Emissions performance standard
The decarbonisation incentives provided by the carbon price floor and feed-in tariffs are further complemented by the proposed introduction of an Emissions Performance Standard (EPS) to limit the amount of carbon dioxide that new power plants can emit per kWh of electricity generated. An Emissions Performance Standard is considered to be required if the market incentives detailed above are not sufficient on their own to divert the electricity sector away from more carbon-intensive forms of generation.
The level at which the EPS is set recognizes that fossil fuel generation today still has an important role to play in ensuring security of supply, providing a stable base load and flexibility, while at the same time maintaining consistency with decarbonization goals by avoiding the construction of new coal-fired power plants without carbon capture and storage technology and maintaining affordable electricity prices.[2].
The proposed EPS only applies to electricity generation and is set at a level to balance meeting decarbonization targets with the cost of electricity. Using the argument that decarbonising electricity is key to decarbonising UK energy supplies, many commentators have criticized HM Government for not introducing a much more onerous 2030 electricity EPS. This argument is based on the incorrect assumption that gas cannot be economically decarbonized on a large scale.
Typically, methane synthesis produces about 55% CO2 and 45% CH4. Separating these gases into two streams to inject synthetic natural gas (SNG) into the gas network leaves high-purity, high-pressure CO2 as a waste byproduct available for use in CCS at almost zero marginal cost of capture and compression. If 45% biogenic: 55% fossil mixed fuel is used to produce SNG with CCS, zero net CO2 emissions are produced. This concept is called Low Carbon Gas (LCG). In the US, it is called Carbon Neutral SNG. The typical marginal cost of carbon reduction for LCG production is around 40 to 50p/tonne supercritical CO2.
Gas is a storable primary energy resource, while electricity is an instantaneous secondary energy vector. Energy flows from the gas network, but vice versa. In the UK, 250 times more energy is stored as gas than electricity. The capital cost of gas transmission is 1/15 of the cost per MWkm of electricity transmission. 5 times more energy flows through the gas grid than the electricity grid at peak winter demand.
Gas is typically 1/3 the cost per unit of energy of electricity. Carbon negative gas can be produced from mixed waste, biomass and coal on a large scale at a cost of around 45 to 50 p/therm, 1/6 DECC and OFGEM's projected 2030 cost per energy unit of decarbonised electricity of £100/MWh.
The technology to produce large quantities of low-cost synthetic natural gas (SNG) was developed jointly between HM Fuel and Power and the British Gas Corporation between 1955 and 1992, in order to supply all of the UK's gas demand after 2010 when North Sea gas was expected to run out. Key elements of British Gas SNG technology are currently being used at the world's largest and longest-running Carbon Capture and Sequestration (CCS) SNG plant at Great Plains in the Dakotas, and are being developed on an industrial scale in China under the current 2010-2015 period. Five year plan.
A simple modification to British Gas SNG technology will allow the production of carbon negative SNG at a pressure of 60 bar and high purity supercritical CO2 at a pressure of 150 bar, with a net loss of energy efficiency close to zero or at additional cost. Carbon-negative SNG can be used to generate carbon-negative electricity at a lower cost than incumbent fossil gas or electricity. Since both electricity and gas can be decarbonized with the same ease and with almost equal costs, there is no need to introduce onerous EPS in order to greatly 'squeeze' gas-fired electricity generation off the grid by 2030. proposed that technology-neutral targets on renewables and decarbonization be introduced for both low-carbon gas and electricity, with Contracts for Differences for both low-carbon gas and low-carbon electricity low carbon, the relative "strike prices" will be established by reference to the historical relationship between the price of gas and electricity. This will distribute cost-effective decarbonization equally across the gas and electricity networks, and their associated infrastructure.
The final enacted version of the Energy Act 2013 included a late amendment: Schedule 4 to Section 57 of the Act. Schedule 4 allows any gasification plant, CCS plant and two or more associated power plants, or any part thereof, to be considered as a single system for the determination of net anthropogenic CO2 emissions and low-carbon electricity generation. The Program does not say anything about what fuel can be used for gasification; how the gasification and CCS plants operate or are interconnected, and what type of gaseous energy vector flows from the gasification and CCS plants to the two or more power plants, or any part thereof. Typically, the gaseous energy carriers used for power generation are: Syngas (also known as Syngas or Towns Gas - a mixture of CO, CO2, H2 and CH4); Hydrogen (H2) or methane (also known as natural gas, synthetic natural gas or biomethane - CH4).
Any of the gas carriers above could meet the terms of Schedule 4. In reality, the only gas transmission network in the UK that connects two or more power plants is the existing UK gas network. Therefore, as long as methane injected into the grid has had its anthropogenic carbon emissions offset at the source through the use of biogenic fuels, CCS, or a combination of both, such methane will meet the terms of the Energy Act, and generators burning such gas to produce low-carbon electricity will be eligible for support through Contracts for Differences. DECC has confirmed that such a scheme is eligible for CfD support.
Since the carbon offset methane injected into the high-pressure gas transmission network will be distributed equally to all gas end-users – transport, heat, industry and power generators – the enhanced revenues earned by CfD-supported gas power plants can be used to underwrite the decarbonisation of the gas grid.