Developing an industrial CCS network in

Teesside

Sarah Tennison

@Teescollective

www.teessidecollective.co.uk

info@teescollective.co.uk

Why ICCS and Why Teesside?

Over £3bn investment over last

5 years

Company Capex

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 £60 million

Who are Teesside Collective?

Multinational companies based in Teesside with an

interest developing a CCS network on Teesside

BOC Largest steam methane reformer in UK

Growhow Largest UK ammonia fertiliser

producer

SSI Europe’s second largest blast furnace

Lotte produces PET for15bn drinks bottles

per year

National Grid Store developer

TVU Local Government

NEPIC Cluster representative

“CCS on industrial plants is going to be a

critical part of the global effort to prevent

serious climate change. Teesside is in the right

place, at the right time, to get ahead of the

curve.”

Sir David King, UK’s Special Representative

for Climate Change

“A CCS network in Teesside is a critical step,

giving a shot in the arm to British industry’s

long-term future.”

Dianne Sharp, North East Director, CBI

What will Teesside Collective

do?

• Use the £1million received from DECC to: – Engineer and cost a solution to capture CO2 from 4 industrial plants, onshore transport network, offshore

transport network, and identify a store

– Develop the Business Case for an industrial CCS network

– Propose a solution to ‘how can Industrial CCS be funded?’

• We have: – Commissioned Pale Blue Dot, Amec Foster Wheeler, and Societie Generale

– Completed the Engineering

– Developed the draft Business Case

– Developed the draft funding models

– Commissioned the economic impact assessment

• Project will be launched by July 2015 – as much information as possible will be public

Funding mechanism

• Without a funding mechanism, such as the low carbon power sector has, Industrial CCS will not

happen

• Costs cannot be passed on to consumers

• EU ETS certificates are not bankable

• Industrial companies can close – long term financing unavailable

• Clustering important to minimise individual credit risk and decrease infrastructure costs

• Taking the Transportation and Storage out of project to reduce risk and make project more

bankable – Regulated Asset Base, Capital Grant

• NER400 opportunity, especially for Transport and Storage for clusters

• A funding mechanism is possible and will be presented by July

ICCS Timetable and Key Risks

Critical Path Risks

• Ability to attract Pre-FID finance before funding mechanism in place

• Government timetable for implementing a funding mechanism

• Storage – speculative FID on additional storage sites

Teesside Collective

• 2015 – 2016: Scope Pre-FID work and identify Pre-FID funding

• 2016 – 2019: Undertake Pre-FID work - permitting and

consenting, FEED, initial engineering, agree finance

structure, agree ownership structure, agree storage tariff

• 2019 – 2021: Bid for NER 400 for and apply for UK Government’s

ICCS funding mechanism

• Early 2020’s: Reach FID, let EPC contracts, start operations

Storage Operators (who ???)

• 2015 – 2018: Secure funding to develop follow on storage sites to FID

including storage appraisal, storage permit,

agreement of financial securities and liabilities

UK Government

• 2015 – 2016: Identify funding for Industrial CCS Pre-FID work

and storage development

• 2015 – 2019: Agree ICCS funding mechanism, agree budget,

and obtain legislation change

• 2019 – 2021: Agree Member State NER400 projects and

match funding principles

EU

• 2015: Agree with Member states to/not-to sell

additional 300m EUA allowances

• 2016 – 18 Agree eligibility for 300m allowance fund

• 2015 – 19 Agree eligibility for NER400 and method for pre-

selection of projects before allowances sold

• 2020+ Process NER400 applications