Some Risks in CCS

Last night over dinner a couple of mates were berating me for not putting finger to keyboard for some time. So, Keith and Ken, this is for you.

The other day a colleague pointed out to me a couple of risks associated with the White Rose CCS project that hadn't occurred to me. The White Rose project itself involves the construction of a new coal-fired plant, alongside the existing Drax PS, equipped with oxyfuel combustion technology. Then there is an entirely separate project headed up by National Grid to build a pipeline out into the North Sea.

Of course, the two project are inextricably linked. What my colleague suggested was that any environmental statement supporting the development will need to adopt the so-called "Rochdale Envelope Principle" (No -I've never heard of it before, either). Under this principle the developers have to assess and present the maximum potential adverse impacts for the whole scheme. My colleague then went on to point out that this adds two new risks to the plethora that already surround CCS projects:

• the risk of increased challenge prompted by presentation of this worst case scenario;
• challenge about whether or not a worst case scenario has actually been disclosed.

As assiduous readers of this blog will know I was periferally involved in one of the unsuccessful projects bidding into the competition. One of the big headaches in putting together the project was clear allocation and management of risk. Of course, there are all the usual ones you expect in any big project - technology risk, financing risk etc., but also some peculiar to a multi-player project of this nature - integration risk being one of the biggest.

Even at the back-end of the project there is a sting in the tail. Eventually, under the EU CCS Directive, risk can be passed to the member state's government but only "if and when all available evidence indicates that stored CO2 will be completely and permanently contained". That is some tall order if you really think about it. The monitoring and maintenance commitment that is implied is not insignificant. Furthermore, even when risk is transferred to the state the operator has to make a financial contribution towards continued monitoring.

One of the big hopes of the project that I was involved in was that it would unlock enhanced oil recovery as a means of offsetting some of the risk-based costs. Neither of the selected pojects will do this and it is difficult to see how a truly independent project with such an aim can get off the ground in the near-, or even medium-term.