Yahoo Finance Britain will fall behind in key net zero project without EU shipping deal, Sunak warned
Britain risks losing an “early mover” advantage in a nascent net zero technology unless a shipping deal is struck with the EU, a North Sea energy company has warned.
Enquest, which runs the Sullom Voe oil terminal on the Shetland Islands, is one of several companies racing to develop carbon storage sites that will pump carbon dioxide undersea to be locked up in old oil and gas reservoirs.
But the company has warned that while the UK holds advantages, due to the number of depleted oil and gas fields that could be repurposed to hold CO2, it will be unable to trade CO2 cargoes with Europe unless an agreement is reached with Brussels on the “London Protocol”.
The protocol, along with the older London Convention, is an international agreement designed to stop waste being dumped in the oceans. In its current form, that would prohibit shipments of CO2.
However, the International Energy Agency (IEA) has called for protocol signatories to adopt an amendment that would allow trade to begin flowing.
Rishi Sunak announced £20bn of funding for carbon capture projects in July as part of a package designed to “defend the public” against the disruption of energy supplies caused by the Kremlin’s invasion of Ukraine.
Salman Malik, chief financial officer of Enquest, said accepting European cargoes of CO2 could be a potentially lucrative business but that Britain risked missing out unless solving the issue was made a priority.
With a deep water jetty and direct pipeline links to oil fields, Enquest’s Sullom Voe terminal is one of the sites where CO2 could arrive by ship and be pumped into storage.
It is thought that up to 10 millions tonnes of CO2 could be stored via Sullom Voe per year, or one billion tonnes over the site’s lifetime. Injections would begin in the late 2020s if Enquest gives final approval to the project.
Mr Malik said discussions were already under way with potential European industrial customers that needed to store carbon.
He said: “The Europeans are short of storage capacity, so we expect to play a very significant role there.
“But there is a roadblock which needs to be overcome - we will need engagement between the governments to facilitate the transportation of CO2 across borders.
“This industry is in its infancy and in the current environment, you would need ratification from the European [Union] to allow that.
“It’s certainly on the radar, and it’s been communicated fairly regularly to the UK Government, and we’re certainly keen to see an acceleration of those conversations to allow us to maintain an early mover advantage in this space.”
Mr Malik said there was also still work to be done for the UK and EU to fully recognise each other’s emissions trading systems.
On Saturday the Department for Energy Security and Net Zero confirmed that it was aware of the London Protocol issue and was leading cross-government work to solve the problem.
A spokesman added: “We are making the entire UK a world leader in carbon capture, backed by an unprecedented £20bn, and are accelerating development of this vital technology as part of our greater efforts to increase energy security.
“We welcome interest from EU countries in using UK stores for imported CO2 and are actively exploring opportunities to overcome the regulatory barriers to enable this to happen.”
Carbon capture, utilisation and storage will involve taking CO2 emissions either from the air or from large emitters, such as industrial facilities, and storing them safely underground or transforming them into other products.
It has been highlighted as necessary by the IEA if the world is to reach net zero carbon emissions by 2050.
However, the technology remains nascent and critics have warned that it risks distracting from broader emissions-reduction goals, or - at worst - even disincentivising them.
On top of this, carbon storage can only be done in certain places, where suitable rock formations exist. These must be permeable and porous and located at least half a mile underground, with a layer of dense rock above to prevent leaks - making depleted oil and gas fields ideal candidates.
The UK Continental Shelf could potentially hold 78bn tonnes of CO2, according to the North Sea Transition Authority (NSTA).
By 2030 the Government is aiming to capture and store 20 to 30 million tonnes of CO2 per annum, rising to 50 million tonnes by 2035.
Earlier this year, the NSTA granted the first 20 offshore carbon storage licences, four of which were awarded to Enquest.
The Government is also encouraging development of the technology at “clusters” in areas such as one on England’s East coast that will stretch from Teesside to the Humber.
