Jeremy Hunt, the UK Chancellor of the Exchequer, announced that the next budget will include a £20 billion ($24 billion) investment program for carbon capture projects. This is the single largest investment in the technology outside of the U.S., with £1 billion planned for deployment every year.
Having pledged to reach net zero emissions by 2050, the UK sees carbon capture as part of technological mix that will help achieve that target. The specific goal of the investments is to reach a capacity of 20-30 million tonnes (22.05-33.07 million tons) of captured and stored CO2 annually.
Mr Hunt said that funding will be directed to “projects from our east coast, to Merseyside, to north Wales, paving the way for CCUS everywhere across the UK.” One of the clusters that was not mentioned in the announcement was Scotland, where backers of the Acorn project like Shell and Harbour Energy hope to receive support.
The government’s plans also include the development of modular nuclear reactors in a bid to reduce overall energy costs and prevent energy prices from spiking like they have recently.
Mr Hunt said: “Without government support, the average household energy bill would have hit almost £4,300 this year, which is why we stepped in to save a typical household £1,300 on their energy bills this winter.
We don’t want to see high bills like this again, it’s time for a clean energy reset. That is why we are fully committing to nuclear power in the UK, backing a new generation of small modular reactors, and investing tens of billions in clean energy through carbon capture.”
Ruth Herbet, CEO of the UK’s Carbon Capture and Storage Association responded to the announcement by saying: “The industry welcomes the Chancellor’s announcement of major investment in UK carbon capture and storage. This will create new jobs and growth and position the UK to export low carbon products and CCS skills and services.
The UK has a strong supply chain capability across all of the technologies needed to deploy CO2 capture, transport and storage, thanks to our successful offshore industries as well as our chemical and engineering know-how.”
The U.S. Inflation Reduction Act which was enacted last year with large investments slated for various decarbonization technologies, including carbon capture. Reaching a total of $370 billion, these subsidies have put pressure on UK and European companies and drawn some of their investments there.
Shadow energy secretary even used the phrase “British Inflation Reduction Act” while criticising the lack of a response earlier this month.
In February energy giant Drax shared a thinly veiled threat that it is considering moving its £2 billion ($2.4 billion) bio-energy with carbon capture plant to the U.S. The proposed Drax plant is located in one of the clusters.
Carbon capture has become more prominent in recent years, as governments and industry look for ways to decarbonize the most emission-intensive aspects of their economies like manufacturing, transportation, and construction.
Critics of the technology have said that it prolongs the lifespan of fossil fuel energy, especially when captured carbon dioxide is used for enhanced oil recovery. Whether this practice will be addressed remains to be confirmed in terms of the UK’s policies and criteria for receiving funding.