Written evidence submitted by Carbon Engineering (HCC0032)

 

Carbon Engineering’s response to the Scottish Affairs Committee inquiry on ‘Hydrogen and carbon capture in Scotland’

 

Background on Carbon Engineering

 

Carbon Engineering is a Canadian clean energy company with global plans to capture CO2 directly out of the atmosphere by deploying our Direct Air Capture (DAC) technology at megatonne scale, working with a network of international partners. We capture excess atmospheric CO2 which can then be safely and securely stored deep underground offshore utilising carbon capture and storage (CCS) infrastructure to accomplish Greenhouse Gas Removal (GGR). Alternatively, facilities can utilise clean hydrogen to convert our atmospheric CO2 into near carbon neutral synthetic transport fuels. Synthetic fuels provide an early, additional route for clean hydrogen to decarbonise the energy system, which is important for sectors where direct use of hydrogen may require retrofits or new infrastructure. By combining clean hydrogen with atmospheric CO2 to produce fuels, our AIR TO FUELS™ process provides a pathway for hydrogen use in today’s infrastructure and increases the ability of these sectors to quickly displace fossil fuels.

 

Carbon Engineering is partnering with plant developer Storegga to build Europe’s first commercial-scale DAC with storage (DACS) plant in North East Scotland. Storegga is the lead developer of the region’s Acorn Project and our proposed DACS facility would be connected to Acorn’s CCS infrastructure at the heart of the Scottish net zero industrial cluster, which is currently designated ‘reserve’ status under the UK Government’s cluster sequencing plans. We are also working with partners to build our first AIR TO FUELS™ facility in British Columbia, which will be designed to utilise our technology to capture CO2 out of the air and combine this with clean hydrogen to deliver up to 100 million litres of synthetic fuel each year. In the UK we are part of the Green Fuels, Green Skies competition, in partnership with LanzaTech, on a project to produce over 100 million litres of Sustainable Aviation Fuel (SAF) a year, enough to supply around 1% of the UK’s annual aviation fuel demand in 2050.

 

Given our plans in Scotland, and the fact our DAC technology utilises both clean hydrogen and CCS infrastructure, we welcome the opportunity to respond to this inquiry. Rather than respond to individual themes, we have outlined how our technology can help support the development of Scotland’s hydrogen and CCS industries as an offtaker and the policy required to deliver this.

 

Should you have any questions please do not hesitate to contact Stuart Gregg, UK & Ireland Country Manager.

 

Kick-starting the hydrogen economy

 

Clean hydrogen-derived products, such as near carbon neutral synthetic transport fuels, constitute a near carbon-neutral alternative to fossil fuels and can significantly contribute to emission-reductions across hard to decarbonise transport sectors like aviation and shipping. For the purposes of this inquiry though, if our projects are operational in the 2020s and utilise clean hydrogen, then they could play a critical role in bringing down its cost by acting as an early offtaker and therefore contributing to kick-starting the industry in the UK. 

 

 

​​Carbon Engineering’s AIR TO FUELS™ solution has three major steps:

 

  1. Our DAC process captures and concentrates CO2 from atmospheric air.
  2. Clean electricity (such as solar PV) is used to electrolyse water, splitting it into hydrogen and oxygen.
  3. The CO2 and hydrogen are reacted to produce hydrocarbons which can directly, or with refining, be converted into drop-in compatible synthetic gasoline, diesel, and jet fuel.

The UK Government’s hydrogen strategy sets an ambition of achieving 5GW of low carbon hydrogen capacity by 2030, and Scotland’s own Hydrogen Action Plan echoes this. However, there are few near-term off-takers to stimulate demand.

 

Synthetic transport fuels produced from air captured CO2 are ready to scale commercially, and these fuels can be used in existing engines and refuelling infrastructure with little or no modifications.  We are reliant on scaling of affordable clean power and clean hydrogen to produce e-fuels.

 

Investment in Scotland

 

Carbon Engineering has a flexible business model and plans to licence our technology to others to build and operate. This, along with the extensive use of standard industrial equipment which is assembled on site, means that our DACS and AIR TO FUELS™ solution will uniquely enable the rapid deployment of plants in Scotland and the UK more widely, and crucially the development of a domestic supply chain. The extent of in-country construction is a unique aspect of Carbon Engineering’s technology compared to other DACS solutions available today. By acting now, the UK could capture these benefits for what will be a global and highly exportable DACS industry.

                                                                                   

By taking early leadership, Scotland could play a particularly important role in helping to transition engineers (particularly those working in the oil and gas sector) to green industries. This would in turn create a global export opportunity for both knowledge and services, selling to other countries with geological storage capacity or abundant renewable energy to make ultra-low carbon intensity synthetic fuels.                            

 

Our DACs and AIR TO FUELS™ project partners will also utilise CCS transport and storage infrastructure from the mid-2020s and long after point source fossil fuel CO2 stops, if Government policy enables this infrastructure to come forward in a timely manner through the cluster sequencing process. Also, and crucially for this inquiry and as mentioned above, facilities using Carbon Engineering technology could be an early off-taker for clean hydrogen projects.

 

Collectively, this will ensure areas like North East Scotland are not “left behind” in the transition to net zero, creating new local jobs, building domestic supply chains and exporting skills in areas like synthetic fuel production and carbon removal management.

 

Policy action

 

Experience from offshore wind highlights that an investment framework which provides visibility on the available support for the industry over the long-term is critical to deploy a new sector at scale. Government must therefore set out a clear roadmap to developing negative emissions industries such as synthetic fuels, with a long term vision up to 2050, whilst also establishing a clear funding envelope for clean hydrogen. This will underpin the development of the industry and have a transformative impact on industry and supply chain confidence.

 

Specifically, there are two policy asks that will help build a clean hydrogen economy:

 

  1. Open access infrastructure for the transportation and storage of CO2. All CCS clusters need to progress at speed in the 2020s, with “reserve” and Track 2 included on the same timeframe. Our DACS project with Storegga and all potential future projects are reliant on common, open access CO2 transportation and storage infrastructure.
  2. Support for first-of-a-kind plants, for example, through a Contract for Difference (CfD) mechanism for DACS and/or Government procurement. As with other growing technology industries, like renewable power, we expect the rate of cost reduction to accelerate with the rate of deployment, which is why we advocate for DACS plants to be deployed today. CfDs have proven successful in other sectors like offshore wind at attracting investment, ramping up deployment and reducing costs. Government procurement should also be considered for early plants.

 

 

March 2022