CCSA Blog: Recent CCUS announcements and delivering the next wave of clusters in the UK, by Ruth Herbert, CCSA CEO

At the CCSA we’ve been taking some time to reflect on the momentous announcements over the past few weeks. I’m delighted to finally see the decades of hard work and collaboration between industry and government come to fruition. This is a pivotal moment which fires the starting gun on the UK CCUS industry. 

The Government’s Spring Budget announced £20billion of funding had been allocated for CCUS projects, an unprecedented recognition of the importance of CCUS in delivering net zero and boosting the UK’s economic growth. The funding means the initial Track 1 CCUS clusters can truly start moving forward with the first eight projects – a critical springboard for the UK industry to further develop and a kickstart for the decarbonisation of North-West and East Coast of England. The funding will provide operational payments to cover the use of carbon capture on power, industry and hydrogen production and this will unlock private sector capital for its construction.  These eight projects will collectively capture and store around seven million tonnes of CO₂ a year and create thousands of jobs.  

These projects are just a small proportion of what is required to reach Net Zero. But they represent just one tenth of the current project pipeline, demonstrating the scale of the opportunities in front of us.  Last year the CCSA identified over 70 million tonnes of carbon emissions from around the UK which could be abated with Carbon Capture and Storage by 2035. Delivery of all of these projects would keep the UK on track with its Net Zero Strategy trajectory and provide significant economic benefits to disadvantaged regions.  

Critically, this is not just a Net Zero opportunity. The CCUS pipeline can provide 70,000 new jobs, as well as protecting 77,000 existing jobs, across the UK’s industrial heartlands, all while positioning our country to export low carbon products and CCUS skills and services around the globe. There is more to do and the necessary next steps are set out in Chris Skidmore MP’s Net Zero Review recommendations.  

We urgently need to see a clear CCUS deployment plan for the whole of the UK. To have a fighting chance of reaching Net Zero and leading the low carbon industries of the future, it is vital all of the industrial clusters across the UK get up and running with carbon capture and storage as soon as possible. 

Delivery of this plan offers an exciting, near-term opportunity to put our industrial regions at the forefront of the next industrial revolution – leading the way in the transition to a global low carbon economy in the same way as British industry led the world in the first industrial revolution. So great is this opportunity – the kind that only comes every few hundred years – other countries are racing to take up the mantel. Both the US Inflation Reduction Act and the EU’s Green Industrial Plan and Net Zero Industry Act set out powerful CCUS measures.  We risk falling behind despite the UK’s 18-year head start (the CCSA was established in 2006).   

We need a longer-term commitment to remain an attractive proposition to investors and to develop our own supply chain. Ahead of the Spring Budget, the CCSA made a Budget Submission requesting funding to cover the period to 2035. We believe this would provide sufficient forward visibility to develop a UK-based supply chain capable of both servicing the UK project pipeline and exporting technology and services to other emerging CCUS markets. We will keep up the pressure on the Government to deliver this. 

The recently announced Track 1 expansion will provide an important opportunity for the remaining shortlisted projects, as well as new projects. The expansion will launch later this year and government is expected to engage with the sector on delivery shortly. We urgently need to see more detail before the summer regarding the timeline for the expansion, the eligibility criteria, and what the industry can expect going forward. 

The Track 2 process for the next two CCUS clusters was also launched at the end of March. It’s important this process moves forward quickly if the UK is to meet its 2030 target of storing up to 30 million tonnes of CO₂ a year. However, we are still awaiting further details on the timeline and criteria for selecting capture projects under Track 2.  

The Chancellor has said he will be setting out the UK’s response to the US Inflation Reduction Act and the EU Net Zero Industry Act this Autumn. While I am relieved to hear the UK will not sit back and shrug its shoulders as good people and projects leave the UK, the question on everyone’s lips is “can he afford to wait that long?”. Boards are already impatient to see the case for continued and new investment here in the UK. It is time for the government to set out its stall – persuasively – and action a swift response: every week counts in the race to build this industry. 

There is a powerful case to make. The UK is blessed with significant CO₂ storage capacity in the North Sea and the East Irish Sea, and a strong offshore skills base, both of which make us uniquely placed to become one of the global leaders on CCUS deployment.  Critically for long term planning, there is widespread political consensus around CCUS’ vital role in reducing industrial emissions and enabling a Net Zero power system, as evidenced by the recent second reading of the Energy Bill in the House of Commons. The Bill provides an investable regulatory framework for CO₂ transport and storage and world-leading carbon capture business models that minimise subsidy and provide long-term contractual certainty to investors.   

All that is needed to create a haven for CCUS development is an injection of confidence to take the big decisions, to accept some inevitable risks and to set aside any philosophical discomfort with the “build it and they will come” approach which is being pursued elsewhere.  The UK has developed a strong framework for a new industry – it just needs to turn on the funding tap and watch the inward investment flood in.   

The counterfactual of continuing to constrain the roll-out of CCUS through extended allocation processes will slam the brakes on the UK economy as private investment across a range of key ‘economic lifeblood’ sectors, such as manufacturing, energy and transport is either put on hold or finds another home.  Where civil servants and regulators need more resources to move at pace they should be given them, and quickly.  There is no option for the UK economy to stand still in this global race for the ‘once in a century opportunity’ – we have to speed up or we will be left behind. 

The UK’s CCUS policy has made tremendous progress in the past few months. I’m thrilled the industry is finally able to advance towards delivering the first eight projects on the ground. It really does feel like the official beginning of CCUS implementation in the UK.   

Just think what could be achieved with a bit more ‘bounce’ in the springboard. 

Current CCUS cluster proposals in the UK

With recent record high temperatures at both of the Earth’s poles, it is clear that we cannot afford another moment of delay in combating the climate emergency.

Carbon Capture, Utilisation and Storage (CCUS) is a crucial tool in addressing this emergency, and I believe we can deliver the scale of CCUS required to meet the UK’s Net Zero pathway, rapidly reducing our emissions and leading in the development of this vital low-carbon technology.

In November 2021, the UK Government published its Net Zero Strategy which set a target for reducing Greenhouse Gas emissions to 78% below 1990 levels by 2035 – in line with the Sixth Carbon Budget. The strategy sets out pathways for the deployment of low-carbon technologies that can deliver the deep cuts in our emissions required over the coming decades.

Carbon Capture has been around for decades and when combined with permanent storage, it can be used to abate emissions at source or remove greenhouse gases directly from the atmosphere. The Net Zero Strategy envisages that the UK will need to store up to 30 million tonnes of CO₂ a year by 2030, rising to at least 50 million tonnes a year by 2035 to remain on a pathway consistent with achieving Net Zero by 2050.

The strategy includes a number of envisaged pathways for capture and storage of emissions from power, industrial and hydrogen production plants, as well as for greenhouse gas removals through Bioenergy with CCS (BECCS) and Direct Air Carbon Capture and Storage (DACCS). The Net Zero Strategy also requires the UK power sector to be fully decarbonised by 2035, subject to security of supply, and this will require a proportion of  carbon capture on gas-fired power stations and switching to CCUS-enabled (blue) hydrogen.

Ambition and government strategies are one thing. Delivery is another. Our CCUS Delivery Plan 2035 is the industry’s response to these ambitions. We can and must deliver, and we need to act now to stay on the pathway to meeting the Sixth Carbon Budget.

Only by building all the major projects currently under consideration in CCUS clusters and deploying CO₂ shipping and other non-pipeline transport solutions alongside rapid CO₂ pipeline network and storage development, can we meet the UK Governments 2035 ambition. Given the long lead in times for this infrastructure, the clear message from industry is that ‘2035’ is essentially ‘now’ in terms of the urgent need to plan the roll-out of CCUS across all regions in the UK.

CCUS is crucial for the competitiveness of the UK. Deploying CCUS in all of our industrial heartlands will provide an opportunity to lead the global green industrial revolution and reduce our reliance on imports with new UK products, such as clean steel, clean cement and clean hydrogen, and attract inward investment through our offer of a clear route to decarbonisation for heavy industries. As one of the first movers on CCUS, there is also a huge opportunity to exploit our world-leading skills and plentiful offshore storage capacity to offer decarbonisation services to Europe.

Providing there is more clarity on greenhouse gas removals and non-pipeline transport, the work on business models looks set to deliver a viable investment framework. What is now required to unlock that investment, and further develop the CCUS project pipeline, is a UK Government commitment to a steady build-out rate through a multi-year programme of contract allocation rounds, similar to the 2013 Electricity Market Reform (EMR) Delivery Plan that enabled the scale up and cost reduction seen in offshore wind over the last decade.

I believe by bringing together the CCUS industry, UK Government and other stakeholders we can make this vision a reality. By implementing the actions set out in the CCUS Delivery Plan 2035 we can play a leading role in combating the climate emergency and give our industrial regions the opportunity to lead the green industrial revolution.

The time to deliver CCUS is now.

For more information, read the full ‘CCUS Delivery Plan 2035’, watch the ‘Delivery Plan Animation’ and for further insight be sure to watch an overview discussion of the report from the CCUS APPG chaired by Alex Cunningham MP which is available on demand on our website.