March 2022, Scottish Carbon Capture & Storage

Introduction

Scottish Carbon Capture & Storage (SCCS) is pleased to provide evidence to the Scottish Affairs Committee on the role of hydrogen and carbon capture and storage (CCS) in Scotland.

The key advantage of hydrogen is as energy storage in the system: hydrogen storage is likely to be significantly lower cost, and more resource efficient, than electric batteries. It also provides an alternative to fossil fuels that is carbon dioxide-free at the point of use, allowing decarbonisation of dispersed sources of carbon dioxide (CO₂) emissions such as heat and transport.

The two main methods of producing low-carbon hydrogen are through reforming of natural gas – either steam methane reforming (SMR) or autothermal reforming (ATR) - combined with CCS to prevent the CO₂ emitted as part of the process reaching the atmosphere; and electrolysis of water using renewable electricity.

In this response we will use the terms ‘green hydrogen’ to mean hydrogen from electrolysis using renewable electricity; ‘blue hydrogen’ to mean hydrogen produced from natural gas with CCS; and ‘low-carbon hydrogen’ to mean either or both. Another option for low-carbon hydrogen production is biomethane – methane from non-fossil sources -  which gives the opportunity to use CCS to deliver negative emissions alongside hydrogen production.

Hydrogen from natural gas is likely to come first, because it is at Technology Readiness Level 9 – but it is dependent on the availability of a CO₂ takeaway service to make it blue hydrogen.  Blue hydrogen can not be produced unless CCS is developed and accessible in Scotland. It is also dependent on the availability of natural gas on the global market, which is very vulnerable to supply shortages driven by business and a buffer store of methane feedstock into SMR or ATR conversion plant is needed.

The Climate Change Committee expects blue hydrogen to peak in the late 2030s, with green hydrogen taking over[1].  It is clear that both forms of low-carbon hydrogen production will be needed for the UK to meet its net zero target.

Green hydrogen is entirely dependent upon the abundant supply of very low-cost wholesale renewable electricity, which itself is dependent on the construction of the projects offered agreements in the ScotWind licensing round. Green hydrogen lags behind operating wind supply, and the consenting process for offshore wind can take several years; there is also a huge scaleup necessary to extend and strengthen the onshore electric transmission network from north and east Scotland to the central belt and England, and the risk of delay inherent in that, as was seen with the Beauly-Denny link.

What should be the focus of UK Government investment to ensure that Scottish industry, supported by Scottish research, is able to become a world leader in green hydrogen for domestic use and export?

The Scottish Cluster

As stated above, we will need the development of both green and blue hydrogen; blue hydrogen enables development of hydrogen infrastructure, including storage, and a rapid transition to this energy vector on the timescales needed to meet net zero targets for Scotland. Investment in the Scottish CCS cluster is a priority to enable the bulk production of blue hydrogen. The cluster includes a proposal for new blue hydrogen production, and the CO₂ storage offer will also support blue hydrogen production elsewhere in the UK and beyond.

The Scottish Cluster was designated a ‘reserve cluster’ in the government’s cluster sequencing competition, the vehicle through which the first CCS projects in the UK are able to negotiate for government support, including capital funding from the CCS Infrastructure Fund and revenue support through CCUS business models. Two projects in the north of England – HyNet and East Coast - were selected for this, with the Scottish cluster given reserve status. Although the government has committed to continue to engage with the Scottish cluster, it is now in a much less favourable funding position than the two successful clusters.

Both hydrogen production and CCS are technically proven – the main obstacle to their deployment is the need for business models to encourage investment, so success in the cluster sequencing process is crucial. For hydrogen, the market is currently small, with most large industrial users producing their own hydrogen, through unabated steam methane reforming. To accelerate the use of low-carbon hydrogen across the economy, there is a need to build both supply and demand at the same time, which entails a significant amount of risk on both sides, and for decisions to be made on where electricity or hydrogen is the best option for replacing fossil fuels in particular sectors (such as in domestic heat and transport), as well as business models to support development of both hydrogen production and CCS. 

The Scottish government has recently consulted on its draft hydrogen action plan, and in our response we highlighted the need for a comparable CCS action plan to ensure that the CCS infrastructure to enable blue hydrogen is developed in time[2].

Hydrogen storage

Massive hydrogen storage is an inevitable need and a no-regrets action for the gas network in Scotland, the rest of the UK and Ireland.  Scottish companies are exceptionally well positioned to evaluate and design this, due to hydrocarbon legacy skills, and to develop the infrastructure and stores. 

Storage of hydrogen is envisaged as 30% of UK annual methane consumption.  Such storage has not previously been needed, due to the ability to produce more methane, but for a manufactured energy vector such as hydrogen, big stores are essential.

SCCS members have undertaken surveys of geological hydrogen storage on land and offshore in Scotland and the rest of the UK. There is massive opportunity for hydrogen storage, many times more than annual need.  This needs research support to continue evaluation, in partnership with UK industries and gas distribution companies

Work at Edinburgh University[3] indicates that we will need around 100TWH of annual hydrogen energy storage and that scale of storage can only be delivered by geological storage in depleted gas fields. As permitting a site for storage can take many years, we need to get a demonstration project for hydrogen storage in porous rocks underground operational as soon as possible.

Legislation

There is currently no comprehensive legislative regime for hydrogen transport and use.  The following is a non-exhaustive list of legislation that need to be either amended or replaced:

The Gas Act 1986 – It is not clear whether hydrogen would be covered by the definition of ‘gas’ in this Act; similarly it is not clear whether carbon dioxide is covered. If either or both were covered, there could be difficulties for the hydrogen production model, as the unbundling requirements would make an integrated production, transport and supply operation difficult, as the Act prevents the holder of a gas transportation licence from also holding a gas shipper’s license, a gas supplier’s licence or an interconnector licence.

The Gas Safety (Management) Regulations 1996 only allow for 0.1% hydrogen to be incorporated into the UK gas supply, while the Gas (Calculation of Thermal Energy Regulations) require that, within each of the thirteen billing zones of the UK (of which Scotland is one), all gas sources must be enriched or de-riched to the prevailing gas quality for the entire zone.[4]

Further work is needed to understand the full range of changes to the legislative landscape that the production and use of hydrogen will require; this work must take into account the devolved competencies of the Scottish Parliament, and how the legislation and implementation in Scotland differ from the rest of the UK. There will be particular issues for projects and activities that cross the border between Scotland and England, and for activities in the offshore.

Embedded emissions

Upstream emissions from natural gas extraction form a significant part of the carbon footprint of blue hydrogen. UK gas production has a 14% lower emissions footprint than the international average, so hydrogen made from North Sea gas will have a lower footprint than hydrogen made with gas produced in many other places in the global market. 

A key part of this will be ensuring that the UK low carbon hydrogen standard aligns with EU and international standards.

A carbon border adjustment mechanism (CBAM) that takes into account the greenhouse emissions from the production of natural gas, would reduce the embodied emissions in the feedstock of blue hydrogen produced in the UK. The Climate Change Committee has recently recommended either a CBAM or implementation of standards to reduce embedded emissions in imported fossil fuels[5].

It will also be important for any hydrogen export market that the forthcoming UK low carbon hydrogen standard aligns with EU and international standards.

What infrastructure, and investment in infrastructure, is needed for green hydrogen to be easily available for heavy transport and buses across the whole of Scotland?

Infrastructure is a crucial area for investment – both to transport and store hydrogen, and to transport and store CO₂ from low-carbon steam methane reforming. Without this infrastructure in place, it will be hard to scale up supply and demand for hydrogen. A pilot project for the geological storage of hydrogen in Scotland would be valuable.

What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?

Hydrogen and CCS have a crucial role in a just transition, both for the oil and gas industry and for manufacturing industries.  Hydrogen production and CCS call for the skills and experience found in the existing oil and gas, and chemicals, industries, so are an obvious source of employment for workers as the UK transitions away from dependence on unabated fossil fuels.  Around 28,300 people in Scotland are employed in the oil and gas industry, with a further 35,000 employed in the supply chain[6].

Around 185,000 people are employed in manufacturing in Scotland – 7% of the working population[7]. Manufacturing in Scotland includes cement, polymers, chemicals, paper and board mills, glass-making and food and drink, as well as the midstream oil and gas industry – such as refining and gas processing.

These sectors have high CO₂ emissions, either due to a high demand for heat, which is met with fossil fuels, or because they generate CO₂ as an unavoidable part of their industrial process, or a combination of both.

The use of hydrogen as a replacement for fossil fuels, or CCS as a means to prevent CO₂ reaching the atmosphere, enable high-emitting industries to continue operating in a low emissions way, maintaining jobs.  In addition, the delivery of CCS and hydrogen infrastructure in Scotland could encourage new carbon-intensive industry to relocate to the region.

Around 230,000 people in Scotland are employed in construction, expected to increase to 241,000 by the end of 2025[8]. This industry relies on high-carbon products, such as cement and steel, which have unavoidable CO₂ emissions from calcination and iron reduction, respectively. This means that, even if the heat needed to manufacture these products could come from electricity or hydrogen, the process itself would still produce high levels of CO2[9]. Without CCS, these products will be hard to manufacture within a low-carbon economy. As well as the impact on construction costs and jobs, there would be knock-on effects for housebuilding and renewables.

For a just transition, policy needs to enable the growth and transition of Scotland's supply chain and workforce through technical and safety standards, ensuring that people with skills and experience developed over many years are retained within Scotland. Projects, such as SGN’s H100, that support the development of installation standards and training specifications for the repurposing of existing natural gas systems for use with hydrogen are very welcome. Hydrogen storage in offshore depleted gas fields and salt caverns is envisaged to retain vital skills, jobs and infrastructure. 

The energy transition will be expensive, with significant upfront capital costs. Policy must address who pays for this transition and export revenues could play a significant part. Ultimately costs will pass to the consumers, but this will not impact everyone equally. Cost recovery exclusively through utility bills will impact the poorest households and struggling companies the most unless there is government support to ensure a fair, equitable and inclusive energy transition.

What training is required to build a hydrogen-ready workforce in Scotland?

Training will be needed to allow workers with existing skills to adapt and transition to the hydrogen sector. This is likely to include workers in the domestic gas sector, shipping and road and rail transport, as well as workers in oil and gas and heavy industry. In addition to these more front-line jobs, training and capacity building will be needed for regulators and planners who will be involved in decision-making and consenting around hydrogen and CCS developments.

Scottish Carbon Capture & Storage

Scottish Carbon Capture & Storage (SCCS) is the largest CCS research group in the UK, providing a single point of coordination for CCS research, from capture engineering and geoscience to social perceptions and environmental impact through to law and petroleum economics.

Our internationally renowned researchers provide connected strength across the full CCS chain. With our unique position SCCS is able to act as the conduit between academia, industry and government.

SCCS has access to cutting-edge experimental and analytical facilities, expertise in field studies, modelling and simulation, key academic and research personnel to accelerate the development of CO2transportation, capture and subsurface storage. We undertake strategic fundamental research and are also available for consultancy. In addition, we perform a key role in providing impartial advice to industry, the public sector, government agencies, and policy makers.

Founded in 2005, SCCS is a partnership of the British Geological Survey, Heriot-Watt University, the University of Aberdeen, the University of Edinburgh, the University of Glasgow and the University of Strathclyde working together with universities across Scotland.

This submission does not necessarily represent the views of the individual members of the SCCS Directorate nor of the SCCS consortium partner institutes.

March 2022

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