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BP likes to be beside the Teesside

The level of investment in the Net Zero Teesside project will be instructive as to how seriously BP and other majors are taking their recent emissions pledges

Some form of carbon capture, usage and storage (CCUS) will be essential if we are to get to net-zero emissions while still burning fossil fuels. As the UK has enshrined its 2050 pledge in law and the Net Zero Teesside project has near-ideal characteristics, the project’s success or failure will be enlightening.

BP’s net-zero by 2050 pledge was greeted by applause and accusations of greenwashing in equal measure. But at the end of February it became the operator of a consortium—including Italy’s Eni, Norway’s Equinor, Shell and Total—that has taken leadership of the project from OGCI Climate Investments, giving its commitment more heft. The naysayers will have to eat their words—if real money is actually spent.

The Teesside project aims to transform an industrial area centred around the town of Middlesbrough on England’s northeast coast into the UK’s first net-zero cluster, capturing CO2 and storing it under the North Sea. “Teesside is well designed. It has made full use of its favorable location, with close proximity to existing sources of CO2 and potential suitable sinks offshore,” says Jonathan Fuller, global head of advisory at consultancy Xodus Group.

The littoral countries of the North Sea are ideally positioned for industrial cluster CCS projects as they have existing depleted gas fields, and possible saline aquifers, in close proximity to existing infrastructure, according to Fuller.

Strength in clusters

The International Energy Agency (IEA) estimates that CCUS could provide 9pc of the cumulative emissions reduction between now and 2050. But there is a question over whether Teesside alone will make a material impact on total UK emissions. “In short, no,” says Fuller. “But it is a starting point for an industry that has struggled to get off the ground.”

“Teesside has made full use of its favorable location, with close proximity to existing sources of CO2 and potential suitable sinks offshore” Fuller, Xodus Group

According to provisional UK government statistics, UK 2019 CO2 emissions were 351.3mn t. Teesside’s industry cluster is currently the fourth largest industrial emitter of CO2 in the UK, producing 3.1mn t/yr. Of this, 25pc is planned to be captured in Phase 1, equivalent to 0.78mn t/yr.

However, Teesside seeks to ultimately dispose of 6mn t/yr of CO2 from capex of £0.5bn. “This equates to a capex of £4.20/t assuming a 20-year life. This would make it the most capex competitive of all similar projects we aware of,” says Fuller.

“It would be very impactful, saving millions of tonnes of CO2 a year, and helping to ensure that heavy industry has a future in a decarbonised Britain,” says Corin Taylor, principle consultant, future of gas, at standards firm DNV GL. “Combined, the major industrial clusters emit tens of millions of tonnes of CO2 each year, so major cluster projects would have a big impact on total emissions in the UK.”

It is clear that the next wave of CCUS facilities will be anchored on a hubs and clusters approach, allowing for multiple sources to connect to a CO2 network, according to Guloren Turan, general-manager, advocacy and communications at thinktank the Global CCS Institute. “They can achieve significant emission reductions in hard-to-abate sectors like cement and steel. It can also be applied to hydrogen production, natural gas processing and ethanol and fertilisers facilities.”

 Proof of the pudding

As capturing carbon has opex the government needs to create an investible business model. A high carbon price would make UK, industry uncompetitive. “Another option to finance it would be to establish contracts for difference (CFDs), as the government has done for offshore wind. The costs might fall on energy consumers, or general taxation,” says Taylor.

Teesside is only at the planning application stage. “The key is whether there will be money to build it,” says Taylor. Some public money is available for capex, including the £800mn Industrial Energy Transition Fund announced in the March budget, but far more private money would be needed.

Planning approval is targeted for the end of 2021. After this comes FID and big investment. “We are yet to see them putting lots of money into this to back it up,” says Taylor. “Whether they put in significant funding will be a really good test—if they did it would show that they are serious.”

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