storage capacity – thought to amount to 70 billion tonnes of CO2 or over a century of UK emissions – while protecting jobs associated with the UK's coal and energy intensive industries.
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