The UK is uniquely placed to be a global leader in Carbon Capture Usage and Storage (CCUS), which will play a critical role in the transition to net zero. We must act quickly to foster certainty and attract the investment that we need. Key recommendations: • In 2023, government must act quickly to re-envisage and implement a clear CCUS roadmap, showing the plan beyond 2030. As part of the roadmap, government should take a pragmatic approach to cluster selection. This means allowing the most advanced clusters to progress more quickly. • By 2024, government must develop a strategy for the plan for non-pipeline transport and how dispersed sites and mini clusters can connect to the CCS network and what support should be offered for doing so. • As soon as legislation allows, government must finalise the business models and regulatory frameworks across the value chain, including for industrial CCS, Energy from Waste with CCS and CO2 transport and storage. • In 2023 HMT should set out the funding envelope available to support Track-1 CCUS clusters. |
393. Net zero must involve capturing emissions from processes which still use fossil fuels and storing this carbon, with net anthropogenic flows between geosphere and atmosphere eventually equalling zero.294 Not everything can be electrified or replaced by an alternative fuel immediately, and therefore we need to look towards capturing or removing greenhouse gases from the atmosphere to meet our target. Carbon capture, usage, and storage (CCUS) is perhaps the best-known method for this, whilst other methods of engineered removals, such as direct air carbon capture and storage (DACCS) and bioenergy with carbon capture and storage (BECCS) will also play a role. All modelled pathways to net zero envisage a key role for CCUS and the UK should see this as an opportunity.295
394. Industry is responsible for around 16% of the UK's greenhouse gas emissions, with industrial clusters accounting for around 50% of all industrial greenhouse gas emissions.296
395. While the continued use of fossil fuels is necessary to maintain our security of energy supply, CCUS can be deployed to help decarbonise the energy system. Its importance is supported by the Climate Change Committee, who have described CCUS as "a necessity, not an option."297
396. The CCUS industry represents a unique opportunity for the UK, given our unique geological storage opportunities under the North and Celtic Sea - totalling an estimated 78 gigatonnes of storage potential around UK shores, enough to support the UK's demand for hundreds of years.298 With limited EU storage capacity, we could provide storage services for other countries, if regulatory barriers can be addressed.299 We also have significant industrial infrastructure in place through the gas network, and extensive experience from oil and gas sectors in the right places.
397. In their recent report Carbon Capture and Storage, Offshore Energies UK found that the UK has the technological experience and skilled workforce to develop an agile CCS industry. This industry could attract £100 billion of investment into the UK by 2050 and could be crucial in retaining jobs in energy-intensive industries and preserving the profitability of hard to abate industries such as steel and cement.300 The sector could also have an exportable value of £2.1 billion per annum by 2050.301 Analysis suggests that global turnover from power CCUS tradable goods and services could reach £53 billion annually by 2040.302
CASE STUDY: Tata Chemicals Europe Exemplifying the UK's early progress in the sector, in June 2022 Tata Chemicals Europe (TCE) opened the UK's first industrial scale carbon capture and usage plant which was supported with a £4.2 million grant from BEIS' Energy Innovation Programme. The CCU facility captures 40,000 tCO2 each year from TCE's gas-fired combined heat and power facility, and is used in the production of 130,000 tonnes of pharmaceutical grade sodium bicarbonate. Approximately 60% of the sodium bicarbonate is exported to over 60 countries around the world.303 |
398. CCUS will also help deliver sustainable growth by creating net zero aligned jobs and unlocking new export opportunities. Many of these jobs will be high skilled and concentrated in our industrial heartlands which will go through significant economic restructuring in the transition to net zero. In terms of exports, according to the Government's CCUS Investor Roadmap, CCUS could create £4.3 billion in GVA.304
399. Government has recognised this potential and taken a number of steps to grow and enable the industry, including: committing to capturing 20-30MtCO2 per year by 2030, bringing forward the first UK CCUS projects in the mid-2020s as part of the CCUS Cluster Sequencing process,305 developing a series of business models resulting in strong competition for Track-1 (first projects on the cluster sequencing process) confirming deployment of four clusters by 2030, and developing the licence conditions and business model arrangements so that non-piped sources of CO2 can be accommodated by the transport and storage business model.
400. Current demonstrator projects as part of the UK Net Zero Industrial Clusters programme have shown the potential and ambition for industry to go further, faster than has been envisaged as part of the Track-1 and Track-2 process.
401. In spite of this progress, the first-mover opportunity is fading. We must act now to ensure timely decarbonisation whilst maximising investment and export opportunities for the UK. We already know the UK will be required to decarbonise all large industrial sites, so we should not wait for an artificial process to be concluded. If a decision needs to be taken, it should be taken now, to bring certainty to investment whilst helping to lower the learning costs of technology.
402. In light of the recent US Inflation Reduction Act and similar measures from Canada, the UK must move quickly to take advantage of the opportunities presented by CCUS and our comparative advantage in the sector. Whilst CCUS is a globally proven technology, commercial deployment has been limited and further technology developments and cost reductions are required. It has suffered from a stop-start approach in the UK, including most recently with the temporary pause of the Energy Bill. If we do not accelerate in key areas, the cost of this inaction could be far greater than the cost of action.