This article appears as part of the Winds of Change newsletter.
So many seemingly contradictory things are happening on the journey towards a clean energy system that sometimes the whole trip can be so bewildering as to appear to defy what we might call common sense.
Energy-gobbling data centres, for instance, become the answer to a decarbonising grid’s wind curtailment problems by providing demand in places where wind farms are getting turned off.
A new Scottish gas-fired power station gets approved by the Scottish Government, but then, a day later, the funding mechanism for the project which would make sense of it as part of a net zero energy system, is cut by the UK Government.
How, we ask, are twists in the narrative like these taking us towards net zero? It’s vital, in a world that the recent UN Emissions Gap Report has said could be heading towards 2.8C under current policies, that we get our answers right – and these two governments work together to make that happen
But this is not it. Grants, we learned last week, for Acorn, the carbon capture and storage project planned to take emissions from Peterhead gas power station and other industrial sites and store them beneath the North Sea, are to be replaced by financial transactions, “loans/equity stakes”.
Scottish Secretary Douglas Alexander announced the cutting of capital grants, saying that Acorn faces “significant challenges” and that these were “both in relation to the market readiness of the technology and in relation to the commercial arrangements around the project”.
A UK Government spokesperson described the current plans as providing better value for the British taxpayer.
Read More:
Use £5bn oil and gas revenues to fund Acorn carbon capture – SNP
UK Government wants Acorn carbon capture and storage project success – minister
Well, this is a tricky situation. If you thought before this that a gas-fired power station could deliver net zero, you might be having doubts now.
Campaign groups like Friends of the Earth are describing CCUS as “a fantasy” and “fairytale” – especially after Acorn developer Storegga announced plans to sell its stake last year.
They are calling on the Scottish Government to “put time and money into climate solutions that will improve people’s lives such as insulating homes and improving bus services”.
The decision to give consent, they said, was a “catastrophic failure to protect the environment” .If you didn't suspect this before, you might be wondering now.
Meanwhile, it seems that the UK Government has not lost faith in carbon capture in general – or other UK projects – just, possibly, Acorn.
Five projects associated with the Government's first two clusters, HyNet and the East Coast Cluster, had reached final investment decision, with £1.5 billion of UK supply-chain contracts subsequently awarded by the East Coast Cluster alone.
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And this funding change comes despite the fact that UK governments have repeatedly pursued CCS at Peterhead and around St Fergus, going right back to at least 2014.
Can Peterhead exist without Acorn? This is a power station that has long been planned to use post-combustion carbon capture to remove most of the CO₂ produced when it burns natural gas.
Without Acorn, it could only be compatible with net zero if it did something else to tackle the emissions or, instead of fossil fuels, converted to green hydrogen or some other genuinely low-carbon fuel.
Professor John Underhill from the University of Aberdeen, for instance, told me: “Acorn is the obvious candidate for Peterhead’s emissions since a carbon dioxide-compliant chrome-plated pipeline runs past the Goldeneye site, but other options exist including shipping the CO2 to one of the other UK stores (Endurance, HyNet or Viking CCS) or overseas to Northern Lights in Norway or Greensands in Denmark for example if Acorn does not progress.
Last week, Prof Underhill, a keen supporter of the necessity for CCUS, also said that changing the financial support mechanism weakened “the case for a new gas-fired power station at Peterhead”. He described Scottish CCS as having been “jinxed from the get-go”.
It’s hard to imagine one of these projects, Peterhead or Acorn, without the other. The two are caught in a circular relationship. Acorn makes Peterhead possible because it provides somewhere for Peterhead's CO₂.
But Peterhead potentially makes Acorn more economical. The former without the latter would be a failure beyond greenwashing.
Meanwhile, Acorn’s possible failure also raises a bigger question: is Peterhead still the right answer to the problem it is supposed to solve?
Is it the right answer for how to provide dispatchable power that can be switched on when renewable output is low or it is needed to balance the grid – which happens frequently in periods of decent wind?
There are, of course, other answers to these issues: more battery storage, new pumped-storage hydro, greater interconnection with the rest of Britain, reinforcement of the transmission network, demand side flexibility.
Many people would like to see nuclear in the mix, but the problem with small modular reactors is that they are best suited to sustained generation rather than sitting idle waiting for periods of low wind, and ramping up and down.
Ultimately, Peterhead only becomes clearly the right answer when paired with CCUS – which is why this funding situation is so awkward.
Meanwhile, the biggest argument against CCUS is that for as long as we believe that it will magic our emissions away, we will fail to properly cut them.
These announcements make it feel as if this may be what is happening. We see a Scottish Government firing ahead with a new gas power station while a UK Government makes the technology required to deliver it as net zero less certain.
This also takes place against a backdrop in which there is good reason for lack of faith. As Friends of the Earth points out, Scotland’s Climate Plan states that carbon capture and similar “negative emissions technologies” could deliver up to one third of Scotland’s climate pollution reductions by 2036, but there has been zero carbon stored so far.
Progress on the technology is happening. There are examples of it working as a real engineering system, but it has not yet proved itself at anything close to the scale, reliability or affordability required by many net-zero plans.
An evidence-based review of carbon capture and storage (Rasool et al) published earlier this year concluded: “Ultimately, the findings underscore that continued reliance on CCS is a high-cost gamble that risks delaying the deployment of truly effective climate solutions.”
It also said: “Yet, if strategised properly, 2026–2030 could still mark a decisive turning point in determining its role in the energy transition”.
Of course, the impact of the funding changes for Acorn should not be overstated. In fact the developers say they are firing ahead as planned under this new financial mechanism. The UK Government says it wants to see the project succeed.
Nevertheless, the big question is what happens if Acorn does not come through? Can the proposed Peterhead Carbon Capture Power Station proceed if the carbon capture project does not reach final investment decision?
Common sense says surely not. They are joined at a net-zero hip.
But the risk is there that it will – and we see in this moment the risks putting oil and gas at the centre of a net zero strategy can bring.
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