Press release

New vision to create competitive carbon capture market follows unprecedented £20 billion investment

Government sets out plans for a new competitive UK carbon capture, usage and storage market by 2035 - delivering new jobs and supporting net zero.

From:
Department for Energy Security and Net Zero, The Rt Hon Claire Coutinho MP, and Lord Callanan
Published
20 December 2023
  • CCUS Vision sets out plans for new competitive market in Carbon Capture, Usage and Storage (CCUS) by 2035 – to unlock investment and drive economic growth, adding £5 billion to the economy by 2050   
  • long-term decisions to achieve this include outlining a timeline to establish a new CCUS market and using competition to drive lower costs for industry   
  • potential to store the carbon equivalent of taking 6 million cars off the road – and support 50,000 jobs by 2030   

Green boost for the UK economy as Energy Secretary sets out plan to make the UK a global market for Carbon Capture, Usage and Storage.

The plan – named the CCUS Vision – sets out how the UK will transition from early projects backed by government support to becoming a competitive market in this area by 2035, meaning UK companies will compete to build carbon capture facilities and sell their services to the world.

This is expected to boost the economy by £5 billion a year by 2050 – making the UK a pioneer in this technology while meeting its net zero commitments in a reasonable way that eases the financial burden on taxpayers.

Carbon capture works by capturing carbon dioxide (CO2) before it reaches the atmosphere and storing it safely underground – filling the spaces left by oil and gas extraction. The UK holds a strategic advantage compared to other countries thanks to its unique geology, skills and infrastructure as an island nation. It also offers enough space under the North Sea for up to 78 billion tonnes of CO2.

This is the latest step to develop CCUS technologies - which aim to store 20-30 million tonnes of CO2 per year by 2030 and support 50,000 jobs by 2030 - backed by up to £20 billion of investment.

It comes as the Department launches the process for more companies to connect to and expand the HyNet Cluster in the North-West and Wales – delivering further jobs and investment in the region.

Energy Security Secretary Claire Coutinho said:  

Thanks to the UK’s geology, skills and infrastructure, we are in a unique position to lead the way on carbon capture technologies.  

That is why we’re making one of the biggest funding commitments in Europe on carbon capture that will cut emissions from our atmosphere, while unlocking investment, creating tens of thousands of jobs and growing the UK economy.  

Energy Efficiency and Green Finance Minister Lord Callanan said:    

We need pragmatic answers to the carbon challenge, and with our infrastructure, skills and geology, the UK is in pole position to take advantage of game-changing carbon capture and storage technology.      

Today we’re publishing a blueprint to deliver a world-leading UK carbon capture industry, so that we have a competitive market in this exciting new technology by the middle of the next decade.    

Backed by an unprecedented £20 billion investment, this is also a pivotal milestone in our journey to net zero that will drive economic growth, unlock investment and create tens of thousands of jobs in our industrial heartlands.     

Ruth Herbert, CEO, Carbon Capture and Storage Association said:

We welcome the CCUS Vision published today, setting out a long-term strategy for the UK’s CCUS industry to be able to store over 50Mt a year by 2035 to support the decarbonisation of domestic industries and take advantage of export opportunities. 

It is great to see CO2 transport by ship, road and rail will be enabled from 2025 onwards, which will also support longer-term cross-border CO2 transport solutions.

Hedvig Ljungerud, NSTA Director of Strategy, said:

The energy transition and the path to net zero cannot succeed without carbon storage. As the regulator, we welcome today’s announcement and look forward to supporting this growing industry as it benefits the UK’s economy and the fight against climate change.

The CCUS Vision – the plan to create a competitive CCUS market by 2035 – includes measures to achieve this goal, including:  

  • moving to a competitive allocation process for carbon capture projects from 2027 to speed up the building of the UK’s CCUS sector   
  • creating the conditions for projects that cannot transport CO2 by pipeline to enter the market from 2025 onwards, using other forms of transport such as ship, road and rail    
  • establishing a working group led by industry to identify and adopt solutions to reduce the cost of capturing CO2   

Earlier this year, a further 2 carbon capture clusters were announced, bringing the total to four UK carbon capture clusters to support the government’s ambition to decarbonise industry and power – HyNet in North West England, East Coast Cluster in Teesside and the Humber, Acorn in Scotland and Viking in the Humber.

These will build truly integrated energy hubs that make the best use of the UK’s established infrastructure, and play a key role in the country’s measured, pragmatic approach to reaching net zero. 

The UK government has also today announced significant progress in delivering on these carbon capture clusters in the UK’s industrial heartlands. This includes:     

  • agreeing initial commercial terms with the Northern Endurance Partnership (NEP) around Teesside and the Humber, paving the way for expansion of that cluster. The government will now consider the best time to launch an expansion process from 2024 based on an assessment of store readiness in the New Year
  • and, having announced the locations of the third and fourth CCUS clusters in the Summer, government is today announcing a faster process to get those clusters set up and suitable capture projects identified

Luciano Vasques, Managing Director, Eni UK said:

We see strong demand from businesses across the UK for CCS so today’s announcement is a welcome step forward. We look forward to providing transportation and storage at HyNet for a wider range of companies in North West England and North Wales, helping them to reduce CO2 emissions, protect local jobs and boosting industrial competitiveness for the region.

Chris Daykin, General Manager, NEP said:

Today’s announcements mark another positive milestone in the development of the East Coast Cluster and the UK CCUS industry.

Agreeing the key commercial principles through the Heads of Terms is a crucial step in the decarbonisation of the North East region and delivering jobs. We look forward to the expansion process launching from 2024 and agree that the selection of projects by HMG should be matched to the available transportation and storage capacity, so that projects and stores are developed at the same pace and equivalent level of maturity.

We thank the UK government for their continued support as we work to complete the final agreements in the coming months, enabling NEP to take Final Investment Decision in September 2024.

Notes to editors 

Also published today are updates on the business models for Greenhouse Gas Removal (GGR) and Power BECCS (Bioenergy with Carbon Capture Storage). GGR technologies will be important for reaching net zero – balancing residual emissions from hard-to-decarbonise sectors while providing new economic opportunities

Further stakeholder commentary

Gustavo Baquero, Harbour Energy’s Executive Vice President of Strategy, Business Development and Energy Transition, said:

Today’s announcement marks another significant step forward for CCS projects like Viking CCS and Acorn and the development of the UK’s carbon capture and storage industry, which is critical to delivering the energy transition. It is important that momentum is maintained and the selection of the anchor emitters to individual clusters are assigned as quickly as possible, which will enable businesses like Harbour to make vital investment decisions to help enable the UK to meet its legally binding emissions reduction targets.

Louise Kingham, bp’s UK head of country and senior vice president of Europe, said: 

We welcome the announcement of the UK government’s CCUS Vision, which sets out a bold plan for making the UK a global leader in carbon capture, utilisation and storage, as well as the positive steps forwards announced for both Track 1 and Track 2 CCUS clusters. CCUS has an important role to play in helping the UK deliver on its net zero targets and bp is committed to continuing to make progress on its projects, and helping to ensure this vital industry can deliver on its significant potential.

Mike Tholen, OEUK sustainability and policy director, said:

We end 2023 with a vision of where we want to go, a plan for how to get there, and projects already in motion which could create 50,000 UK jobs in the coming years. 

The UK is on the brink of a transformation that will allow us to provide carbon capture and storage facilities to industry here and to help our European neighbours. This is good news for tackling climate change and for boosting the UK economy.

David Parkin, Project Director, Progressive Energy said:

We very much welcome Government’s announcement on HyNet Track 1 expansion.  This will provide further opportunity for industrial decarbonisation in the North West region, while optimising value for money for the taxpayer by maximising use of the HyNet assets.

More broadly, the CCUS Vision help sets a roadmap for longer term expansion of carbon storage, enabling a much broader range of industries across the region decarbonise and open up storage opportunities across the Irish Sea.

This will enable vital industries, such as the cement and lime sector in the Peak District, to decarbonise through CCS in the medium term.

Published 20 December 2023