Offshore Energies UK (OEUK) says today’s confirmation of £22bn of funding over 25 years can help kickstart the UK’s Carbon Capture, Usage and Storage (CCUS) sector starting with the deployment of the Hynet cluster in Merseyside and the East Coast Cluster in Teeside and Humberside, known as Track-1 clusters.
As OEUK’s new report shows, the licences awarded establish the economic framework to transport carbon dioxide captured from emitters in industrial clusters and safely sequestering it in geological stores under the sea and was a prerequisite for the clusters to reach final investment decision followed by the construction operations.
Hynet and the East Coast Cluster will build the foundational infrastructure necessary to scale up CCUS, a technology that has been deemed by the Climate Change Committee (CCC) to be a necessity, not an option to reach net zero.
The UK already has the components necessary to make CCUS a success including the largest carbon dioxide offshore storage potential in Europe, highly transferable capabilities from its oil and gas sector and the opportunity to reuse existing energy infrastructure.
The successful implementation of CCUS will be crucial for the UK to cut emissions while creating and protecting over 100,000 jobs up and down the country. The sector could be worth £100bn to the economy by 2050.
Building on today’s announcement, today OEUK publishes its CCUS Insight report, which outlines six key recommendations to accelerate development of the industry:
- Industry welcomes the confirmation of over £20bn of government support to de-risk early projects and kickstart the sector. Going forward, the government must implement clearer, simpler funding mechanisms: The government must create clearer, more predictable funding processes beyond current market pricing, which is currently insufficient for CCUS. The development of business models to make these projects investable is a crucial first step. Going forward, creating a route to market for transportation and storage systems and emitters outside of the “Track process” will be critical to provide long-term confidence to investors.
- Leverage UK’s unique position for CCUS leadership: The UK’s significant CO2 storage potential, existing infrastructure, and local supply chain give it a competitive edge in CCUS. To capitalise on this, policies must be developed to retain critical energy supply chains and prevent the need to import technologies.
- CCUS as the key to protecting heavy industry and jobs: CCUS is crucial to preserving energy-intensive heavy industries and for creating and protecting more than 150,000 jobs across the UK’s industrial heartlands. Without CCUS, the UK cannot meet its net zero targets. The technology is also expected to add over £100bn to the economy by 2050.
- Strengthen carbon pricing and markets for CCUS investment: A robust carbon market, including mutual recognition of UK and EU emissions trading schemes, will be critical to underpin CCUS investments. Common carbon border adjustment mechanisms and a clear trajectory for carbon pricing are both essential to ensure long-term investment in CCUS.
- Facilitate non-pipeline and cross-border CO2 transportation: Regulatory barriers to non-pipeline CO2 transportation, especially by ship, must be removed to capitalise our storage capacity, develop an international market for CO2 storage and decarbonise non-clustered emitters.
- Accelerate power CCUS projects to meet 2030 goals: Deploying carbon capture technologies in gas-fired power plants is vital to achieving the government’s 2030 clean power targets by providing low-carbon power to balance renewables. Policies must accelerate funding support for these projects to ensure they move forward.
Commenting, Michael Tholen, Sustainability and Policy Director at OEUK says:
“This is an important day for the UK’s nascent carbon capture sector that cements a commitment to decarbonisation and net zero and secures long-term activity for the industry and its supply chain. Industrial decarbonisation, low carbon hydrogen production and the provision of low carbon dispatchable power needed to meet the new government’s 2030 target, will all rely on the successful deployment of these clusters. With CCUS, the UK can maintain reliable supplies of energy, cut emissions, generate jobs and create huge export opportunities for communities up and down the country.
“CCUS is a core pillar of the North Sea Transition Deal, a transformative platform that capitalises the power of the UK offshore energy industry to help the UK meet its Net Zero targets. The Deal has provided a solid platform for industry to engage with governments and regulators to help achieve the decision announced today, which is a positive step in the right direction.
“The report we launch today shows that starting work on the first two clusters is only the beginning. To fully harness the potential of CCUS and achieve the UK’s 2030 deployment targets, progress must speed up. Leaders of many projects remain uncertain about their eligibility for government support or when they can expect it. A clear plan for deployment beyond the initial clusters is critical to establish a steady flow of work for the supply chain. While 27 CO2 storage licenses have been awarded so far, more than 100 will be needed by 2050, requiring the rapid and sustained growth of the industry.
“The UK offshore sector is ready to meet the challenge, but relying on foreign expertise and technology makes no economic sense. Instead, enhancing our existing oil and gas supply chains which have highly transferable capabilities to CCUS should be a top priority.”
Download a free copy of the report here.
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