Exclusive: Minister drops funding hint over CO2 pipeline for region’s industry

Energy Minister Charles Hendry told MPs that the coalition has “moved on” from earlier plans to simply offer financial backing to individual “clean coal” projects around the UK, and is now considering whether “large, oversized pipelines” for CO2 should be funded instead as part of a carbon capture and storage (CCS) network for the nation.

Yorkshire is widely seen as the best place in the country to develop the emerging technology of CCS, which involves capturing harmful carbon emissions before they are released by power stations and factories and then burying them deep underground.

Regional planners have spent years drawing up plans for a vast pipeline running from the Aire Valley to the banks of the River Humber and out into the North Sea, collecting CO2 emissions from all Yorkshire’s main industrial polluters along the way before storing them in disused oil and gas fields beneath the seabed.

Such a pipeline appears the only realistic way of maintaining Yorkshire’s heavy industries and coal-fired power stations as the UK slashes carbon emissions over the coming years. If successful, it would cut the UK’s entire carbon output by up to 10 per cent.

The scheme would cost around £2bn, however, and the region has faced an uphill battle in trying to convince Government that this is the best use of the limited resources it has set aside for CCS development. Whitehall had previously focused on developing individual “clean coal” power stations instead.

However, its first proposed project, a “clean coal” power station at Longannet in Scotland, collapsed last year as costs spiralled.

Now Mr Hendry has told MPs that a new CCS funding competition, in which projects will be able to bid for up to £1bn of Government support, will encourage polluting industries to collaborate through the use of shared pipelines – the precise vision Yorkshire has been working towards.

“Since pulling back from (Longannet), we have sought to put in place a new competition that is much more all-embracing,” Mr Hendry said. “It will give… greater scope for collaboration between different industrial partners. It will also provide the opportunity to find out whether we can use the funding to support infrastructure development.

“For example, would putting in place large, over-sized pipelines provide the opportunity for an industry to be created, rather than a few pilot projects?”

With its cluster of heavy industries and power stations, and proximity to potential storage wells beneath the North Sea, Yorkshire is considered one of the best places in Europe to develop a shared CCS pipeline.

It is the only place in the UK that already has a fully costed and detailed technical plan of how such an underground pipeline could be deployed. The National Grid is backing the plan, and launched a public consultation on possible routes last year.

Studies suggest thousands of construction jobs would be created, and tens of thousands more secured as large emitters such as Drax power station and Tata Steel are offered a potential way forward for their businesses as carbon reduction targets become ever tighter.

Other heavy-polluting industries are also likely to be attracted to the region if they are confident a CO2 pipeline will soon be in place to deal with their carbon emissions.

Mr Hendry said such a collaborative effort will be vital over the years to come. “Our ambition has moved on,” he said.

“It is not just about how to put a few projects in place, but about how to create an industry that is viable and competitive in the 2020s.”

CO2Sense, the Yorkshire-based not-for-profit consultancy which has been lobbying for a pipeline to be built across the region, said Mr Hendry’s comments were highly significant.

Director of strategy Dr Stephen Brown said: “Yorkshire is the obvious place to develop an infrastructure capable of supporting a new CCS industry.

“With its cluster of power stations and heavy industry, developing a shared oversized pipeline in the region to carry the captured CO2 to the suitable storage sites in the North Sea makes clear sense.

“Together with our industry partners, we have already carried out engineering studies which have identified suitable routes and which show that this is a hugely cost-effective way of developing CCS.

“Sharing the costs of transporting the CO2 could cut costs by hundreds of millions of pounds.”