Securing a green recovery on a path to net zero: climate change plan 2018–2032 - update

Chapter 8 Negative Emissions Technologies - 3.8. Negative Emissions Technologies

Introduction

3.8.1 Our pathway to net zero is focused on reducing emissions from across Scotland’s economy. However, we also need to bring forward key technologies which will compensate for residual emissions. In other words, we need technologies which will not just store emissions resulting from energy or industrial processes, but deliver a net reduction in emissions. The Climate Change Committee (CCC) has highlighted the importance of Negative Emissions Technologies (NETs) in meeting net zero across the UK, and the relatively greater potential we have in Scotland to remove and store emissions.

3.8.2 The use of NETs can remove carbon from the atmosphere on a permanent basis. This is achieved in two stages: firstly, its sequestration (for example the natural capture of carbon emissions by plants and trees); and secondly, its capture and long term storage. The two primary options for sequestering carbon discussed in the chapter are through the growth of biomass and through the direct (technological) capture of carbon from the atmosphere. There are also other ways of removing carbon from the atmosphere, such as through the expansion of forestry, which are covered in the LULUCF Chapter of this Plan update (Part 3, Chapter 6). This chapter focuses on the removal of carbon via technologies, rather than through land use.

3.8.3 NETs pathways with the potential to contributed to net zero in Scotland include:

• Bioenergy with Carbon Capture and Storage (BECCS) for electricity: this involves the use of biomass to generate electricity coupled with Carbon Capture and Storage (CCS) to prevent the emitted carbon from entering the atmosphere. As well as generating electricity, the process results in negative emissions, as the carbon sequestered by bioenergy crops when they grow is captured and stored.
• Biomass/Waste Gasification and Carbon Capture and Storage for hydrogen: Biomass or waste gasification is a technology pathway which uses heat, steam and oxygen to convert biomass or waste to hydrogen, without combustion. The biomass or waste is heated to high temperatures to produce a syngas rich in hydrogen, which also contains carbon monoxide (CO) and CO2. This syngas can then be upgraded and separated to sequester the carbon via CCS, and produce negative carbon hydrogen, which can then be used for energy applications across a number of sectors.
• BECCS in industry: in addition to the use of negative carbon hydrogen or electricity, there are opportunities to develop BECCS applications linked to the production of industrial heat or other industrial processes.
• Biofuel production with Carbon Capture and Storage: the conversion of biomass resources into biofuels represents a further pathway for the use of bioenergy, which in combination with CCS can deliver negative emissions.
• Direct Air Carbon Capture and Storage (DACCS): this is not an energy producing technology; it is a process that is run for the purpose of capturing CO2 from the atmosphere in order to safely and permanently store it.

Carbon Capture and Storage

3.8.4 As this list shows, CCS is an essential part of any NETs project. Our strategy for delivering NETs will be built around our support for a flexible and adaptable CCS system in Scotland, capable of transporting carbon from industrial or electricity generation sites in Scotland to storage in the North Sea.

3.8.5 We have already made substantial progress in supporting the development of CCS in Scotland. The Acorn project in North East Scotland, supported by the Scottish Government, has developed a detailed delivery plan for major CCS infrastructure based at St. Fergus. It aims to commission and begin capturing and storing emissions in 2024 and has the potential to capture and store 10 MtCO2e per year by 2030. This will involve the development of a carbon storage site in the North Sea capable of storing over 20 Gt of carbon in total and the repurposing of a North Sea gas pipeline to deliver carbon to the site. Further storage sites mean the total storage opportunities in Scottish waters is estimated at 46 Gt.

3.8.6 This technology is supported by the work of North East CCUS (NECCUS), the industry body bringing together action on decarbonisation. NECCUS will lead the development of the Scottish Net Zero Roadmap (SNZR). The SNZR will identify pathways and opportunities for decarbonisation, including Hydrogen production and fuel switching, and how the Acorn project will enable emissions to be captured in the wider Scottish industrial cluster.

Bioenergy

3.8.7 With the exception of DACCS, NETs pathways depend on the use of bioenergy. A key part of developing NETs will be to understand the implications, scale and pace with which bioenergy resources should be focused on each of the possible pathways, and how this interacts with other uses for bioenergy.

3.8.8 For example, where we use biomass grown or produced in Scotland we need to fully understand and consider the impacts on our agriculture and land use sectors. Where we import biomass, it will be important to do so in a way that supports efforts to tackle the global climate emergency, which means adopting a sustainable way of using bioenergy resources produced elsewhere, and considering the growing importance of bioenergy as a pathway to decarbonisation in other countries.

Markets, regulation and revenues

3.8.9 Developing market structures and support mechanisms which can support innovative and novel technologies will be vitally important to growing NETs capacity. This will require substantial changes in reserved policy areas by the UK Government, working in cooperation with the Scottish Government, including future carbon pricing arrangements and the development of appropriate support mechanisms.

3.8.10 These developments can build on existing success stories such as Contracts for Difference, which have driven the continued growth and development of renewable electricity generation while dramatically reducing the cost of energy. It is also important that market structures recognise and reward the real value, in captured carbon, and build this into mechanisms that value and price carbon.

3.8.11 As discussed in the Industry chapter, we support the implementation of a UK ETS once the UK leaves the EU, to maintain the carbon price signal provided by the EU ETS. Through this we will work with the UK Government to explore ways to value and reward negative emissions as well as pricing positive emissions. Support for NETs needs to recognise the variety of technologies that will need to come together, and the composite and innovative nature of NETs.

The opportunities for NETs

3.8.12 The potential for developing NETs in Scotland, and the role that they will need to play in meeting our targets, represents a substantial change from our 2018 Climate Change Plan. This Plan update sets out that we expect to begin removing emissions from the atmosphere through NETs by 2030, as an important part of meeting our climate change targets.

3.8.13 There are significant opportunities in both electricity generation and industrial processes that can be brought forward during the 2020s, together with wider opportunities to support the decarbonisation of heat and transport in the 2030s and 2040s. Our first step will therefore be to identify the most efficient and effective NETs pathways for Scotland and map these opportunities.

3.8.14 This will mean identifying which locations and sectors are best suited to NETs, and how these can be brought together with a coordinated CCS system. We will take forward work urgently to gather this information, starting with commissioning a detailed feasibility study next year. This will give us the strongest platform and body of knowledge possible for accelerating the delivery of NETs projects during the rest of this decade.

3.8.15 A strong and urgent focus on NETs provides an opportunity for Scotland to be at the forefront of developing new technologies to tackle climate change, one that can build on existing strengths: our natural resources, expertise, as well as the developing pipeline of CCS projects.

3.8.16 The use of BECCS for electricity generation has the potential to deliver substantial negative emissions across the UK. The CCC highlights this as the biggest contributing application in 2050 in its net zero report. A major retrofit of CCS to an existing bioenergy power station at Drax in Yorkshire has the potential to deliver substantial negative emissions by 2030. The development of BECCS in Scotland, building on the work described in this chapter, which will enable us to better understand the best uses and wider implications, has real potential to turn electricity generation in Scotland from an emitting sector to one that delivers negative emissions overall.

3.8.17 BECCS also has deployment potential in industrial settings, where there are fewer alternatives for decarbonisation. Bringing forward projects which can produce negative carbon industrial heat and hydrogen alongside electricity has the potential to make substantial inroads into what is currently our highest emitting sector.

Making decisions

3.8.18 Making early decisions on where to use NETs means increasing our understanding of both the technology options and the place based options. Our initial focus will be on looking across Scotland at which sites provide opportunities for either electricity generation or industrial applications of NETs and, working with industrial partners, carrying out high level feasibility studies which link closely to the development of CCS.

3.8.19 This work to identify feasible sites will be carried out in parallel with our review of bioenergy so that by 2023 we will have the evidence to focus our resources on bringing forward and developing specific NETs projects.

Research and development, trial and demonstration

3.8.20 Many of the technologies needed to deliver NETs already exist. A key challenge will be how to integrate each component into an efficient and commercially viable process. Alongside our focus on developing the knowledge and measures needed to bring forward large scale NETs projects, we will also focus innovation and industrial support onto projects which raise the technological readiness of each of the NETs pathways. This will leverage our existing support for CCS, along with the substantial investment in this technology expected from the UK Government over the coming decade.

3.8.21 We have provided £300,000 of start-up and support funding to the industrial decarbonisation membership body NECCUS. NECCUS has secured industry funding to develop Scotland’s Net-Zero Roadmap (SNZR); this will identify and highlight opportunities for carbon reduction, including NETs, and will form a key part of our initial feasibility work. We have directly supported CCS planning to date at St. Fergus through the Acorn project with £425,000.

3.8.22 We have announced a major fund to decarbonise industry and manufacturing opening up opportunities to develop NETs technologies across industry. The Scottish Industrial Energy Transformation Fund (SIETF) commits £34 million for projects at industrial sites for energy efficiency or deeper decarbonisation, including working with the industrial sector on feasibility and conceptual studies into the role of NETs.

3.8.23 We are also announcing a £100 million funding commitment for hydrogen, as part of a wider new Emerging Energy Technologies Fund of £180 million to support the development of hydrogen and CCS, and which will add new impetus to the development of NETs.

3.8.24 Whilst DACCS is an emerging technology, there are fifteen trial and demonstration direct air capture plants operating in Europe, the USA and Canada. For example, the CarbFix project in Iceland is currently capturing CO2 from the atmosphere and dissolving it in water for injection and underground storage. There are already opportunities to scale up this technology. The Canadian company Carbon Engineering is developing a large-scale direct air capture plant in the USA that could capture up to 1 MtCO2e each year.

3.8.25 We believe that the potential exists to bring forward a DACCS demonstration plant in Scotland during the 2020s, subject to the appropriate consultation and planning processes. The recent memorandum of understanding between Carbon Engineering and Acorn CCS is consistent with this goal. The UK Government launched a competition during 2020 to support Direct Air Capture and other Greenhouse Gas removal technologies, and has also confirmed plans to open a call for evidence on these issues. Successful projects will need to have access to substantial offshore transport and storage infrastructure of the kind being developed in North East Scotland.

Green recovery and just transition

3.8.26 NETs have the potential to secure existing jobs as well as delivering new ones. If successful, existing industries, which are currently some of Scotland’s largest carbon emitter will be able to move to a sustainable business model actively supporting and reducing Scotland’s emissions with every unit they produce, taking us closer to net zero as their output increases. As outlined in the Industry chapter, jobs in the CO2 management industry, a core facet of the Carbon Capture Utilisation and Storage(CCUS) sector, are estimated to reach between 7,600-45,000 by 2030, and 22,000-105,000 by 2050, if Scotland is successful at securing 40% of the European CO2 market.

3.8.27 The criticality of CCS to NETs means that there will be growing opportunities to repurpose and help transition the skills and expertise currently deployed across the Oil and Gas sector. This will help secure work, jobs and income for a major sector of the Scottish economy, which currently supports approximately 100,000 jobs.

3.8.28 The need to develop NETs research and development projects, demonstration and trials, and to move quickly to larger scale roll out, will represent a major investment in our green economy, supporting our recovery and continued economic growth throughout the 2020s.

Positive vision for 2032 and 2045

3.8.29 By 2032, there will be major NETs projects operating in Scotland: world leading developments capable of generating clean energy while removing greenhouse gas emissions from our atmosphere. The demonstration and early roll-out of CCS achieved during the 2020s will build the foundation for unlocking negative emission potential across industrial and electricity sectors. By 2032, CCS infrastructure in north east Scotland will be able to capture and store over 10 MtCO2e per year, facilitating low carbon technologies as well as NETs. Roll-out will have been enabled by demonstration and trial projects developed during the first half of the 2020s, and operational for several years.

3.8.30 By 2045, we expect Scotland to benefit from a substantial and mature NETs sector with deployment across multiple applications and pathways. Deployment will have been informed and guided by a detailed evidence base, taking place in a way that is compatible with sustainable land use within Scotland. It will also support sustainable international trade, ensuring that the necessary bioenergy resources are available to countries around the world.

3.8.31 There will also be potential for technologies which are currently less well developed or understood to make an impact. For example, the use of gasification and/or the production of biofuels may, if the evidence shows that this is an efficient use of bioenergy, form part of the NETs systems in Scotland. This could create the opportunity for negative-carbon hydrogen to support decarbonisation of domestic buildings, services and transport, as well as industry and electricity.

3.8.32 DACCS is likely to have been deployed in Scotland in a focused and specific way, to ensure that it can counterbalance any further residual emissions.

Case study: Direct Air Capture

Pale Blue Dot Energy, the developers behind Acorn CCS and Acorn Hydrogen Project located at St Fergus Gas terminal in North East Scotland have entered into a partnership with Carbon Engineering, a leading provider of Direct Air Capture (DAC) technology that captures carbon dioxide out of the atmosphere.

The companies have announced their intentions to work together to deploy commercial DAC projects in the UK and have signed a Memorandum of Understanding to collaborate on the development of facilities that will contribute towards the removal of millions of tonnes of CO2 from the atmosphere each year. This agreement marks the first partnership between a DAC technology company and a UK development partner and signifies the next step towards establishing a UK DAC industry that will create significant environmental and economic benefits.

One of the locations being considered by the partnership for their first UK DAC plant is close to the Acorn CCS project at St Fergus. The proposed DAC facility would deliver permanent carbon dioxide removal by capturing significant volumes of CO2 from the air and then safely and permanently storing it deep below the seabed in an offshore geological storage site. Pale Blue Dot Energy are currently developing the offshore Acorn CO2 storage site, which was awarded the first UK CO2 appraisal and storage licence by the Oil and Gas Authority.

From a pilot plant in British Columbia Canada, Carbon Engineering has been removing CO₂ from the atmosphere since 2015 and converting it into fuels since 2017 and is now engineering its first large-scale commercial plant in the United States that will capture one million tonnes of atmospheric CO2 annually – equivalent to the work of 40 million trees.

Acorn is aiming to be operational from late 2024 and the first DAC project could be operational approximately two years later. These types of greenhouse gas removal projects can help accelerate Scottish and UK efforts to reach net zero emissions by compensating for sectors of the economy that are challenging to decarbonise directly, such as aviation, shipping and agriculture.

Route Map to 2032

2020

Hydrogen Policy Statement published.

Scottish Industrial Energy Transformation Fund (SIETF) launched, including £34 million over 5 years (2021-2026) for projects at industrial sites for energy efficiency or deeper decarbonisation.

2021

Expert Bioenergy Working Group set up.

Detailed review of key NETs technologies and opportunities in Scotland carried out.

Scottish Government Hydrogen Action Plan published.

BEIS provides greater clarity on CCS and Hydrogen business models, and responds to consultation on greenhouse gas removal technologies.

BEIS expected to publish its Hydrogen Strategy.

First tranche of funding available from the £180 million Emerging Energy Technologies Fund.

2022

Feasibility studies for most promising NETs locations and applications in Scotland.

Demonstration projects funded, exploring potential roles for proposed Scottish Energy Technology Innovation Plan and Scottish Industrial Energy Transformation Fund, as well as wider UK net zero innovation funding.

Cross-governmental review of NETs and bioenergy for Scotland to inform the 2024 Climate Change Plan.

2024

Acorn Project Development:

• 2024 – CCS Demonstration and commercialisation at St Fergus Gas Terminal;
• 2025 – Acorn Hydrogen, hydrogen production with CCS;
• 2026 – Shipped imports of CO2 for storage in the Acorn store;
• 2026 – Direct Air Capture and Storage operating from St Fergus.

2030

First delivery-scale NETs installations begin operation.

The actions we are taking

3.8.33 We are announcing a new Emerging Energy Technologies Fund of £180 million that will support the development of hydrogen and CCS, and which will add new impetus to the development of NETs. We will make £100 million available to support hydrogen projects in line with our Hydrogen Policy Statement, and a further £80 million of this funding will be directed to projects supporting the development of CCS and NETs in Scotland. This funding will help to deliver negative emissions, and complements our ambitious energy transition programme, including innovative marine energy solutions.

Bioenergy

3.8.34 We will publish a Bioenergy Update in early 2021, laying out our current position and understanding of the role of bioenergy in the energy system and setting out in more detail how we will move forward.

3.8.35 In 2021 building on the Bioenergy Update we will establish a Bioenergy Expert Working Group to consider and identify the most appropriate and sustainable use for bioenergy resources across Scotland. It will also assess the volume of bioenergy resources that we can grow or produce within Scotland, and confirm the level of import that we believe is compatible with a sustainable global trade in bioenergy.

3.8.36 By 2023, in time to inform the next Climate Change Plan, we will publish a Bioenergy Action Plan, incorporating the learning developed by the expert working group and our understanding of the options to use Bioenergy in both NETs and other applications.

CCS

3.8.37 The Industry chapter of this Plan update (Part 3, Chapter 4) provides more detail and outlines our support for achieving the commercialisation of CCUS within the timeframe of this plan. Building on this, our funding and support for the development of CCS, which is the keystone technology for delivering NETs, will ensure that the development of carbon transport and storage infrastructure is designed and developed to support the delivery of NETs.

3.8.38 We will ensure that Scotland’s net zero roadmap developed by NECCUS and our support for the Acorn CCS based at St. Fergus focus on developing a flexible CCS system in Scotland capable of accepting carbon from NETs projects across north east and central belt of Scotland. This will be complemented by our £5 million Carbon Capture and Utilisation challenge fund that will operate between 2022 and 2024.

NETs Studies

3.8.39 In 2021/22, we will carry out a detailed feasibility study of opportunities for developing NETs in Scotland, ready for the early 2030s. This will identify specific sites and applications of NETs, including developing work to support policy on Direct Air Capture and its role within NETs in our future energy system.

3.8.40 From 2022, based on the outcomes of this feasibility work, we will provide support for commercial partners to develop NETs proposals, including initial design and business cases.

Keeping NETs under review

3.8.41 We will put in place a continual process to review NETs development and progress against its envelope. Where progress is strong and there is clear indication of which technologies and applications are being taken forward, we will be able to re-allocate the negative emissions to specific individual sectors in the next Climate Change Plan.

3.8.42 If new evidence indicates that NETs are not developing at an appropriate rate to meet the envelope from 2030, we will reassess the scale and role of NETs in the next Climate Change Plan, including any need to re-allocate emissions reductions across other sectors.

Our call to others

The UK Government

3.8.43 The UK Government needs to create the stable policy environment and incentives, including business model and financial frameworks, required to build confidence and enable the development and commissioning of the first CCS facilities in the UK from the mid-2020s.

3.8.44 This will require urgent clarity on the steps that the UK Government will take to support and deploy negative emissions technologies and capacity within the electricity generating and industrial sectors. As part of that, the UK Government must consider a number of characteristics of NETs technologies:

• Innovative, ground breaking world firsts: The pioneering nature of these projects will provide substantial risks to commercial investors. It will be important that mechanisms are developed which fairly share the risks and rewards between government, industry and consumers. Mechanisms such as Contract for Differences (CfDs) which provide support based on the output (e.g. electricity) of a NETs installations provide one way of doing this, and Regulatory Asset Base (RAB) models where allowed rates of return on investment are agreed up front is another.
• Use of bioenergy: a UK-wide framework will need to take account of the environmental and land use impacts of bioenergy production across the country as well as the implications for sustainable international trade. It will be important that support mechanisms put in place to develop NETs don’t lead to unintended and negative consequences for land use or global sustainability.
• Complex, multi-component projects: NETs projects will need to link many large scale processes in a coordinated way. For example BECCS in industry or electricity generation means adapting existing and already complex processes, for example converting from fossil fuel to bioenergy and combining these with new systems to capture, transport and store the carbon emissions.
• Negative emissions: unlike existing industries with positive emissions, the role of mechanisms which price carbon will be to reward NETs for the carbon it removes from the atmosphere. It is important that the UK Government explores options for valuing and pricing negative as well as positive emissions.

3.8.45 In December 2020 the UK Government published a consultation and call for evidence on greenhouse gas removal^[153]. The Scottish Government will take this opportunity to engage with stakeholders on the issues raised, and to submit a measured response.

3.8.46 The UK government must also set out its view, advice and plans for the role of bioenergy in the energy system.

Scottish businesses and industry

3.8.47 The development of NETs in Scotland will provide an opportunity for industry in Scotland to pioneer ways which can deliver their long term sustainability. To deliver this, we need Scottish business to commit to helping us understand and deliver NETs. By doing so they will be developing world-leading technologies and processes, giving them a global edge.

3.8.48 We need business to work with us to help understand where and when NETs can be used in their processes, and what support is needed to bring NETs investment forward. Through our Emerging Energy Technologies Fund and Scottish Industrial Energy Transformation Fund we will provide substantial financial support to developing projects. In return we need business to engage constructively, helping us identify potential projects, and showing how these can fit within the wider development of CCS infrastructure, and our overall whole system approach to developing the energy system.