by Blair McMaster – Senior Consultant Carbon Capture – DNV
Record breaking renewable energy generation, falling clean technology costs, and the rapid deployment of carbon capture solutions – that the UK’s energy landscape is undergoing a profound transformation is there for all to see. Significant progress has already been made in the nation’s quest to zero out emissions by 2050 and yet much remains to be done in an ever-closing window.
Carbon capture, utilisation and storage (CCUS) is a linchpin in the UK’s net-zero strategy. With the government targeting 20–30 MtCO2 per year in emissions capture and storage by 2030, the recent Final Investment Decision (FID) taken on the Northern Endurance Partnership (NEP) and Net Zero Teesside Power (NZT Power), both of which fall under the wider East Coast cluster in Teesside and Humber, is a clear indication that the sector is finally gaining traction.
These initiatives, and the projects within them, aim to enhance storage and network capacity through power CCUS, industrial carbon capture (ICC), waste-to-energy, and CCUS-enabled hydrogen initiatives.
For its part, government has pledged £21.7 billion in support over the next 25 years, with a projected £3.9 billion earmarked for CCUS and hydrogen projects in 2025-26. But for all the money that has been pledged, the pace of implementation is not keeping up with ambition.
Our latest forecasts, detailed in DNV’s third UK Energy Transition Outlook (ETO), reveal that the UK’s carbon capture capacity will reach 5 MtCO2 per year by 2030, well below the government’s target. After 2030, we anticipate a sharp rise in capacity – reaching 42 MtCO2 per year by 2035 and peaking at 54 MtCO2 per year in the mid-2040s – but the impact of this slow start is being felt already.
Confidence in the short-to-medium-term outlook for CCUS in the UK has declined due to delays in the first projects reaching FID and uncertainty around the next clusters.
The key factors behind missing the 2030 targets include the slower-than-expected progress of the Track 1 clusters and their associated projects, with most yet to reach FID.
Advancing the initial clusters and projects through FID and into detailed engineering design is crucial for providing industry and investors with clarity on financial support models and ensuring the first wave of projects moves forward. This, in turn, is essential for unlocking the broader pipeline and attracting capital into the market. CCUS is going to play a large role in the UK’s net zero future, but we are behind schedule and getting back on track requires swift action, otherwise we will miss out in the face of global competition.
Carbon pricing and market mechanisms
DNV forecasts that the UK will fall short of its Nationally Determined Contribution (NDC), which commits to reducing economy-wide GHG emissions by at least 81% compared to 1990 levels. Meanwhile the legally binding 2050 target is also looking increasingly doubtful.
A lack of consistent policies and of clear implementation plans to decarbonise the buildings and transport sectors are the primary drivers behind this and government should give these their utmost attention. Compounding the issue are carbon prices, which are not expected to approach the cost of CCS until the early 2030s, delaying widespread adoption and large-scale deployment.
Current projections indicate that Europe’s carbon price could increase from $75/tonne today to $150/t by 2030 and $250/t by 2050. Only by the mid-2030s is the cost of emitting CO2 likely to exceed the cost of capturing it, slowing the acceleration of CCUS across industries up to that point.
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Carbon credits, both within compliance markets (such as the UK Emissions Trading Scheme) and voluntary carbon markets (VCM), will be vital to keeping emissions reduction targets alive.
Integrity standards, such as those set by the Integrity Council for the Voluntary Carbon Market (ICVCM) and the UK government’s voluntary carbon principles, will be crucial in ensuring the credibility of offsets and driving interest in CCUS from other industries, like bioenergy, energy-from-waste and biogas.
Moreover, the UK is consulting on implementing a Carbon Border Adjustment Mechanism (CBAM), which would require importers to pay the same carbon price as domestic producers under the UK Emissions Trading Scheme (ETS). This policy aligns with the EU’s CBAM, creating a more cohesive European approach to carbon pricing and preventing emissions leakage.
Declining fossil fuel use and future outlook
The UK’s energy-related CO2 emissions have fallen by approximately 43% since 1990, with further declines expected as fossil fuel use diminishes. The shutdown of the UK’s last coal-fired power plant in September 2024 marks a significant milestone. While coal will still be used in industrial processes such as steel production, its role is expected to shrink with increased recycling, efficiency improvements, and low-carbon alternatives like hydrogen and bioenergy.
Natural gas, which grew by 35% from 1990 to 2022 as a coal replacement, is also set for a steady decline. By 2050, emissions from natural gas use in the energy system are expected to be 55% lower than 1990 levels. Meanwhile, oil consumption is projected to decline by 85% as the transport sector transitions to electrification and low-carbon fuels.
Despite these positive trends, the UK is on track to miss its sixth carbon budget (965 MtCO2e for 2033-2037), underscoring the need for accelerated action and stronger policy enforcement.
Seizing the moment
The UK’s CCUS rollout is finally out of the starting blocks, but we are still some way off capturing our first emissions and even further from having a fully functioning carbon abatement sector. Despite these challenges, the opportunities ahead are vast.
A thriving green economy with CCUS at its heart can drive job creation, strengthen energy security, and position the UK as a global leader in clean technology. Realizing this potential depends on sustained policy support, targeted investment, and cross-sector collaboration. The road to net zero demands both urgency and adaptability – embracing new technologies while staying agile enough to respond to emerging opportunities.
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