CCSA Blog: What can the UK Carbon Capture, Utilisation and Storage (CCUS) industry learn from the US Inflation Reduction Act (IRA)? By John Catillaz, Decarbonisation Marketing Director, GE Vernova

GE Vernova was proud to host the Carbon Capture and Storage Association’s (CCSA) third Member’s Discussion Forum at the Library of the Institution of Mechanical Engineers in London on 28 September, bringing together industry representatives to discuss the US InflationReductionAct (IRA) and what it means for the UK’s CCUS industry.

The panel, chaired by Ruth Herbert , Chief Executive at Carbon Capture and Storage Association , examined how tax incentives have mobilised carbon capture projects in the US, and the response from the EU and the UK. I was joined on the panel by Heather Bell, Director of the U.S. Department of Energy (DOE) office at the U.S. Embassy in London and James Hughes, Commercial Director at Technip Energies .

The US IRA, signed into law in August 2022, marks the most significant action taken by the US Government on clean energy in the nation’s history, dedicating USD ~370 billion to US decarbonization efforts. It encourages action on climate change and energy security through a combination of grants, incentives and other investments. With the UK’s ambitious plans to capture and store 20-30 megatonnes of CO₂ annually by 2030, there are three key areas that are worth considering.

The first point is the US IRA has provided confidence. Early adopters need government support to de-risk CCUS projects. The supply chain needs visibility on future volumes, not only for improved planning to ensure in-time execution but also to drive cost down.  Furthermore, the UK has over 70 billion tonnes of CO₂ storage capacity but does not have the infrastructure required to transport CO₂ in a profitable way. Incentives similar to the IRA could be used to attract the investment needed and accelerate the permitting required to build CO₂ pipelines. The industry needs unwavering support, well-funded investment channels, and expedited decision-making.

Secondly, it is interesting to observe how the US IRA also looks at Direct Air Capture (DAC), a technology that will become more and more important, in particular for hard-to-abate sectors. DAC allows us to “unwind the clock” CO₂ emitted since the industrial revolution by removing CO₂ from the atmosphere.

The third point is to recognize that incentives alone won’t ensure the UK reaches its CCUS target. Although the US IRA is likely to drive increased volumes of projects in a short space of time, public acceptance of CCUS is vital. The UK needs to engage the public and increase education around the topic of CCUS, which in turn will help with permits to build the infrastructure required.

While there are many elements of the IRA that are interesting to consider for other countries, like the UK, it is important to note that there are different ways to accelerate the deployment of CCUS. GE Vernova welcomes the significant progress the UK Government has made over the last months and years. The development of the different business models provides a solid basis for the negotiation of the projects that have been selected as part of Track-1, and the commitment for GBP 20 billion for the CCUS industry is a first step to inspire the confidence the industry needs to kick-start. A roadmap with clear timescales and CO₂ volumes will help reduce risk, attract investment and establish the supply chain, infrastructure and talent needed.

GE Vernova’s recent white paper on reaching net zero carbon in Great Britain provides a deeper analysis on the need for accelerated investments, market reforms and energy policy to deploy low carbon technologies, including CCUS.