Carbon capture for gas power is a high-risk strategy for EU countries

Vast UK subsidies for a planned gas power plant with carbon capture and storage (CCS) should serve as a warning for EU countries considering similar projects, according to new research from the Institute for Energy Economics and Financial Analysis (IEEFA).   

The UK has earmarked £23 billion in subsidies for Net Zero Teesside, which aims to be the world’s first gas-fired power station with CCS. UK electricity consumers will pay for most of these subsidies.  

Given that this single project will account for less than 3% of the UK’s 2050 CCS target, the report urges EU Member States to reconsider any attempts to decarbonise gas power plants with CCS.   

The European Commission launched the EU’s Industrial Carbon Management Strategy in February 2024, prioritising CCS for industrial sectors. But the strategy does not explicitly exclude CCS for power generation, potentially leaving the door open for EU Member States to use the technology for gas power plants.  

“Substantial subsidy requirements and underperforming pilot projects mean CCS with gas power is a high-risk strategy for EU countries,” said Andrew Reid, an IEEFA energy finance analyst and author of the report. “EU Member States should approach the technology with caution, as it may divert resources away from more cost-effective and technically proven renewable energy solutions.”   

The report highlights the challenges of using CCS for gas power:  

• No track record. Europe has no successful CCS projects attached to gas-fired power facilities.  
   
• High costs. There is little economic incentive for infrastructure owners to apply CCS without subsidies or other forms of financial support.  
   
• Capture rates. Leading carbon capture projects underperform, highlighting the continued technical issues of CCS and the potential for further cost rises.  
   
• Long timelines. CCS projects take 10–15 years to develop because of permitting, infrastructure and cross-border agreements.  
   
• Infrastructure gaps. The EU has no operational carbon dioxide pipeline network.  
   
• Storage. Significant uncertainties remain about long-term carbon dioxide storage potential and the safety of offshore sites.  

Given these issues, EU countries may instead aim to decarbonise gas power stations by using hydrogen as a fuel. But this is a much more expensive option that still relies on immature technology.  

Because of high fuel prices, hydrogen power plants can be 10 times more expensive than gas CCS units on a levelised cost of electricity basis.  

“The cheapest way to decarbonise gas power stations is to reduce the need for them — through renewables, energy storage and stronger grids," said Reid. 

Read the briefing note: https://ieefa.org/articles/carbon-capture-gas-power-high-risk-strategy-eu-countries 

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About IEEFA  

The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. www.ieefa.org