UK to invest £22bn in carbon capture and storage projects

The UK government has pledged up to £21.7bn ($28.5 billion) in support to launch the nation’s first carbon capture and storage (CCS) projects, marking a significant milestone for the emerging sector, though highlighting the substantial costs involved.

Over 25 years, this funding will back two offshore carbon storage sites and pipelines capable of storing more than 8.5mn tonnes of CO2 annually. It will also fund carbon capture at three planned projects in Teesside and Merseyside to produce hydrogen, power, and energy from waste.

Provisional government data for 2023 shows that the UK emitted 384.2mn tonnes of CO2 equivalent. While this initiative represents a crucial step toward establishing the CCS industry in the UK, it underscores the government’s commitment to the sector.

However, only three of the eight industrial sites previously in talks with the government will receive support for attaching carbon capture technology, leaving the future uncertain for the remaining projects. Additionally, the government has not provided details on support for future projects selected by the previous administration, particularly in Scotland and the Humber region.

A Labour party aide reiterated the party’s commitment to CCS in “Humberside, Scotland, and other parts of the country,” calling this a first step and promising to outline further plans in due course.

The government’s £21.7bn support, which will be funded through energy bill levies and Treasury resources, is expected to attract £8bn in private investment. This push for private sector backing comes ahead of the UK’s international investment summit on October 14.

Prime Minister Sir Keir Starmer emphasised the government’s intention to “reignite our industrial heartlands,” asserting that the funding will provide certainty for the industry.

CCS technology involves capturing CO2, compressing it, and storing it underground—often in depleted oil and gas fields—preventing it from entering the atmosphere. The technology is seen as vital to achieving the UK’s legally binding goal of net-zero carbon emissions by 2050, though concerns persist about its commercial viability at scale.

Globally, carbon capture capacity reached 51mn tonnes last year—just 0.14% of total emissions—through projects in countries like the US, Canada, and Norway, according to BloombergNEF.

Previous UK government attempts to support CCS, in 2011 and 2015, were abandoned. In 2023, then-Chancellor Jeremy Hunt committed £20bn over two decades to CCS, but no funds were allocated before this year’s general election.

The two storage sites securing government support include Italian oil giant Eni’s project in Liverpool Bay and the Northern Endurance Partnership, led by BP, Equinor, and TotalEnergies, off Teesside’s coast. One supported power project is BP and Equinor’s Net Zero Teesside gas-fired plant, which is expected to create 4,000 construction jobs by year-end, according to Tees Valley Mayor Lord Ben Houchen.

The Protos energy-from-waste plant in Cheshire, developed by Encyclis and Biffa, and a hydrogen production facility at Essar’s Stanlow oil refinery have also secured government backing to capture emissions.

While some scientists and environmentalists argue that CCS could extend the life of fossil fuel assets, organisations like the Climate Change Committee, which advises the government, believe it is essential for meeting the UK’s climate goals.

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