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 clusters. |
403. There is currently limited clarity on the commercial viability of CCUS projects. Stakeholders have been vocal in asking for government to finalise business models across the value chain, including for transportation, storage and greenhouse gas removals. They have asked for clear timelines for support and clarity on what opportunities also exist outside of the cluster allocation.
404. The likes of Shell and SSE have said that delivering the business models through primary legislation is "a matter of urgency" to deliver on our CCS ambitions.306 On power CCUS there is a particular "lack of clarity on market design" according to BP, with uncertainty as to how the Dispatchable Power Agreement (DPA) will fit into future electricity markets being developed under government's Review of Electricity Market arrangements (REMA).307 Similarly, Storegga, a leading UK-based carbon capture developer, told the Review:
"Any delay in the legislation risks stalling the excellent progress to date on these business models. Delays will create uncertainty for developers and investors, increasing the cost of investment."308
405. Furthermore, as set out in the hydrogen section, US and Canadian policy has changed the funding landscape for CCUS, with the US providing long term tax credits for CCUS operators. With investment already being drawn to the US, this has sharpened focus on the need for governments to provide long term funding certainty to attract investment.309
406. 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. This will enable the UK to start awarding contracts and building capacity as soon as possible.
407. More specifically, in 2023 HMT should set out the funding envelope available to support Track-1 clusters.
408. At the same time as establishing the CCUS business models, the UK should continue to innovate by focusing on the opportunity for business to utilise CO2 and by-products created.