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In this follow-up episode, we dive back into the closing CCUS panel discussion that took place at this year’s EnviroTech in London. With the aim of exploring the ins-and-outs of CCUS, with a particular focus on upcoming projects in the UK, Senior Editor, David Bizley, was joined on stage by: Rachel Sutton, Interim CEO of Peak Cluster, Tolga Timirci, Head of Global CCUS Projects at Heidelberg Materials, and Tom Redfern, Head of Sustainability at Holcim UK.
Last episode included an introduction to the Peak Cluster project and the general environment surrounding CCUS in the UK. In this episode, we dive into the second-half of the discussion which was based around questions from our combined EnviroTech and World Pipelines CCS Forum audiences.
And if you missed the first half of this two-parter, make sure to check it out along with other episodes in our back catalogue.
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What is World Cement Podcast?
The World Cement podcast: a podcast series for professionals in the cement industry.
Hello, everyone, and welcome back to the World Cement Podcast with me, your host, Alfie LloydPerks, assistant editor of World Cement. In this follow-up episode, we dive back into the closing CCUS panel discussion that took place at this year's EnviroTech in London. Senior editor David Bizley took to the stage to dig into the ins and outs of carbon capture, utilization, and storage with a particular focus on what's coming up here in The UK. Joining him were Rachel Sutton, interim CEO of Peak Cluster Tolga Timirci, head of global CCUS projects at Heidelberg Materials and Tom Redfern, head of sustainability at Holston UK. Last episode included an introduction to the Peak Cluster project and the general environment surrounding CCUS in The UK.
David Bizley:In this episode, we dive into the second half of the discussion, which was based around questions from our combined EnviroTech and World Pipeline CCS Forum audiences. I hope you enjoy.
David Bizley:I just wanted to take a moment to remind you to register for World Cement. It's free of charge and gives you access to the latest issues of World Cement, both in print and online. Every issue comes packed full of regional analysis, technical articles, project case studies and the latest industry news. Simply head over to worldcement.com, click the magazine tab and register today. It's as simple as that.
David Bizley:Happy reading! So before we move, we've got another question here on the screen, but before we move to that, is there anyone in the audience who hasn't used the EnviroTech app who has a question? If you do please wave your hand and somebody should be running down to the front with a microphone for you. If you could just keep your hand in the air that'd be great, thank you.
David Bizley:When it comes to questions of cost, what part does the pipeline cost pay in the overall cost alignment and cost effectiveness of the project? And in relation to that, is the water content of the CO2 an important factor? Because that can be an important factor in determining pipeline cost and I wondered if there was alignment between the cement industry and the pipeline operators.
Rachel Sutton:Yes, a couple of bits there. So first part of the question, I guess, what proportion of the entire system cost is pipeline? I can't give an exact percentage off the top of my head, but relatively small. Most of the costs are in the capture technologies and then with the storage facilities. Obviously, that is highly dependent upon the length of the pipeline.
Rachel Sutton:And so if you have a much longer new build pipeline that that creeps up, but fundamentally, the CapEx costs of the pipe going in the ground are not your major sensitivity to the overall pounds per tonne of CO2 abated. To the other question on water, absolutely, you're right. So one of the major factors in the pipeline design are corrosion studies and water content is a really key part of that. So there's several aspects here, there is a CO2 specification that has been set by high net and by East Coast cluster, they are close but subtly different. Peak cluster in the first instance is assuming the high net CO2 specification.
Rachel Sutton:It seems a sensible starting place, but we're currently undergoing very detailed work, both from a pipeline assurance perspective, but actually more critically from a storage perspective to understand what the consequence of the various impurities within the CO2 stream are going to be. There are some extremely sophisticated thermodynamic models out there now to understand what the corrosion risks are going to be. And we're undergoing some really detailed modelling at the moment to make sure we understand the impacts of the various impurities within the CO2 stream. Fundamentally, the design codes for these pipelines is the same as they offer for natural gas pipelines as well. So there's no the challenge at the moment.
Rachel Sutton:And the work we do at the moment is focusing on understanding the thermodynamics of the CO2 as opposed to the pipeline design aspect itself. But that's a piece of work that's being done as we speak. So I guess to go back to your original question, yes, the water content will be a balance of costs between the dehydration of the CO2 before it goes into the pipeline and the cost of actual building the pipeline itself. Although it's worth saying that the store probably has even more sway of the CO2 spec than the pipeline itself does. And the overall cost impact on the project is not likely to be massively sensitive to that when you take into account the Capture Thirties and the store.
David Bizley:Excellent. Thank you. Anyone else with a question? Gentleman over there.
Speaker 4:Thank you. Good morning. Duncan McSullen from Honeywell UOP looking at carbon capture technologies. This relates my question to either the pipeline or each industrial emitter, each cement emitter. How important is it to have a lump sum turnkey EPC contract, noting reluctance in the market for the traditional oil and gas contractors to go turnkey EPC, labour issues and so on.
Speaker 4:Or is the government underwriting those cost overruns? How important is it for contractors to be bidding EPC lump sum to enable these projects to be sanctionable.
Rachel Sutton:I'll defer to you first having to go through the procurement process, and I'll get in.
Tolga Timirci:EPC, of course, the owners' first choice is to have the EPC contractors available but in the market especially in UK for full EPC, we can talk about the partial EPC EPC of the carbon capture part, ISPL certain parts but the full EPC for the entire plant to have the full EPC seems a little bit in the current market situation, is difficult to get. Of course, in a new EPC you have more cost assurance, you have more control on the project from cluster point of view, from owner point of view etc. But it's difficult. For that reason, what we are trying to do is we are trying to de risk EPC non availability of this EPC pricing and for that reason we have this long term FEED studies and then we have a strong owner team in the project coming bringing from other projects, other CCS projects, to make sure that we have the control on the project more. Otherwise, with the EPC, you just sit down and watch the game, but unfortunately, it's not the case for those projects in UK especially at the moment.
David Bizley:What we see. Before we move on to this question on the screen, anyone else in the audience who has a question for our panellists? Somebody at the back there.
Speaker 6:Stuart Robson from Atkins Realis, you mentioned there is a potential for expansion of the use of the pipeline potentially, Has that been built into the model and what sort of capacity expansion could you expect and would you be able to sell that use of the pipeline to try and reduce your overall costs in the future?
Rachel Sutton:Yeah, I'll caveat what I'm about to say by saying this is the core part of the peak cluster project does not include expansion is Spirit Energy who are operating the Morecambe net zero storage that are looking at this. So I'm speaking somewhat on behalf of them. So don't hold me totally to account of what I'm saying. But just to give a bit of context, the store itself has a billion tonnes of CO2 storage capacity. The peak cluster pipeline alone is looking at about 3,000,000 tonnes.
Rachel Sutton:So there is plenty of additional capacity. And absolutely, the more CO2 you can put into that, that more it drives down your overall cost of abatement. So there is absolutely an economic incentive to make sure that we maximise the CO2 storage. It is extremely early days at the moment, but what Morecambe are starting to look at is shipping. So importing CO2 from other parts of The UK and potentially from Western Europe as well, bringing that in via ship into Merseyside into Stanley and then transporting that via pipeline.
Rachel Sutton:It isn't part of the core Peak Cluster project. Going It's into the pipeline from the Peak District, but the store itself is looking at potential expansion opportunities to again drive down the cost further.
David Bizley:Okay, thank you. So let's move to this question from the screen here. Politically, what is the risk of these schemes being scaled back if a change of government leads to the scrapping of net zero targets, only for that government to be out of power within a single term. Let's not get political.
Tom Redfern:I'll say to everyone, it's always a risk, isn't it? I think it's always dangerous to try and predict politics, who knows, and we're definitely in an ever changing world. But I think it's also important for us to acknowledge that it is more than just net zero. This is protecting UK industry. That was the point we talked about where this gives us a clear future and a future to commit to grow upon.
Tom Redfern:That's important for jobs, the actual pipeline itself and storage is important for jobs. I hope and I'm confident that regardless of the government that comes in, these are the merits to doing this, which aren't just a net zero drive. And I think it's important we talk about those more.
David Bizley:Yeah. As you said, I think we need to
Rachel Sutton:focus on the economic benefits as well as the net zero benefits of these projects and sustaining British business, making sure that we don't see the loss of we've seen so many sites close in The UK over the last few years. And we don't want to see that replicated within the cement and lime industry as well. So it's important that we focus on those benefits as well as the net zero ones. But let's be clear, if we have a government that comes into power that chooses to repeal the Climate Act, this is going to be a very difficult project to justify. So yes, it is absolutely a risk and something that we're working very closely to understand how we can work with all potential governments coming in to make sure that they understand the importance of peak cluster.
Rachel Sutton:I guess it's worth saying that we've already got INET away. So that project is not going to be not going to be halted. That's moving forwards. It's the future projects that could potentially be at risk. We are working extremely closely with DESNAS to make sure that the current government is aligned on exactly what needs to be done and the timescales on which we wish to achieve it, and to make sure that we can get this through within a support of parliament.
Rachel Sutton:But yes, it is a risk.
David Bizley:Thank you. And following on a similar note, if government funding doesn't happen, is there any likelihood of private funding stepping in, or would that put the whole project at risk?
Rachel Sutton:I guess there's two elements to government support. Part of it is funding, and as I said earlier, we are trying to move away from government financial support as much as we possibly can. We recognise that subsidies into the future is not a viable option. The CCS industry is going to have to stand on its own two feet. I'm not going to speak on terms of which private funding might come in to step into that.
Rachel Sutton:But we are looking at as many ways as we can of moving this off the balance sheet. What I would say is the other element of government support that's required is the regulatory side of things. The CO2 transport storage system is a regulatory asset, it needs to go through a government process to make sure that we have an industry that operates. So even if we can fund it privately, you still need a supportive government who are willing to put this into a RAB in order to make the project be a success as well. So it's two elements, part is regulatory and part is financial.
David Bizley:Okay, thank you. So we've talked a bit about government support. And this was actually very similar to my next question, moving to the realm of public support. There have been some recent local protests on the PEEK cluster development that show how public perception how important, sorry, public perception is to the success of these projects. What are some of the most effective strategies to ensure positive public perception, and what examples can we point to?
Rachel Sutton:Yeah, absolutely. So yes, we have had some local protests on the peat cluster pipeline. And to put some context around that, the struggles we've been having are where the pipeline is going through an area which isn't seeing the immediate economic and environmental benefits of capturing the CO2 in the district. So it's the opposite end of the pipeline. I guess it's worth saying that local protests to large infrastructure projects are not uncommon.
Rachel Sutton:And this is why we go through a development consent order process to make sure that nationally important infrastructure projects are considered outside of purely local circumstances. That being said, bringing the public with us is absolutely critical. We want to work really closely with the local communities to make sure we understand their concerns. We are still very early in the process and we've just gone out for our initial consultation where we're starting to introduce the project to landowners. And now what we need to do is be working with them on a one on one basis to make sure that we understand their concerns and can design the project sensitively around that.
Rachel Sutton:So making sure where pipeline is passing through their property, for example, that we can route the pipeline into an area which has the minimal impact on them. The other thing we need to be really clear on is how we're managing environmental impact. There is always a difficult balance between a project that's designed to mitigate environmental impact through capturing CO2 versus the local environmental impacts through the construction phase. And that is always a challenge. And we are absolutely committed to making sure that we are fully aware and do absolutely everything we can to mitigate local environmental impacts.
Rachel Sutton:For example, one of the things that we are doing is looking at a 10% biodiversity net gain, which means we're committed to making sure that the project leaves the environment in a 10% better position from a biodiversity perspective to how we found it. So the responsibility and the onus is on us is to show how the benefits of the project will be realised by those local communities. And that's what we're endeavouring to do over the coming six to twelve months of kind of engineering detailed engineering design is to make sure that we can understand what the consequence is going to be and mitigate those as much as possible. I think it's worth saying that High Net did an excellent job of managing this. And there was actually generally very positive support from that.
Rachel Sutton:There was the benefit that the benefits of the project were being realised in the same region as the construction impact. So it was a weighing of pros and cons on an individual basis, as opposed to people seeing the local impacts without seeing the benefits to their local communities as well. So peak cluster does have a different challenge to high net. And equally, the political environment is very different now to where it was three years ago as well. So it is a very difficult situation.
Rachel Sutton:And we really need to continue to engage with the local public to make sure that they understand why it's important to them as well as well as why it's important from a national perspective.
David Bizley:Tom, did I think you want to add to that?
Tom Redfern:Yeah, go again, many of those points. But that's why through peak cluster, went out far earlier than we actually needed to consultation because so important. We start by engagement early, we take on board that feedback, we understand the concerns, which we understand far better now through taking those steps. It's on us now as Peak Cluster and as the admitters to make sure we can give confidence and the certainty to those communities that are impacted, but we take environmental protection seriously and we care about them as well, want to make sure the impact is as minimal as possible and we need to demonstrate that now as we go through the process towards that DCO.
David Bizley:Thank you, and I think this is for Tolga and Tom, we'll start with you Tolga, Most carbon capture technologies rely quite heavily on electricity. Now do you plan on building your own green electricity production infrastructure, or are you going to be relying on the national grid? And when planning carbon capture projects like this, how are you planning to deal with equivalent emissions?
Tolga Timirci:It depends on the plant as well, so there are plants that we have heat, extra heat available, so we use them, but there are plants that we are also investing 100 megawatt power plants to make sure that our CCS plant works, but that's also captured and that's captured as well, the power plant is captured as well in the Flue gas. So it depends on the plant capacity, heat availability, for example, if we have a very small CHP and getting the rest from the grids for electricity.
David Bizley:And, Tom, for Wholesome UK's perspective?
Tom Redfern:We would we're very unlikely to have our two renewable energy generation when we had to not pick this at National Park. That would be very difficult to discern the scale of the energy generation we need. Our preference, I think we would say would always be to be supplied through the grid. And that kind of comes back onto that political support piece again, that government support, we would really like to see prioritization of increased energy power to the CCS projects moved up that list. Otherwise then we'll have to of course look at doing our own on-site generation, but that, as Tolga said, then brings with his own emissions, the things that we'd have to deal with as part of the process.
Tom Redfern:So grid energy would be our preference.
David Bizley:Thank you. Moving to another question from the audience. UK produces about 7.7 megaton million tons of cement. Here, about half will be carbon capture enabled or net zero by 2032. How do you expect the market to absorb that volume at a green premium?
David Bizley:Do like that one.
Tom Redfern:I'm happy to go, but Tolga might have some experience from Brevik first, and then I'm happy to
Tolga Timirci:There are different mechanisms. Carbon bank, different mechanisms available. I think we need to look from a holistic view, not only the price of the the green premium, we need to look for the holistic view, so we have at the moment from Brevy Case started even selling this green premium for the data centers all over the world at the moment and there is a demand for it. I guess it's a matter of the market materialization about that, it's not only selling one product, it's the combination of the products and also the necessity for it.
Tom Redfern:Yeah, I think we can see this kind of book and claim system ever evolving which is probably going to form a core part of green cement sales going forward. So it might not necessarily be with cement produced at a plant in The UK is then claims the the green premium. Who knows? But that certainly seems to be an evolving evolving area. Also, I think as we see increased ETS costs go up, let's assume that policy stays the same, governments don't change, we can still see those really sharp increases in carbon taxation.
Tom Redfern:That's got to start to ultimately bring that into more of a level playing field as well.
David Bizley:Okay, thank you. Is there an obligation to produce cement and sequester CO2 coming with the public funding?
Rachel Sutton:I don't quite understand the question, if someone's able to elaborate. Just to give it to the funding that's coming forwards, I presume you're referring to the National Wealth Fund funding for the DevEx.
David Bizley:But I'm not- Let's assume.
Rachel Sutton:That money is specifically going towards the development costs of developing the pipeline. So I guess, that there is that cost is expected to be spent on sequestering CO2 from produced cement. We're not getting in there's no public funding at the moment coming through to for cement production, which isn't related to CO2 in terms of the context of these projects. But I'm quite happy to answer a question if I haven't interpreted that correctly.
David Bizley:Okay, excellent. Does anyone else who isn't using the app have a question to ask? If so, please wave your hand. Okay, excellent. Just to make sure I'm not missing anybody out.
David Bizley:We've got another question here on the screen though, so we're getting plenty through here. When it comes to the construction phase, will you be looking at setting strict conditions when it comes to using UK based labour, UK manufactured products specified to assist in getting public and government backing?
Rachel Sutton:So I'll take this from a people's perspective, but I guess perhaps you can follow on UK content from your experience as well. So there is absolutely a keen focus on UK content from this, from a procurement process, and with something we're already looking at in details, making sure that we can maximise the amount of content from a labor perspective, from a materials perspective that we can source within The UK. And that is really important to us to make sure that we are maximising the domestic opportunities. That being said, we always have to recognise the limitations of the availability in The UK, or that The UK is not able to supply 100% of what we need. And often UK does come at additional cost.
Rachel Sutton:So when you're looking at the economics from, particularly from a government funding perspective, when it comes to DevEx, for example, you need to make sure you're spending that money appropriately. So it's always a balance. I think it's probably worth saying that at the moment, the general consensus on CCS projects in The UK seems to be dancing around about the 50% UK content. Just to put it into context, that is not a strict obligation at the moment, although there may well be an obligation that comes into force in the future. But we are working very closely with DESNAS and with DBT to make sure we understand from both sides how we can maximize the opportunities to The UK economy as a result of these projects.
Tolga Timirci:We've made a very long search and study what's available in UK, which kind of equipment, which kind of services, which kind of construction we can get from UK and identify the companies and maximize as much as possible from UK content, not only to get the support of the public but also from a financial point of view because at the moment after this Middle East Conflict logistic prices and unavailability of the contractors are overseas we see a big benefit that UK contractors, UK fabrications, UK equipment suppliers will play an important role to supply on demand, on time and on cost, so as mentioned previously we are looking for partly modularization or let's say pre assembly units for our plants in Page Food and there are good suppliers in UK that can accomplish that fabrication Tom,
David Bizley:did you want to add to that?
Tom Redfern:I think this kind of feeds in nicely to some of those non net zero benefits. It's an opportunity to potentially build four carbon capture plants at the same time in The UK and help make The UK a leader in carbon capture technology, can both attract UK labor, skilled UK labor, and also then replicate that across the world. I think it presents amazing opportunity.
David Bizley:Thank you. And another question's just come in as well. How important is a CBAM card and border adjustment mechanism for these four projects to reach FID? Who'd like to go first?
Tom Redfern:I'd to go. A watertight C band is vital for you The UK cement industry, let alone getting these projects to to FID. If we don't have a a robust C band in place, as we said, the ETS costs are now going to start to significantly ramp up over the next ten years, but until they phase out altogether, The UK cement market will be left unable to compete with imports which aren't attracted to the same ETS costs. So for this project, The UK cement, in general, it's volatile.
David Bizley:Thank you. Is anybody else wanting to comment on that or we'd all agree? Okay. Excellent. So as more projects come online over the next few years, what do you expect the lessons will be learned from or the main lessons to be learned from first generation of carbon capture plants that have come online at Cement?
David Bizley:And I'll start with you, Tolga.
Tolga Timirci:There are plenty of lessons learned, I can just give you one example from our project, Langford, Meggistat, and and other pilot projects. We have a lessons learned database, now it reached 2,500 points items. So what we are doing is that we are identifying all the relevant ones now for PaceFood and implementing them for PaceFood. There are for engineering lessons learned, are execution lessons learned, contracting mechanism lessons learned, there are project management lessons learned, so all these things we are trying to implement, not to start from scratch all these projects. Because what's happening is that it's new for everybody also for contractors, for technology providers and EPC, EPCM contractors they are learning with us as well so what we are trying to do is give them our lessons learned directly to them and get their lessons learned from their other projects to make sure that we don't start from scratch.
Tolga Timirci:Otherwise, those learnings will cost you during the project execution.
David Bizley:And Tom, Rachel?
Rachel Sutton:I'm just going to add that we've paid with Heidelberg have been kind enough to do a lessons learned session with the Peak cluster partners as well, which again is a fantastic demonstration of collaboration amongst competitors. Is that opportunity for everyone to get in a room together and talk through what went well for Paidford and what the Pete Cluster team are able to take away from that as well. So I think it is really heartening to see how the cement industry is coming together in The UK pass those lessons on and to make sure that we continue to drive this to a successful place.
Tom Redfern:Yeah, I think just a maturing industry, which means we don't need to do exactly as Tolga said, so we don't have to learn those lessons again every time and both make things quicker, efficient and increasingly more cost effective. The more we do something, the more we get mature in how we do it, the better, the quicker it's going to become.
David Bizley:Excellent. Thank you. Now, going back to something Rachel actually touched on in your introduction about storage availability. You mentioned, think it was like a was it a billion tons I caught from? So demand for carbon capture is only going to grow.
David Bizley:Is there actually enough capacity when you take into account other industrial sources as well? We're well placed in The UK, but is this potentially a problem for other areas?
Rachel Sutton:Yeah, so certainly in The UK, we are extraordinarily geologically blessed with storage capacity. Think the latest CCSA estimate was 78,000,000,000 tonnes of CO2 storage capacity availability in UK waters, which yeah, that's just offshore. So that is huge and vastly more than we would ever need in The UK itself. And actually, positions The UK quite nicely to become an importer of CO2 from a storage perspective, I should add. But that's actually a really nice way of building a CCS market is by collaborating with European industry and providing shipping opportunities and providing essentially a market through which we can market CCS capacity and import that CO2 and build a merchant model around carbon storage.
Rachel Sutton:So I think, yes, here in The UK, there is more than enough storage and actually our challenge here is to exploit that rather than to worry about filling it up too quickly.
David Bizley:Thank you. And I always like to wrap these things up with by asking people to get out their crystal ball and their tea leaves. So starting with you, Tom. Looking ahead 10 from now, where do you expect, or maybe hope might be the better word, the state of carbon capture in the cement industry to be?
Tom Redfern:I hope and expect that it'll be matured. Would like to hope and think that peak cluster would have been delivered and that will take out a huge chunk of The UK's cement emissions. And really, what are we doing this for? It's to decarbonize cement so we can continue to provide good material, safe, warm and clean homes, houses, infrastructure that we all rely on. So I think my hope is in ten years we're benefiting from net zero cement to allow production of cement to continue into a future and continue to deliver all those important things that society depends on.
Tom Redfern:Thank you. Anne Rich?
Rachel Sutton:In my ten years time, I would hope that we're starting to see material quantities of carbon now being captured and stored from projects like like Pete Cluster, like East Coast Cluster and the likes are starting to see demonstrated quantities of CO2 being stored. And I think where we'd really like to get to is that The UK establishes itself as an exporter of green cement. This is an enormous economic market opportunity for The UK. This is our chance to establish ourselves globally as an exporter of green cement and I think that's where we'd really like to see this go.
David Bizley:And Tolga, final word for you.
Tolga Timirci:We have started the first feasibility study for Previk in 2014, so twelve years ago At that time it was a black box for a cement company, a carbon capture plant was completely black box and maybe 80% of the company they were not believing in that project But now after twelve years, for us, for Idelwek, we are in the details, we know that we can deliver those projects and they are viable projects, it can be viable if the industry plays with it and the policy plays with it. And I believe in ten years, it's a process. So we've learned in the last ten years, we learned that these projects are technically possible, viable if they work, and we can build those projects. In the next ten years it comes down to scalability and also make them modular to reduce the costs and then you can apply it everywhere quickly because at the moment they are expensive and takes long time to execute those projects. Each project takes between eight to ten years to execute from initial stage until commissioning.
Tolga Timirci:So I believe in the next ten years, the industry, the technology providers, with contractors, with policy makers, that we will find a way to how to execute those projects commercially and also time wise, so that we can widely worldwide in Europe and worldwide execute those projects.
David Bizley:Excellent. Thank you so much. Please give our panelists a warm round of applause. Thank you.
David Bizley:I hope you enjoyed this concluding episode. If you missed the first half of the discussion, don't worry. It's still available, along with our full back catalog on all major podcast platforms. And as always, if you like this episode, please make sure to rate, review, and subscribe. Goodbye for now.
David Bizley:I just wanted to take a moment to remind you to register for World Cement. It's free of charge and gives you access to the latest issues of World Cement, both in print and online. Every issue comes packed full of regional analysis, technical articles, project case studies, and the latest industry news. Simply head over to worldcement.com, click the Magazine tab, and register today. It's as simple as that.
David Bizley:Happy reading!