Issue 6 of the Emission Statement covers the market challenges around each of the emissions reduction pathways.

1. E|MISSION Statement ™
EMAIL enquiries@our-
future.co.uk
ISSUE
6
The
‘Emission
Statement’
sets
out
to
provide
a
view
of
the
application
and
potential
for
carbon
mitigating
technologies
as
they
strive
to
find
commercial
value
propositions
that
are
considered
supportable
by
policy
makers,
treasuries
and
tax
payers.
The
aspiration
from
publishing
such
a
document
is
not
to
provide
an
oracle
or
prescriptive
roadmap
for
clean
technology
development.
Instead
it
is
offered
as
a
simple
pragmatic
framework
for
all
stakeholders
to
be
able
to
consider
such
developments.
Far
too
frequently
the
complexity
of
situations
is
over
analysed
to
the
extent
it
creates
barriers
to
progress.
As
with
the
‘Engineering
of
Things’
(“EoT”)
though,
simplification
and
the
pursuit
of
solutions
can
be
much
more
productive
and
is
the
foundation
with
which
the
‘Emission
Statement’
is
presented.
Markets
This
Issue
will
focus
on
market
construct
and
dynamics
for
the
different
emissions
reduction
pathways.
It
is
not
designed
as
a
pure
4
P’s
(Product,
Price,
Promotion,
Position)
or
five
forces
analysis,
because
such
analyses
are
really
designed
for
competitive
marketplaces.
For
infant
subsidised
markets
we
need
a
more
creative
and
prophetic
approach
to
consider
how
they
can
work.
So
instead,
we
will
undertake
a
robust
high
level
analysis
of
the
market
characteristics
of
each
emissions
reduction
pathway.
To
achieve
this,
we
will
consider
the
specific
elements
of
scale,
capital
costs,
operational
costs,
service
support,
failure
impact
and
revenue
diversity;
which
have
be
loosely
attributed
below
to
the
4P’s.
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and
™
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Management
Services
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GB
Management
Services
Ltd
offers
consultancy
services
related
emissions
reduction,
process
and
operations
improvement,
and
the
development
clean/renewable
technology
projects.
Contact
Details:
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Budge
Mobile:
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7780
920504 Email:
gbudge@our-­‐future.co.uk
Scale of
technical
solutions
alone
can
drive
markets.
Unit
capacity
costs
reduce
with
increased
size,
but
generally
engineering
begins
at
low
unit
scale
to
mitigate
financial
risk.
There
is
a
practical
balance
to
selecting
scale.
Product
Price
Promotion
Position
Capital
and
operating
costs
underpin
the
long
term
price
of
a
solution
and
need
to
be
considered
in
robust
detail.
As
mentioned
in
previous
issues,
they
become
the
defining
element
of
any
long-­‐term
solution.
Service
and
support
needs
must
be
assessed
when
considering
emissions
reduction
pathways.
This
criterion
is
a
life
cycle
functional
attribute
for
maintaining
the
market.
Failure
impact
and
revenue
diversity
consider
the
solutions
position
in
the
value/supply
chain
and
how
that
may
influence
the
market.
Over
the
following
pages
we
will
profile
each
emissions
pathway
around
these
four
criteria,
commenting
on
primary
attributes
and
illustrating
through
spider
graphs,
the
challenge
faced
by
each
pathway
market
today.
On
each
graph,
the
further
away
from
the
centre
the
point
of
intersection,
the
greater
the
affect; the
cumulative
impact
being
represented
by
the
enclosed
shaded
area.
This
analysis
is
not
intended
to
be
detailed,
but
is
provided
as
a
way
to
represent
the
scale
of
the
challenge
associated
to
each
pathway
and
to
begin
identification
of
ways
in
which
infrastructure
requirements,
emissions
reduction
pathways
and
their
markets
could
be
designed
from
initial
concept
to
be
complimentary.
Risk
Management
Markets

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Mobile:
+44
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7780
920504 Email:
gbudge@our-­‐future.co.uk
E|MISSION Statement ™
Scale of
Source
Substitution
ranges
from
kW
household
installations
through
to
national
generation
infrastructure.
As
a
consequence
of
the
range
of
installation
scale,
the
absolute
capital
and
operating
costs
are
equally
all
encompassing;
but
with
reducing
unit
costs
of
installed
energy
capacity
demonstrating
economies
of
scale
with
every
order
of
magnitude
increase
in
size.
While
the
range
of
solutions
could
push
the
service
support
needs;
requiring
competence
and
systems
to
be
available
for
the
complete
range
of
sized
assets;
there
is
overlap
in
the
competence
and
resource
requirements
between
the
installation
sizes,
allowing
skills
transferability
and
systems
synergies
to
constrain
the
extent
of
the
challenge.
With
regard
to
impact
of
unit
failure,
being
an
established
market
with
supply
system
redundancy,
this
should
be
negligible.
For
the
same
reason,
revenue
diversity
is
limited.
Demand
Reduction
Scale of
Demand
Reduction
technologies
is
firmly
in
the
Watt
(“W”)
unit
scale.
Real
change
comes
from
cumulative
sales.
Absolute
capital
costs
and
operating
costs
per
installation
when
considered
against
the
follow-­‐on
technology
categories
is
very
low
(i.e.
£100’s).
From
a
service
support
perspective,
being
mass
market
with
millions
of
end
users,
they
require
extensive
supply
chains
to
deliver
and
provide
the
follow-­‐on
support
to
the
consumer.
From
an
environment
and
market
level,
unit
failure
has
little
demonstrable
impact
on
system
performance;
and
from
a
supplier
perspective
the
products
are
single
CADS
products
designed
for
individual/household
consumers,
with
little
to
no
revenue
diversity
beyond
the
sale
and
support
framework.
CADS
technologies
range
from
light
bulbs
to
cavity
wall
insulation.
They
have
been
driven
by
legislation
for
the
publication
of
energy
efficiency
ratings
and
the
promise
of
being
self-­‐financing
(the
future
reduction
in
energy
consumption
repaying
the
capital
costs
within
3
to
5
years).
These
are
mass
markets
and
to
date
have
evolved
predominantly
with
the
direct
(i.e.
incentives)
and
indirect
(i.e.
policy)
State
sponsorship.
But
as
a
market
in
the
context
of
emissions
reductions
they
rank
as
follows.
Source
Substitution
is
a
holistic
consumer
segmented
market
delivering
through-­‐out
the
energy
supply
chain,
but
what
these
technologies
don’t
need
is
additional
distribution
or
transmission
infrastructure.
They
are
supplying
established
marketplaces
and
it
is
this
prevailing
and
accepted
market
structure
that
exposes
the
true
costs
of
introducing
low
emissions
energy
(i.e.
ROC’s,
CfD’s).
Source
Substitution
Demand
Reduction
is
the
simplest
of
pathways,
only
having
a
slightly
elevated
challenge
profile
for
service
support
because
of
the
maintenance,
distribution,
retail,
wholesale
and
manufacture
system
that
sits
behind
it;
albeit
that
for
the
most
part,
these
services
already
exist
and
are
simply
being
redefined.
Source
Substitution
is
the
modular
restructuring
of
an
existing
system,
which
only
provides
a
high
challenge
upon
initial
scaling
and
associated
funding.
In
the
long
term,
both
scale
and
cost
challenges
will
reduce
for
Source
Substitution
pathways,
as
they
have
over
the
past
two
decades
for
solar
and
wind.
SCALE
SERVICE
COSTS
IMPACT
SCALE
SERVICE
COSTS
IMPACT

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Contact
Details:
Grant
Budge
Mobile:
+44
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7780
920504 Email:
gbudge@our-­‐future.co.uk
E|MISSION Statement ™
Demand
Substitution
Scale of
Demand
Substitution
ranges
from
W
to
kW
household
and
business
installations.
They
do
not
necessarily
require
significant
new
infrastructure
and
infrastructure
required
can
be
decentralised
if
economical
to
do
so.
The
absolute
capital
and
operating
costs
are
relatively
low
at
an
installation
level,
but
are
high
from
a
unit
of
energy
output
perspective
compared
to
their
historical
equivalent.
The
range
of
CADS
products
in
Demand
Substitution
pushes
the
service
support
needs;
requiring
competence
to
be
available
across
a
diverse
portfolio
with
little
overlap
in
skills
from
one
technology
to
another.
Support
infrastructure
(PAPS)
management
is
less
demanding
and
for
the
most
part
reinforcing
of
existing
services.
With
regard
to
impact
of
unit
failure,
Demand
Substitution
Demand
Substitution
are
predominantly
CADS
driven
markets
(i.e.
heat
electrification,
EV,
fuel
cell
and
hydrogen
grid)
that
require
some
but
not
extensive
additional
PAPS,
distribution
and
transmissions
capability.
Source
Mitigation
The
scale
of
these
assets
covers
the
mid-­‐range
of
KW
to
MW
business
and
process
energy
driven
solutions.
Capital
and
operating
costs
replicate
scale
and
represent
a
mid-­‐range
challenge,
but
economies
of
scale
will
yield
a
lower
unit
cost.
Service
support needs
are
generally
considered
bespoke
and
decentralised,
but
through
strategic
State
level
planning
some
could
be
common
(i.e.
hydrogen
grid).
Impact
of
failure
is
low.
From
an
industrial
perspective
raw
material
and
product
buffer
stocks
exist
within
the
supply
chain
to
absorb
any
issues;
and
from
a
power
perspective
redundant
capacity
absorb
any
individual
failure.
There
is
limited
revenue
diversity
with
each
system
delivering
a
specific
product.
Source
Mitigation
is
a
business
level
intervention
that
requires
a
shift
in
business
behaviour
and
which
significantly
impacts
on
the
energy
supply
chain.
being
predominantly
consumer
level,
small
and
modular
in
design,
failure
of
a
product has
little
impact
and
is
manageable.
For
the
PAPS
supply
infrastructure,
electricity
and
gas
systems
have
embedded
redundancy
to
compensate
and
manage
individual
system
failures.
Demand
Substitution
also
has
limited
revenue
diversity.
Demand
Substitution
can
be
seen
to
be
relatively
modest
on
the
scale,
cost
and
impact
axes,
but
due
predominantly
to
the
potential
for
hydrogen
as
a
heat
and
mobility
fuel
substitute,
begins
to
impose
greater
service
and
impact
of
failure
risks
on
the
market.
Source
Mitigation
represents
a
cost
and
scale
challenge.
But
while
there
is
a
lower
identified
challenge
related
to
service
and
impact
of
failure,
these
Source
Mitigations
require
new
supply
chains
which
must
be
created
and
managed
(i.e.
biomass,
biofuel
etc).
SCALE
SERVICE
COSTS
IMPACT
SCALE
SERVICE
COSTS
IMPACT

4. ©
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Services
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Contact
Details:
Grant
Budge
Mobile:
+44
(0)
7780
920504 Email:
gbudge@our-­‐future.co.uk
E|MISSION Statement ™
Demand
Reduction
and
Source
Substitution
are
predominantly
either:
decentralised markets,
as
with
energy
efficient
household
products
and
residential/community
energy
production
systems
(i.e.
solar)
or
feed
into
established
mature
markets.
They
are
to
a
large
extent
market
‘reworking’
and
as
such,
from
a
market
performance
perspective
across
the
redefined
metrics
(i.e.
product,
price,
promotion,
position),
their
market
and
associated
environmental
impact
is
incremental,
contained
and
relatively
simple.
The
same
cannot
be
said
for
the
latter
three
emissions
reduction
stages.
We
have
stated
before
that
there
can
be
synergies
from
an
integrated
solution
for
Demand
Substitution,
Source
Mitigation
and
Source
Containment,
and
to
demonstrate
this
we
illustrate
three
market
“infrastructure”
models
that
could
be
progressed.
They
are
‘Generic’,
‘Bespoke’
and
‘Tailored’;
and
they
are
defined
below
and
illustrated
on
the
next
page.
A
Generic
Model.
This
is
a
base
case
Source
Containment
design
where
all
independent
power
utilities
and
process
industries
make
their
own
technology/project
decisions
(i.e.
pre
or
post
combustion)
and
investment
cases.
Under
this
scenario,
the
guaranteed
cost
of
carbon
deliverable
needs
to
be
high
to
support
investment;
and
certainty
over
fuel
and
power
forecasting
needs
to
be
strong
to
allow
investment
cases
to
be
made.
In
general,
this
market
will
progress
slowly,
will
require
complex
administration
for
the
supply
of
State
funding,
will
require
early
stage
Policy
to
support
private
investment
decisions
and
can
lead
to
the
embedding
of
redundant
plant
costs
into
the
market
pricing.
A
Bespoke
Model.
This
is
where
independent
power
utilities
and
process
industries
make
their
own
decisions
based
on
standalone
pre-­‐combustion
capture
assets
combined
with
gas
power
islands
(CCGT),
to
develop
hydrogen
revenue
and
potentially
low
volume
carbon
dioxide
utilisation.
First
mover
advantage
(or
State
geographic
bias
as
proposed
in
Issue
5)
will
enhance
load
factors
for
a
smaller
number
of
assets,
aiding
project
finance,
and
modestly
reducing
the
costs
of
CO2 transport
and
storage
(i.e.
fewer
site
connections,
reduced
control
complexity
and
reduced
national
infrastructure).
This
market
will
progress
slightly
quicker;
will
require
less
complex
administration
for
the
supply
of
State
funding;
if
openly
endorsed
as
‘low
emissions
development
regions’
will
require
less
Policy
to
support
private
investment
decisions;
will
lead
to
the
embedding
of
limited
redundant
plant
costs
into
the
market
pricing;
and
will
retain
some
freedom
for
technology
vendor
selection.
A
Tailored
Model. This
is
where
independent
power
utilities
and
process
industries
build
own
and
operate
their
own
assets
around
a
State
defined
geographic
location;
and
contract
with
a
centralised hydrogen
generation
plant
or
local
biomass/biofuel
supply
chain.
Here
the
businesses
can
still
be
in
control
of
commodity
procurement
(retaining
a
competitive
market),
providing
raw
fuels
to
the
central
facility
and
taking
hydrogen
under
a
tolling
agreement.
The
Technology
Design
of
the
central
unit
or
bio-­‐supply
network
becomes
key
here.
The
central
operation
doesn’t
have
to
be
under
single
ownership
or
a
single
technology,
it
can
simply
be
a
State
location
determined
for
infrastructure
development.
This
would
retain
technology
and
supplier
competition,
but
at
the
same
time
would
simplify
associated
infrastructure
needs.
Optimising the
Source
Containment
Proposition
Source
Containment
Source
Containment
is
the
simplest
market
to
characterise
because
it
deals
with
an
issue
that
all
other
pathways
have
failed
to
achieve.
For
emissions
reductions,
these
interventions
are
at
+MW
scale,
initially
require
separation
of
the
problem
and
then
treatment
of
the
problem
whether
by
storage
of
re-­‐
purposing.
Costs
are
high,
system
support
needs
are
high
to
maintain
operational
capacity,
risk
of
system
failure
is
high
and
potential
market
diversity
is
high.
Pictorially,
the
profile
of
all
attributes
is
identical.
It
is
clear
from
the
spider
graph
that
Source
Containment
represents
the
greatest
challenge
for
delivery.
But
it
is
also
true
that
the
development
of
this
market
is
inevitable
if
emissions
targets
up
to
2050
are
to
be
attained.
SCALE
SERVICE
COSTS
IMPACT

5. ©
GB
Management
Services
Ltd
Contact
Details:
Grant
Budge
Mobile:
+44
(0)
7780
920504 Email:
gbudge@our-­‐future.co.uk
E|MISSION Statement ™
CCUS
Strategic
Gas
Power
Station
CCUS
Strategic
Gas
Power
Station
1
GWt Capacity
60%
Load
Factor
4GWt
CO2 Store
CCUS
Gas
Power
Station
CCUS
Gas
Power
Station
5GWt
CO2
Store
CCUS
Gas
Power
Station
CCUS
Industrial
Process
CCUS
Industrial
Process
1
GWt Capacity
70%
Load
Factor
1
GWt Capacity
40%
Load
Factor
1
GWt Capacity
40%
Load
Factor
1GWt
Capacity
70%
Load
Factor
1
GWt Capacity
40%
Load
Factor
1
GWt Capacity
60%
Load
Factor
1
GWt Capacity
70%
Load
Factor
2.6GWt
CO2Store2.6
GWt
Carbon
Capture
Gas
Power
Station
1
GW
Capacity
60%
Load
Factor
CCUS
Industrial
Process
1
GWt Capacity
70%
Load
Factor
CCUS
Industrial
Process
1
GW
Capacity
60%
Load
Factor
1
GWt Capacity
70%
Load
Factor
Industrial
Process
1
GWt Capacity
70%
Load
Factor
Industrial
Process
Gas
Power
Station
Cluster
CO2
Utilisation
H2
Grid
H2
H2
H2
H2
H2
H2
H2
H2
H2
CO2
Utilisation
CO2
Utilisation
CO2
Utilisation
CO2
Utilisation
H2
CO2
Utilisation
H2
H2
CO2
Utilisation
CO2
Utilisation
Generic
System
Bespoke
System
Tailored
System

6. ©
GB
Management
Services
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Contact
Details:
Grant
Budge
Mobile:
+44
(0)
7780
920504 Email:
gbudge@our-­‐future.co.uk
E|MISSION Statement ™
The
below
assessment
utilises the
infrastructure
models
illustrated
on
the
previous
page
and
considers
how
they
could
impact
on
the
delivery
of
a
market
for
Source
Containment.
For
simplicity
and
quantification
of
the
benefits
the
following
terms
of
reference
have
been
used:
• Cost
of
1GWt
of
capacity
taken
as
£1
Billion
for
each
discrete
process/unit
(i.e.
Power,
Industrial,
Carbon
Capture,
Transport
and
Storage)
Capital
costs
reduce
25%
per
100%
increase
in
unit
level
installation
capacity
• Cost
of
operation
of
1GWt
capacity
taken
at
£0.1
Billion
per
annum
at
40%
utilisation/load
factor
• Unit
operating
costs
reduce
5%
per
10%
increase
in
utilisation rate
• Cost
of
hydrogen
and
CO2 pipelines
to
and
from
site
assumed
to
be
negligible
• Common
CCS
capacity
taken
at
potential
peak
load
rate
of
installed
source
units
• 1GWt
of
capacity
treated
as
an
operational
‘node’
• Failure
impact
has
been
treated
as
uniform
for
all
models,
because
this
can
be
controlled
under
all
strategies
through
redundancy
and
modular
design.
• Assumption
that
pre-­‐combustion
technology
is
the
core
technology
for
Bespoke
and
Tailored
Systems
• Revenue
Diversity
has
been
assessed
based
on
a
%
increase
in
the
value
proposition,
pro-­‐rata
with
a
reduction
in
number
of
market
entry
points;
due
to
the
reduced
price
of
services
supporting
greater
market
diversity.
• Scores
illustrated
as
relative
to
‘Generic’
template
(base
case),
which
is
taken
as
indexed
at
100%
Impact
of
an
Optimised Source
Containment
Proposition
GENERIC
SYSTEM
BESPOKE
SYSTEM
TAILORED
SYSTEM
Scale
/
Size 100% 80% 59%
Capital
Costs 100% 80% 68%
Operating
Costs 100% 80% 61%
Service
Support 100% 80% 61%
Failure
Impact 100% 100% 100%
Revenue
Diversity 100% 80% 35%
What
the
analysis
shows,
is
that
the
challenge
against
each
of
the
criterion
can
be
reduced
significantly
as
we
pursue
a
design
concept
based
on
an
integrated
solution,
rather
than
a
first
past
the
post
approach.
This
reduction
is
illustrated
below
in
spider
graph
form,
for
the
Bespoke
and
Tailored
solutions
(Generic
having
been
illustrated
already
under
Source
containment
section
earlier).
SCALE
SERVICE
COSTS
IMPACT
Tailored
System
SCALE
SERVICE
COSTS
IMPACT
Bespoke
System