UK: The Challenges Facing Carbon Capture And Storage

Last Updated: 25 September 2013
Article by Malcolm Dowden

The UK government has confirmed funding to take two Carbon Capture and Storage (CCS) demonstration projects to the next stage of development. For the Peterhead project in Aberdeenshire and the White Rose project in Yorkshire, the next step is "Front End Engineering and Design" (FEED), leading to full-scale and integrated projects which aim to prove the technology and also the business and regulatory models required to deliver a cost-competitive CCS industry by the 2020s. However, significant legal and economic challenges remain, both at project and industry level.

Project level challenges

The White Rose project in Yorkshire involves the construction and commissioning of a new 426MW (Gross) coal-fired power plant with the ability to co-fire biomass. The new plant is to be fully equipped with oxfuel combustion technology and would aim to capture approximately 90 per cent of its annual CO2 emissions.

The power plant would depend on the success of a separate project, led by National Grid, to construct and operate a CO2 transport pipeline leading to permanent geological storage facilities approximately 2km offshore.

Although proceeding as separate projects, the development consent processes are inextricably linked. In its Scoping Opinion on the White Rose Project the Planning Inspectorate emphasised the potential need to carry out a full assessment under the Habitats Directive, and endorsed Natural England's consultation response by stressing that any Environmental Statement relating to White Rose must include full consideration of the whole scheme, extending to:

Existing completed projects (e.g. the Drax power plant adjoining the White Rose site)

  • Approved but uncompleted projects
  • Plans or projects under consideration, and
  • Plans or projects which are reasonably foreseeable (i.e. projects for which an application has not yet been submitted, but which are likely to progress before completion of the development and for which sufficient information is available to assess the likelihood of cumulative and in-combination effects).

The Scoping Opinion specifically refers to the proposed Yorkshire and Humber CCS Pipeline proposals, underlining the fact that in considering whether to grant consent for the power plant and onshore elements of White Rose the cumulative and combined impact of the transport and offshore storage elements must be taken into account.

Given that the precise details of key elements remain uncertain, any development consent application must adopt the "Rochdale Envelope Principle", under which an applicant seeking flexibility should assess and present the maximum potential adverse impacts. This requirement creates two distinct risks:

  • Increased risk of challenge prompted by presentation of the "worst case scenario", and
  • Increased risk of challenge from opponents arguing that the applicant has, in fact, failed to disclose the worst case scenario.

Local press coverage since 2011 has tended to emphasise the scope for disruption and to highlight the potential need to exercise compulsory purchase powers, particularly in respect of the cross country pipeline. The potential for opposition during the development consent order process is significant.

The overall scheme also depends on successful navigation of the licensing regime applicable to offshore storage established under Energy Act 2008, s 18, which includes criteria for establishing technical feasibility, financial viability and environmental protection. The promoters must also obtain a Crown Estate lease of the undersea storage formations.

Industry challenges

The two projects selected as preferred bidders for the FEED stage of the government's competition are full-scale demonstration projects. Their purpose, perhaps over and above their intrinsic value, is to prove the concept and to test the investment case, business structure, legal and regulatory framework for CCS.

Business structures may prove to be particularly challenging. CCS requires integration of carbon capture, CO2 transport infrastructure and permanent storage facilities. The expertise relevant to each element differs, and the risk profiles widely diverge.

From the transport and storage perspective, there is a significant risk in initial reliance on a single source of CO2. For that reason, Capture Power Limited (the joint venture behind White Rose) and National Grid are working with the developers of the Don Valley CCS project to promote the development of an integrated "CO2 cluster" providing a transportation and storage network for the energy-intensive region of Yorkshire and Humberside. Necessarily, that requires National Grid to "oversize" the initial construction to allow for potential future volumes. Successful development at industry scale would be needed to vindicate that approach.

Risk allocation among elements of a CCS scheme may prove difficult. Particular concerns stem from the significant, uncapped and (currently) uninsurable liabilities relating to the transportation and storage infrastructure. For a power plant, viewed in isolation, the principal risk may be of carbon capture technology failing, underperforming or requiring maintenance at a level or with a frequency that affects availability and utilisation rates. That risk may be dwarfed by the "integration risk" when carbon capture is linked with transportation and storage, whether within the same business structure or through contractual arrangements.

Transport and storage risks are, initially, wholly borne by private sector operators. The EU CCS Directive (2009/31/EC) provides for risk to pass to member state governments, but only "if and when all available evidence indicates that the stored CO2 will be completely and permanently contained". In its November 2012 report, Mobilising Private Sector Finance for CCS, the Energy Technologies Institute (ETI) observed that while the sector is reasonably confident about its ability to manage or prevent seepage risks, there is much less clarity or confidence about the risk of catastrophic escape. Consequently, the point at which responsibility for permanent storage risks might be passed on to national authorities must remain uncertain. That, together with the uncapped future of EU carbon credit (EUA) prices, means that insurers are currently finding it difficult to provide products to underwrite CCS storage liabilities.

In any event, operators cannot look forward to a cost-free transfer of risk. The EU CCS Directive notes that after a transfer of responsibility national authorities would have to bear the costs of maintenance, monitoring, control and corrective measures (which may include substantial remediation costs). To mitigate that risk to the public purse the Directive provides that before any such transfer the operator must make a financial contribution. The level of that contribution would have to be set at the time of the proposed transfer, and would reflect the degree of risk being assumed by the public sector. Even though, by that stage, "all evidence" must indicate that CO2 has been completely and permanently contained, it is unlikely that national authorities could prudently regard the risks, and the required level of financial provision, as de minimis.

Policy risks

The ETI's November 2012 report also highlighted investor concerns about the government's continuing commitment to CCS. CCS is policy dependent, so potential investors are highly sensitive to mixed signals from government, either to CCS itself or to broader carbon emission targets.

There is also a potential risk of conflict between the UK government's view of CCS and EU policy. CCS is an attractive technology in part because it offers a way to keep fossil fuels within the energy mix. White Rose has the potential to co-fire biomass, but is predominantly a coal-fired plant. CCS is therefore crucial to its viability. It reconciles the measures required to meet emission reduction targets with the pressing need for energy security. However, there may be a risk that the current UK government, under severe back bench pressure, may fall foul of the terms of the EU Directive. The Directive emphasises that CCS is a "bridging technology". It "should not serve as an incentive to increase the share of fossil fuel power plants. Its development should not lead to a reduction of efforts to support energy saving policies, renewable energies and other safe and sustainable low carbon technologies". CCS is a valuable addition to the mitigation toolkit. It is not a complete answer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Malcolm Dowden
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.