by Matt Browell-Hook, Energy Transition Director, Spirit Energy
This month marked a significant moment for the carbon capture and storage (CCS) sector in the UK. East Coast Cluster took a Final Investment Decision on the Net Zero Teesside Power station, offshore storage, and transport projects. This historic decision means construction can start on the first ever CCS project in the UK, unlocking private funding to get construction under way.
Make no mistake, this is a huge vote of confidence in CCS, and takes us one step closer to unlocking the significant potential of CCS to deliver on the UK’s net zero commitments.
It follows Prime Minister Sir Keir Starmer’s appearance at COP29 in Baku last month, where he- doubled down on the UK’s ambitious climate commitments previously set out in the Paris Agreement. By setting an enhanced decarbonisation target of reducing emissions by 81% from 1990 levels by 2035, the Prime Minister reaffirmed Britain’s ambition to be a global climate leader. He also set a flag in the ground to demonstrate the centrality of industrial decarbonisation to this Government’s agenda.
Indeed, Ministers insist that industrial decarbonisation is a core tenet of the Government’s clean energy mission. Having made net zero a central part of Labour’s manifesto, it’s encouraging to see this focus continue into Government. The UK is especially well placed to deliver on these commitments and can be a global leader in industrial decarbonisation, not least through its burgeoning CCS sector.
Comments from the Prime Minister and Ed Miliband, the Secretary of State for Energy Security and Net Zero, publicly talking up the potential of this sector in recent months have also been welcomed by industry. Baroness Gustafsson, Minister of State for Investment, noted at the Carbon Capture and Storage Association (CCSA) annual meeting last month that carbon capture will be indispensable for industries like cement, which cannot be decarbonised overnight.
With a total capacity of 78 billion tonnes, the UK has enough carbon storage capacity to hold two centuries’ worth of our current annual emissions. We also boast a genuinely world-leading offshore energy sector, cultivated over many decades and harbouring a workforce of valuable knowledge, experience, and innovation, strategically focused on delivering a comprehensive transition to net zero. If any country has the potential to lead and set the pace for global decarbonisation, it’s the UK.
Relevant: bp, Equinor And Total Reach FID On $5.1 Billion Carbon Capture Projects In The UK
Of course, new targets mean the industry needs to be much more dynamic in decarbonising hard-to-abate industries, and emissions reduction initiatives through technologies like CCS will need to begin as soon as possible to make meaningful headway into cutting the even greater volume of emissions now targeted. Spirit Energy’s own Morecambe Net Zero (MNZ) | Peak Cluster project, which will decarbonise 40% of the UK’s cement and lime industry, can make an enormous contribution to the UK’s carbon storage ambitions.
CCS can also support the Government on its ambitious agenda to deliver economic growth and clean energy. CCS delivers on all of these aims as a key part of the UK’s net zero decarbonisation pathway for industry – with partnerships like MNZ | Peak Cluster able to create and safeguard more than 13,000 jobs across the Peak District and Cumbria.
However, these benefits will only be realised if the Government doubles down on delivery.
Advanced CCS projects like MNZ | Peak Cluster don’t need another funding envelope from the Government. We need pragmatic policy reforms that bolster investor confidence, incentivise industrial decarbonisation, and provide a roadmap for delivery.
Firstly on timing, the Department for Energy Security and Net Zero should immediately commence work on the design of the ‘market transition’ phase of CCS support, ready for deployment between 2030 and 2035 ahead of the new 81% emissions reduction target date, so potential investors understand the future business models that will be in place and projects like MNZ can begin reducing industrial CO2 emissions.
Relevant: Expanding And Strengthening The UK Emissions Trading Scheme
We also need clarity on future carbon pricing. A stable and high carbon price under the UK Emissions Trading Scheme is essential to making CCS more financially attractive for industry than emitting carbon and would be bolstered further by the Government implementing a Carbon Border Adjustment Mechanism to protect domestic low-carbon products from being undercut by high-carbon imports.
Finally, and above all else, industry needs certainty on the route to market. By creating a clear pathway for other technically and commercially mature projects that sit outside the Track process and expanding the National Wealth Fund’s focus to include merchant CCS models, the Government will drive private sector investment into projects like MNZ | Peak Cluster, and ensure these innovative projects can contribute to the UK’s new net zero targets at the earliest opportunity.
The UK is at a crossroads. Carbon capture is one of the best means to decarbonise British industry and deliver on our international Net Zero commitments, but the sector needs the Government to chart a viable route to market so more projects can follow in the footsteps of the East Coast Cluster.
The Government must now show leadership and pave the way for private investment into CCS to follow.
