Tees Valley Industrial CCS (ICCS)

Cluster Conference MeetingNorway

18th August 2015

John Brady

NEPIC Leadership Team

Marketing& Communications

Manufacturing& Productivity

PEG

TIG

Innovation

Skills & Resources Energy Supply Chain

NEBR

Initiate a CCS project inpartnership with Industry includingsome significant emitters

Influence UK Government and other keystakeholders by working on, and presenting acoherent proposal/business case (includingfunding mechanism) to facilitate an ICCSproject whilst protecting the competitiveposition of any participating company.

Geographical Position

Why we need Industrial CCS: Industry coming under pressure from customers and

Government to reduce carbon – 80% reduction in CO2 by 2050. At its maximum output, regional yearly emissions as high as 13M

tonnes CO2 The only technology available to significantly reduce industrial

carbon emissions Can’t meet legally binding carbon targets without Industrial CCS Technologically proven at a commercial scale on industrial plants It’s an industry ‘game changer’ and builds on 2 existing CCS

competition projects. Need to protect and build the existing industry Opportunity to attract new investments

Across the region, 35K directly employed, further 200K indirectly Generates > £26bn of regional GDP (> 30%) Regions largest industrial sector High GVA £92,000 for UK Chemical industry - higher than automotive and

aerospace High wages Process chemical industry wages higher in Teesside than the

average UK chemical wage and the average UK wage Consistent trade surplus - £4bn exports

Protecting and Building the Process Industry

Recent Teesside Investments > £3bn

Company Expenditure

SSI £1.9 billion

Air Products £600 million

Sembcorp and SITA £200 million

SNF Oil & Gas £150 million

BOC Linde £100 million

Huntsman Tioxide £65 million

Lotte Chemicals UK £60 million

The Present and Project Initiation

Tees Valley bid for a CCS project as part of UK Government CCS competitionbut were unsuccessful

TVU as our local LEP, bid for and awarded £1Million as part of City Deal toinitiate an industrial CCS project – report back by summer 2015

Number of core elements but essentially:-- capex/opex for capture technology at 4 industrial sites- construct and recommend a business case- recommend a funding mechanism to support investment- potential storage options/costs- first injection and storage targeted for early 2020’s- communications strategy

Only place in the UK progressing an industrial CCS scheme

Delivery Partners

Pale Blue Dot - Project Co-ordinator & Business Cases

AMEC/Foster Wheeler - Engineering Contractor

Societe Generale - Commercial Advisor

Madano - Communications Partner

The Current Industrial Partners

SSI – Blast Furnace ca 3-4M tonnes/pa Lotte – PET, ca 50K tonnes/pa Growhow – Ammonia plant, ca 600K tonnes/pa BOC – SMR, ca 250K tonnes/pa NEPIC (as PICCSI) National Grid Co-ordinated by Tees Valley Unlimited as the local LEP

Transport and Storage Options

Onshore transport Pipe using existing pipe corridors Pressure – gaseous vs dense phase Truck to pipe network from smaller emitters Location of compressors likely to be close to SSI site Major environmental and ownership issues to be identified Optimal sizing to be determined

Offshore Storage Two stores selected:

Goldeneye – Shell agreed to provide information 5/42 – National Grid agreed to provide information

Need Third Party Access Terms and Conditions – storage tariff

Business Case and Investment Mechanism

Business Case outputs including but not limited to: Business model inc Capex and Opex for 4 industrial sites Stress test for major cost elements Third Party Access Terms and Conditions for storage Ownership structure and risk sharing proposal Contract arrangements for oversized pipe and storage

Commercial advisor outputs including but not limited to: Report on commercial issues associated with CCS in industry Independent report on bankability of project Potential finance sources plus what is needed to access these Mechanism which attracts investment into industrial CCS and would allow

companies to finance FEED and reach FID IP Protection

Business Case and Investment Mechanism contd

Economics of ICCS different to that of power:

Cost of CCS can be supported in number of ways including CFD

Competitive nature of globally traded commodity products means thatindustrial emitters are unable in the long term to afford additional cost ofabatement and remain competitive

Lack of an investment mechanism means no private company will developICCS without support

Many Tees Valley industries considered relatively high credit risk

Limited ‘green premium’ on products and a marginal impact of the UU ETS

Some Resulting Conclusions ICCS in Tees Valley is technically feasible and with public support is be

commercially supportable. A significant opportunity to export considerable volumes of CO2 Current study based on capacity to store ca 15M tonnes/year, but the initial

reference case based upon ca 3Mt/year Infrastructure will have an operational life of at least 40 years and given existing

and future ‘supplies’, reasonable to expect to operate well beyond the 20 yearevaluation period

Significant economies of scale result from additional users Cost of capture ranges are very varied - £50-205/tonne and dependent upon

different industries and different scales Two initial investment mechanisms emerged as focus of further work:

An emitter CFD model which provides for a volume based mechanism A storage driven model which helps to resolve a number of challenges

associated with option 1

www.teessidecollective.co.uk

Communications Strategy

Use Of CO2 As A Raw Material Building Block

Commercial processes:React with Ammonia UreaReact with Phenol Salicylic Acid (Aspirin)React with an epoxide

The first British-built LEAF EVs now being built in Sunderland from 2014, withinitial annual production capacity of around 50,000 vehicles.

Electrolyte for lithium ion battery

Advanced lithium-ion battery plant located in Sunderland, withproduction of 60,000 units a year

Cyclic carbonate ( new market demand ?)

Charge your Car was launched in North East Englandin 2010.

North East has over 300 charging points and is themost connected region in the UK.

In 2014, the North East region is a home to over1,000 charging points, at key locations on streets, in carparks, at residential and commercial locations such asretail and leisure facilities.

Infrastructure To Support Electric Vehicles

NET Power www.netpower.com is a new oxyfuel power cycle thatcombusts coal, natural gas, and biomass. It generates electricity that iscost-competitive with the best fossil fuels plants while producing zeroair emissions.

The system uses supercritical CO2 as a working fluid instead of steamthereby avoiding efficiency losses that steam experiences when ittransitions between a liquid and a vapour.

Further Uses of CO2…….

Solidia Technologies www.solidiatech.comSolidia claim their material decreases CO2 emissions by up to 70% of what theindustry is currently achievingHow – they harden the cement in the concrete with CO2 instead of water - notonly conserves water by orders of magnitude, it also makes a better concrete,which is stronger and more chemically durable.

Thank You

John Brady

www.nepic.co.ukwww.nebr.co.uk

www.teessidecollective.co.uk