1 November 2021 update: Carbon Capture, Usage and Storage (CCUS) Track-2

Updated 1 November 2021

The UK is the first major economy to enshrine in law a requirement to reach net zero emissions by 2050 and has accepted advice from the Climate Change Committee that developing CCUS is a necessity in order to deliver this. New targets in the Net Zero Strategy set even higher ambition for CCUS deployment than in the 10 Point Plan.

The announcement of Track-1 clusters represents an important step in building our CCUS industry and decarbonising our economy. As these first clusters are not the extent of our ambition, and ultimately, we expect more industrial clusters will be needed to meet Net Zero, successfully demonstrating CCUS at scale is an essential first step, building industry and investor confidence and catalysing the project pipeline. HMG is committed to further development of CCUS, and we expect forthcoming Track-2 processes to bring forward capture and store of at least 10Mtpa by 2030 to contribute to our Carbon Budget 6 target achievement.

Transitioning to an environmentally sustainable and resilient Net Zero economy is a key pillar of the government’s economic strategy to achieve strong, sustainable and balanced growth. Critical to this is achieving decarbonisation in our electricity system, on which HMG recently announced an increased ambition to fully decarbonise by 2035. CCUS will play a key role in achieving this, as well as the levelling up of our industrial regions, supporting the development of, and UK leadership in, a globally significant technology. It is vital that our economy and, in particular, our CCUS supply chain companies have the opportunity to realise the economic benefits of this large-scale infrastructure programme.

Government recognises the importance of non-pipeline transportation (NPT) and shipping for decarbonisation of the broader economy and allowing deep decarbonisation. In the Transport and Storage Business Model update published in May 2021, we set out our intent to develop the licence conditions and business model arrangements so that non-piped sources of CO₂ can be accommodated by the Transport and Storage Regulatory Investment (TRI) model. We are currently engaging with industry and the devolved administrations to understand how best to incorporate NPT and shipping within a UK CO2 network.

We are continuing to support industrial clusters to develop their Front End and Engineering Design (FEED) studies, for the deployment of CCUS and other decarbonisation infrastructure, through providing £172 million of funding via the UKRI-led Industrial Decarbonisation Challenge (IDC). In addition, we expect that support for Track-2 clusters may include access to capital support through the CCS Infrastructure Fund and Net Zero Hydrogen Fund, and revenue support mechanisms through technology-specific business models.

We will continue to work with industry to map and support a logical sequence for future CCUS deployment. We envisage that the Track-2 process will represent an evolution from those utilised to select Track-1 clusters, incorporating lessons learned from previous experience and developing competitive allocation processes to support our ultimate aim of a sustainable market framework for CCUS.

HMG is committed to working with industry and stakeholders as we pursue our shared aims of decarbonising the economy and building a strong CCUS industry.