UK energy sector welcomes £20bn support for CCS

Package unveiled in Chancellor’s Spring Budget hailed as a response to US Inflation Reduction Act

The UK Chancellor Jeremy Hunt has unveiled £20 billion of support for carbon capture and storage projects as part of his Spring Budget.

Hunt said the £20 billion programme would help create 50,000 jobs, capture up to 30 million tonnes of CO2 by 2030 and put the UK on its way to becoming “a science and technology superpower”.

He said the funding would start “with projects from our east coast to Merseyside to North Wales – paving the way for CCUS everywhere across the UK as we approach 2050”.

The move had been trailed ahead of his speech yet was still warmly welcomed by Britain’s energy sector.

Ruth Herbert, chief executive of European trade body the Carbon Capture and Storage Association, said the funding was “a turning point for this vital sector, delivering the much-needed certainty to investors that the UK is serious about delivering CCUS".

She said the announcement "means that two years since the launch of the programme, we can now move forward with implementing the initial CCUS clusters".

"Alongside this, the industry is developing a healthy pipeline of projects to deliver on the government’s net zero strategy in industrial regions all around the UK – these other regions are eagerly awaiting their turn to move forward with carbon capture and storage and will need to see the government commit to further deployment.

Herbert said she was looking forward "to seeing which projects have been chosen to move to construction, the forward timeline for selecting the next CCUS clusters that need to be operational this decade, and a swift passage of the Energy Bill through Parliament, to finalise the regulatory framework for the industry”.

Stacey Collins, a CCUS & low-carbon hydrogen expert at law firm Pinsent Masons, said the £20 billion fund “could be a game changer” for the industry.

Exclusive interview with Ruth Herbert of the CCSA: Carbon capture: Big cost, big reward

“It’s encouraging to see the government doubling down on its commitment to this technology,” he said.

Richard Lum of Victory Hill Capital Partners said the carbon capture announcement was “a healthy step in the right direction that will help ensure the UK continues to lead the world in applying this technology”.

"The government has recognised the need to do more to promote the reuse of the captured emissions, rather than only backing sequestration.

“Reusing these emissions could boost the economy by supplying certain sectors such as the food and beverage and agriculture industries with valuable and much needed carbon dioxide gas."

Landmark CCS project injects carbon dioxide under North Sea

Mike Hodgson, Strategy Development Manager at James Fisher Renewables, welcomed the Chancellor's CCS funding but urged the government “to think bigger to drive the industry forward”.

“Investment is only one piece of the puzzle to reach net zero while ensuring energy security,” he said.

“The UK is making good pace towards its 2050 target, but in order to get there the industry also needs a competent energy workforce, built through skills and on-the-job experience, as well as an overhaul of consenting and applications processes.”

Aniruddha Sharma is chief executive of Carbon Clean, a London-headquartered CCS technology company.

He said the CCS package was a partial response to the Inflation Reduction Act in the US.

“The UK has built an early lead in carbon capture, and this should go a long way to ensuring the sector can achieve its full potential.

We expect this new funding to support a far greater number of CCUS projects in the UK, and to accelerate the time it takes to allocate funding.

Sharma said this would be vital “because to hit net zero, CCUS needs to grow at the pace and scale seen by the solar and offshore wind industries in the past ten years”.

As the experience of those industries shows, this is possible but only with ambitious policies which ensure government, industry and investors pull in the same direction.”