The UK government has confirmed up to £21.7 billion in financing for carbon capture and storage (CCUS) projects in the UK, to be invested across two clusters, one in the north-east of England and one in the north-west of England and Wales.
The announcement is the confirmation of financing first discussed in 2009, and the money will be used to expand the clusters over the next 25 years. In 2019, the Climate Change Committee described the practice of CCUS as a “crucial” step in the UK reaching its net zero emissions target and said that the establishment of dedicated industrial clusters to encourage the commissioning of CCUS projects would be a key step in this process.
“We’re reigniting our industrial heartlands by investing in the industry of the future,” said prime minister Keir Starmer. “For the past 14 years, business has been second-guessing a dysfunctional government —which has set us back and caused an economic slump.”
“By securing this funding, we pave the way for securing the clean energy revolution that will rebuild Britain’s industrial heartlands,” added secretary of state for energy security and net zero Ed Miliband. “I was proud to kickstart the industry in 2009, and I am even prouder today to turn it into reality. This funding is a testament to the power of an active government working in partnership with businesses to deliver good jobs for our communities.”
Creating jobs, encouraging investment
According to the government, the creation of new jobs and the encouragement of investment in these industrial clusters are among the primary benefits of the investment. Between them, the two clusters aim to create up to 31,000 full-time jobs in the coming years. In the west, the developers of the HyNet North West cluster alone expect it to generate up to £31 billion in fresh investment for the UK.
This cluster will combine CCUS projects with green hydrogen generation facilities. The project aims to meet 80% of the UK’s clean power electricity usage target for transport, industry and homes by 2030.
Meanwhile, in the north-east, the East Coast Cluster aims to capture and store on average of around 23 million tonnes of carbon dioxide per year by 2035, more than half of the UK industrial sector’s carbon dioxide emissions. Last March, the Department for Energy Security and Net Zero (DESNZ) announced that it expects to commission the cluster’s first three projects, which include a CCUS project and a low-carbon hydrogen project, in 2027.
“Major projects like these have the potential to help stimulate economic growth—supporting thousands of jobs, helping UK companies prosper through the vast supply chains involved and creating the infrastructure to help major industrial companies with their decarbonisation plans,” said Louise Kingham, senior vice president of Europe and head of UK for BP, which backs the East Coast Cluster.
“Collaboration is key in helping to progress and deliver the energy transition in the UK, and we look forward to continuing to work alongside the government and our partners to move these innovative projects forward.”
Continued reliance on fossil fuels
However, the involvement of oil and gas majors in these new industrial clusters has drawn criticism, with BP joined by Equinor in the East Coast Cluster, and the Hynet project being developed by Italian oil major Eni, with suggestions that such influential fossil fuel companies should not be so heavily involved in the UK’s decarbonisation plans.
Indeed, a 2023 report from the Institute for Energy Economics and Financial Analysis (IEEFA) found that the UK’s then-proposed £20 billion CCUS investment was “excessively” reliant on blue hydrogen, that is to say hydrogen produced by the burning of natural gas as opposed to electricity from renewable power sources, suggesting that the hydrogen components of the UK’s CCUS strategy are still strongly tied to the fossil fuel industry.
There are also concerns that the CCUS process itself is reliant on fossil fuels, with the IEEFA report noting that 78% of the UK’s CCUS projects set to be in commercial operation in 2030 will “require long-term fossil fuel use”.
“But there’s something of a paradox here,” said Alex Vaughan, CEO of the Costain Group, which has been involved in the East Coast Cluster, today on LinkedIn. “At the same time as solving many of the UK’s climate change challenges, the infrastructure industry is also one of the largest contributors to carbon emissions. The embodied carbon in the core materials used for infrastructure projects, like steel, concrete and aggregates, is considerable.
“But by accepting that infrastructure is intertwined with the climate problem, we’re also acknowledging that the industry is uniquely placed to be part of the solution,” added Vaughan.
Working together to meet targets
The news follows this week’s closure of the UK’s final operating coal-fired power plant, the 2GW Ratcliffe-on-Soar power station. Miliband said that with the closure of the plant and the government’s investment in CCUS instead, “a new era begins” today.
“We can’t hit the country’s targets without CCUS, so this commitment to it is very reassuring,” said James Richardson, acting chief executive of the Climate Change Committee. “It will no doubt provide comfort to investors and business about the direction of travel for the country.”
The UK’s climate change targets have been increasingly under the spotlight this year, with a report from DNV, published in May, finding that the UK is on track to miss its decarbonisation by 2030 targets and its net zero by 2050 goals. If the country is to meet some of these goals, cross-sector collaboration between government and industry will be essential.
“Today’s announcement from the government to drive ahead with investment in CCUS clusters is a major milestone in the decarbonisation of UK industry and sets the construction sector on the path to net zero,” said Simon Willis, CEO of construction firm Heidelberg Materials UK, which launched a carbon capture trial at a Ketton cement works earlier this year, on LinkedIn.
“The government’s commitment also provides assurance that it is supportive of UK industry’s transition to a low carbon future—where the building materials we rely on to construct and maintain our homes, schools and hospitals and major infrastructure continue to be produced here. It will also secure and create highly skilled jobs for the future.”
