The Centre for Energy Policy held a Roundtable on the potential value to the political economy of carbon capture, utilisation and storage (CCUS), in the margins of the Global CCUS Summit held in Edinburgh. This note summarises discussions and reflects on next steps. Participants are listed in the appendix. This note does not attribute comments or views to particular participants. Professor Graeme Sweeney chaired the Roundtable, with Professor Karen Turner, Director of the Centre for Energy Policy, kick-starting the discussion with a presentation on recent research on the potential value of CCUS to the political economy

Bevan, Nick

Chalmers, Hannah

Chalmers-Deacon, Kate

Corradi, Luca

d'Elloy, Marine

de Vries, Frans

Holman, David

Holmes, Nigel

James, Alan

Kerr, Stephen

Mallows, Tim

Parmiter, Philippa

Race, Julia

Ramirex, Andrea Ramirez

Robertson, Luke

Sloss, Lesley

Sweeney, Graeme

Tucker, Owain

Turner, Karen

Vass, Seonaid

Warren, Luke

University of Strathclyde Institutional Repository

Turner, Karen and Chalmers, Hannah and Chalmers-Deacon, Kate and Corradi, Luca and d'Elloy, Marine and de Vries, Frans and Holman, David and Holmes, Nigel and James, Alan and Bevan, Nick and Kerr, Stephen and Mallows, Tim and Parmiter, Philippa and Race, Julia and Ramirex, Andrea Ramirez and Robertson, Luke and Sloss, Lesley and Sweeney, Graeme and Tucker, Owain and Vass, Seonaid and Warren, Luke (2019) Roundtable Event : The Potential Value of CCUS to the Political Economy, Edinburgh 28 November 2018. [Report] , This version is available at https://strathprints.strath.ac.uk/66545/Strathprints is  designed  to  allow  users  to  access  the  research  output  of  the  University  of Strathclyde. Unless otherwise explicitly stated on the manuscript, Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Please check the manuscript for details of any other licences that may have been applied. You may  not  engage  in  further  distribution  of  the  material  for  any  profitmaking  activities  or  any commercial gain. You may freely distribute both the url (https://strathprints.strath.ac.uk/) and the content of this paper for research or private study, educational, or not-for-profit purposes without prior permission or charge. Any correspondence concerning this service should be sent to the Strathprints administrator: strathprints@strath.ac.ukThe Strathprints institutional repository (https://strathprints.strath.ac.uk) is a digital archive of University of Strathclyde research outputs. It has been developed to disseminate open access research outputs, expose data about those outputs, and enable the management and persistent access to Strathclyde's intellectual output.Centre for Energy Policy Occasional Paper  1   Roundtable event: The Potential Value of CCUS to the Political Economy, Edinburgh 28 November 2018 The Centre for Energy Policy held a Roundtable on the potential value to the political economy of carbon capture, utilisation and storage (CCUS), in the margins of the Global CCUS Summit held in Edinburgh. This note summarises discussions and reflects on next steps. Participants are listed in the appendix. This note does not attribute comments or views to particular participants. Professor Graeme Sweeney chaired the Roundtable, with Professor Karen Turner, Director of the Centre for Energy Policy, kick-starting the discussion with a presentation on recent research on the potential value of CCUS to the political economy. .DUHQ7XUQHU·V3UHVHQWDWLRQ Professor Turner noted that we need a compelling narrative rooted in the political economy in order to move decision-making forward and ultimately deliver real-world outcomes. )URPWKH&HQWUH·Vresearch it is clear that the question now is not one of whether we have sufficiently in-depth technical knowledge about the potential of CCUS as a suite of technologies, rather one regarding how having CCUS in the economy may deliver benefits to society, and how political decisions can be framed. In this context, we need to think about decarbonisation not just as a climate policy challenge but also as an economic policy challenge. To avoid risking displacing investment, jobs and GDP, we need a clear understanding of what implications are of climate-driven policies. This was the message clearly set out in the recent Zero Emissions Platform report: that we must deal with emissions were they occur in order to deliver a just transition. The just transition requires taking account of national development priorities (cf the Paris Agreement, p.4), and this means sustaining Centre for Energy Policy Occasional Paper  2 existing sources of economic wellbeing. &&86LVQ·WJRLQJWREHWKHRQO\VROXWLRQto this challenge, but it is broadly recognised as forming part of the solution. To focus in on understanding this challenge ² diagnosing the problem ² the CenWUH·V UHVHDUFK KDV FRQVLGHUHG WKH FDVH RI WKHGerman cement industry as a case study of what the implications may be of offshoring production. Our findings suggest that global CO2 would rise, alongside employment being lost in Germany, and across the EU, and the displaced industry becoming less productive.  Professor Turner summed up by offering two key elements of the narrative that emerges to support D¶MXVWWUDQVLWLRQ· x The need to retain and grow jobs and GDP whilst meeting climate targets in the long term as the preferable outcome to job offshoring/GDP loss and not meeting targets in the short and long term. x The need for industrial decarbonisation where emissions, jobs and GDP are currently located. Discussion Opportunities as well as Risks )ROORZLQJ3URIHVVRU7XUQHU·VSUHVHQWDWLRQGLVFXVVLRQRSHQHGXSWRFRQVLGHUWKHLPSOLFDWLRQVRIWKH&HQWUH·VUHVHDUFKDQGWKHQH[WVWHSVLQGHYHORSLQJDQHFRQRPLFQDUUDWLYHWKDWaddresses wider political concerns about economic wellbeing and a just transition. Participants supported the call for developing an overarching economic narrative and welcomed WKH&HQWUH·VZRUNLQWKLVDUHD7KHUHZDVDJUHHPHQWWKDW¶NHHSLQJFXUUHQWMREVDWKRPH·ZDVDQimportant political economy argument. And that being able to demonstrate the consequences of policy decisions is essential. Some participants felt the economic narrative could be strengthened with greater emphasis on opportunities arising, as well as risks of displacement. For example, as well as the potential losses from displacement of activity overseas, the narrative could consider the value creation in the infrastructure required for  decarbonisation, and opportunities for inward investment therein. A Centre for Energy Policy Occasional Paper  3 further example is in the opportunities in the supply chains of global businesses that have adopted climate commitments.  Industry Focus There was some discussion about the cement case study, and whether it might also be instructive to consider a more dynamic sector such as petrochemicals, plastics or steel. More dynamic sectors might be more willing to set sectoral targets. It was pointed out that there are sectoral roadmaps, mostly from industrialised nations. But that these do not get close to the levels of CO2 reductions required for a 2 degrees scenario. The narrative in these is still one of bottom-up cost and benefit, which results in CCS being very far down the priority list. In developing top-down narratives, what is needed is a vision, a clear ambition and leadership ² facing up to the challenge, overcoming what was seen to be the social barrier to be the first mover and deciding now to implement a graceful transition to keep industries alive. Different Narratives Participants agreed that narratives can usefully be adapted for different audiences, with varying degrees of knowledge and interest. The developed narratives should align and be relatable to government bodies such as the HM Treasury, which may focus primarily on the economic impact of the implementation of any measures. At the same time, the narratives should be tailored to address the concerns of the general public, who may ultimately be seen as picking up the bill. Generally though there was consensus that a narrative has more power where there is a coalition of organisations all aligned behind it.  Discussion moved on to consider the value of jobs ² the narrative needs to be about maintaining job opportunities and retaining (or creating) high-value jobs. This is so important for Scotland.  Standards and Sectoral Targets There is a role for standards and sectoral targets. Public procurement (for example for large infrastructure projects) as well as regulated standards (such as the US federal fuel standards, Centre for Energy Policy Occasional Paper  4 which have driven significant change) were cited as critical policy levers. The discussion explored ways in which procurement, standards and trade rules might be aligned to benchmark CO2 and drive change in industry. There may be ways of applying those standards at the right point in the value chain to reduce resistance (in this context, for example, it would be better to apply a standard to concrete than to cement).  There was some discussion of the merit in, and likelihood of, setting global sectoral targets/commitments, which could create more of a level playing field across industries - where CO2 reduction is part of their decision-making frameworks in a way that has not happened to date. 3DUWLFLSDQWV·YLHZVYDULHGRQ WKH IHDVLELOLW\RIVXFKFRPPLWPHQWVDQG WKHH[WHQW WRZKLFK LW LVUHDOLVWLFWRH[SHFWLQGXVWULHVWRDGRSWWKHPZLWKRXW¶EHLQJIRUFHGWR·E\JRYHUQPHQWV Incentivising Change The discussion moved to consider how to incentivise change, where the view was that the focus of public policy support should be on enabling infrastructure. Participants had concerns that at present CO2 reduction is simply not incentivised through public policy nationally or internationally, with short term shareholder decisions trumping long-term CO2 decisions. This is where a public policy argument comes in, where industry is not going to act on its own. And in this situation, we are clearly going to be looking at the more difficult solutions. But once we have an understanding of the political economy problem ² LHZHFDQ·WDIIRUGQRWWRGRWKLV² then we are into the realm of trying to understand which measures will work. Going Forward There was general agreement that we need to set out future scenarios that demonstrate what we have to gain as well as what may be lost. And we need to consider policies in light of how they would fare under a range of scenarios, to identify and prioritise those policies that deliver positive outcomes in the majority of scenarios. Narratives must consider those positive outcomes as well as identifying and considering the risks. Indeed they should focus on value creation as well as retention. Centre for Energy Policy Occasional Paper  5 In terms of collaboration across the EU, there is a significant amount happening and the Zero Emissions Platform is leading this, for example finding solutions to issues such as how we leverage *HUPDQ\·Vcommitment to CCS whilst they do not have the capacity to store the CO2 themselves. On the other hand, 1RUZD\·VQDUUDWLYHLVFOHDUWKH\ZDQWWRSURYLGHD&2VWRUDJHVHUYLFHLQRUGHUto have a future use for their assets, with as many other parties paying for that as possible.  It was noted that there ought to be a way to capitalise on the commercial investment pressure that is building around capital investment and climate risk ² e.g. if we could get to the point where CCS is seen as a safe investment for pension funds. Conclusion In concluding, Professors Turner and Sweeney noted that WKH&HQWUH·VZRUNKDVKHOSHGWRGLDJQRVHthe challenge, but that we have not yet been able to devote research resources to assessing solutions. The work to date has considered opportunities (for example, for employment creation) as well as risks, but more could be done, including consideration of a range of scenarios and taking more sophisticated account of the ways in which the nature of employment and value are changing in the wider economy.  7KHUHZDVFOHDUHQGRUVHPHQWRIWKH&HQWUH·VZRUNWRGDWHDQGDJUHHPHQWIURPSDUWLFLSDQWVWKDWdeveloping the research further in this direction would be extremely helpful.   Centre for Energy Policy Occasional Paper  6 Appendix - Participants  Name Job Title Organisation Hannah Chalmers Senior Lecturer University of Edinburgh Kate Chalmers-Deacon CCUS Policy Officer Scottish Government Luca Corradi Innovation Network Director The Oil & Gas Technology Centre Marine d'Elloy Policy Officer CCSA Frans de Vries Professor of Environmental Economics University of Stirling David Holman Hydrogen & CCUS Strategy Scottish Enterprise Nigel Holmes Chief Executive SHFCA Alan James Managing Director Pale Blue Dot Energy Nick Bevan Engineering Advisor - CCUS & Industry Innovation Team Department for Business, Energy and Industrial Strategy Stephen Kerr Consultant Avayl Tom Mallows Development Manager Crown Estate Scotland Philippa Parmiter SCCS Business and Project Manager SCCS Julia Race Reader in Subsea and Pipeline Engineering University of Strathclyde Andrea Ramirez Ramirez Professor of Low Carbon Systems and Technologies TU Delft Luke Robertson Senior Business Consultant Pale Blue Dot Energy Lesley Sloss Principal Consultant IEA Clean Coal Centre Graeme Sweeney Visiting Professor Centre for Energy Policy, University of Strathclyde Owain Tucker Global Deployment Lead for CO2 Storage Shell Karen Turner Director Centre for Energy Policy, University of Strathclyde Seonaid Vass Head of Energy, Renewables Scottish Enterprise Luke Warren Chief Executive CCSA  

Roundtable Event : The Potential Value of CCUS to the Political Economy, Edinburgh 28 November 2018

https://strathprints.strath.ac.uk/66545/1/Turner_etal_CEP_2018_The_potential_value_of_CCUS_to_the_political_economy.pdf

Roundtable Event : The Potential Value of CCUS to the Political Economy, Edinburgh 28 November 2018

Abstract

Similar works

Full text

Available Versions

University of Strathclyde Institutional Repository