Ruth HerbertChief Executive, Carbon Capture Storage Association
As the economy decarbonises, Chief Executive of the Carbon Capture and Storage Association, Ruth Herbert explores the opportunity that Carbon Capture presents the UK economy.
Carbon capture and storage (CCS) is going to be built in the UK, after years of uncertainty. It has been a little over a year and a half since I joined the Carbon Capture and Storage Association (CCSA) as its Chief Executive, and both the industry and the CCSA have seen tremendous progress in this short space of time.
Carbon capture utilisation and storage (CCUS) is the process of capturing carbon dioxide (CO2), either at the source of its emission or directly from the air, and transporting it via pipeline or other means to where it can be either utilised or permanently stored. To meet Net Zero targets, the International Energy Agency (IEA) estimates around 7.6 billion tonnes of CO2 will need to be captured and stored by 2050 and the Climate Change Committee (CCC) estimates the UK will need to capture and store around 50 million tonnes a year by 2035.
These are big numbers. It’s clear there’s a lot to do in a short space of time but the UK’s progress on CCUS over the last 18 years can best be described as ‘start-stop’. In 2007, the UK Government launched its first competition for a demonstration of the full chain of CCS from a “single source to single sink”. The competition was cancelled in 2011. A second CCS competition was launched in 2012, only to be cancelled in 2015. Five years passed before a Ten Point Plan commitment to “at least four CCUS clusters operational by 2030” was unveiled in 2020. This was followed by the Government’s CCUS Cluster Sequencing Programme, launched in May 2021. The cluster-driven approach was inspired by the work of the 2018 CCS Cost Reduction Task Force, which concluded the most efficient way to develop CCS in the UK was in places where power, industrial, and other carbon capture sites could share a common CO2 pipeline and storage infrastructure. This allows them to benefit from economies of scale and leads to a lower cost per tonne abated.
Over the two years since the launch of the 2021 programme, the Government has run competitions and due diligence processes to select the first two clusters to proceed, and then the capture projects that would connect to them. The Government recently confirmed, at this year’s Spring Budget[A1] , that £20 billion would be available for CCUS projects. This means the eight selected carbon capture projects, to be connected to the ‘Track 1’ clusters, can finally move forward to negotiations with the Government. The next critical step in the process is the Royal Assent of the Energy Bill, which will provide the necessary powers to sign the contracts, so they can start construction next year and begin decarbonising their regions by 2027. This is good progress, at last.
However, whilst it’s great to see the UK CCUS programme finally moving forward, the Government has a much bigger role to play in providing a clear pathway to decarbonisation for the UK’s industrial regions. There are many CCUS projects across the UK that haven’t been successful in the Cluster Sequencing Process so far, which puts future investment in those regions in an uncertain position. This is particularly true for industries where CCUS is the only viable route to decarbonisation, such as cement, glass, and refineries. There is an exciting opportunity to put UK regions at the forefront of the next industrial revolution, leading the way in the transition to a global low-carbon economy.
The CCSA’s CCUS Delivery Plan 2035[A2] identified over 70 million tonnes of CO2 emissions from eight industrial regions around the UK that could be abated with CCUS by 2035, which would keep the UK on track with its Net Zero targets whilst delivering economic growth. The eight projects across two regions already selected by the Government represent about 10 per cent of this.
The scale of the challenge is clear but so is the scale of the prize. Widespread CCUS deployment could safeguard 77,000 existing jobs and create 70,000 new jobs[A3] . It could drive inward investment into regions that have suffered from under-investment, attracting businesses to locate to where they can access CO2 infrastructure. The UK could corner the emerging market for low carbon products, estimated to be worth at least $3 trillion by 2050, as well as take advantage of the opportunity to export CCUS skills and services around the world.
There’s a lot of talk about whether the UK’s regulatory and incentive framework can rival the tax credit system that is currently driving a lot of CCUS investment in the USA. The major difference is that US tax credits are available on an eligibility basis, whereas the UK is allocating support through lengthy competition and negotiation processes. One reason for the different approaches is that the UK programme is aimed at delivering large, coordinated investments in strategic regional decarbonisation infrastructure, whereas the US tax system is designed to deliver a large volume of projects as quickly as possible. The tax credits are most likely to drive investment in independent ‘source to sink’ projects rather than cluster networks in the first instance.
The bottom line is that the US approach is now unleashing private sector capital, which means technology will be deployed more quickly. This could create a critical mass of CCUS, which would draw developers and the supply chain to America. This is a major risk facing the UK’s Net Zero agenda and the wider economy.
The UK has a strong framework for a new industry and we are close to reaching an agreed set of business models for releasing support. The Government just needs to turn on the metaphorical tap and then watch the inward investment flood in. 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. This is a global race with the prize of a ‘once in a century opportunity’ to be at the forefront of the global Net Zero transition. We must speed up[A4] .