The transportation and storage of carbon from CCS plants has no viable private-sector business model and a 100% state-owned company is the most likely route to success, according to a UK government report.
The ‘CO2 Transportation and Storage Business Models’ report by Pale Blue Dot commissioned by BEIS found private sector inability to accept “long term, unknown and uncapped liabilities” for carbon leakage and doubts about supply volumes meant there is no incentive to invest in the nascent technology.
The report identified four potential business models including a mixture of public and private ownership, of which it found a 100% publicly owned and funded entity is the most viable.
“In the absence of a defined commercial model a public entity would be better able to initiate and progress carbon transportation and storage,” it said.
The report suggests the state company is set up as a regulated asset business to enable future privatisation if appropriate.
The company should “direct investment in infrastructure, retain expertise to enable effective design, build, operation, maintenance, monitoring and closure of the transport and storage assets, potentially in multiple UK regions,” it added.
BEIS said: “Carbon capture, usage and storage (CCUS) has the potential to decarbonise the economy and maximise economic opportunities for the UK.
“However, it is currently expensive and cost reductions are necessary to be able to deploy CCUS cost effectively in the UK, providing value for money for both the taxpayer and consumers.”
A so-called cost challenge task force on CCUS will draw up a workplan by the summer, it added.
BEIS will also develop a “deployment pathway” by the end of the year setting out the steps needed to deliver the technology “at scale during the 2030s subject to costs coming down sufficiently.”
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CCS ‘needs state ownership’
By EBS