By Jamie McRorie from Shepherd and Wedderburn

THE Government has set out plans for a new UK carbon capture, usage and storage (CCUS) market by 2035. 

It aims to use £20 billion of investment to store 20 – 30 million tonnes of CO2 per year and support the creation of 50,000 jobs by 2030. 

These are clearly ambitious targets for a technology that has not been used on this scale anywhere in the world before, but the hope is that large investment, the UK’s unique geology and its skills in oil and gas will position it well to do so.

CCUS works by capturing carbon dioxide (CO2) before it reaches the atmosphere and storing it underground in the spaces left by oil and gas extraction. The plan is that CO2 produced by industrial processes, like steel production or power generation is captured at source and then transported, typically through legacy pipelines previously used for oil and gas pipelines, to be stored in geological reservoirs.

Attempts were made to stimulate competitive investment in CCUS at scale in 2007. However, those plans were cancelled four years later because projects had been insufficiently planned and could not be funded within the £1 billion budget agreed upon at the time. 

The more recent strategy demonstrates a greater degree of regulation and planning, and several lynchpin projects are beginning to take off. 

The Energy Act 2023 underpins many aspects of strategy. The Act provides that Ofgem will be the regulator for CO2 transport and storage. 

It also provides that CO2 transportation by pipeline for geological storage will require operators to hold a licence. These licences will determine the allowed revenue that a transport and storage operator may receive based on their efficient costs. Ofgem will have oversight to grant the licences and enforce or modify their conditions.

CCUS will be subsidised by regulated business models which will provide the vehicles for investment. These are expected to function as a type of ‘contract for difference’ (CfD), a funding model which has been instrumental in the UK’s success in developing offshore wind. 

These will guarantee operators a payment covering their costs while intending to ensure that CCUS projects cannot profit excessively. 

Competitive project allocation rounds are due to begin in 2027.

There are already two CCUS clusters in England which are due to come online first: HyNet covering the Northwest of England and North Wales and the East Coast Cluster based around Humber and Teeside. The individual projects forming each cluster remain under negotiation but aim to be operational by the mid-2020s.

There is also progress on the Scottish CCUS cluster, Project Acorn in Aberdeenshire, due to begin capturing, transporting and storing CO2 in 2028-2029. Acorn CCUS is approaching a key milestone, with projects within the cluster expected to submit their transmission and storage business proposals this year. 

Labour has confirmed its continued investment in CCUS and indicated that existing and planned CCUS projects will continue at pace. 

That must be good news for a nascent industry which presents a real prospect for benefiting the Scottish labour market and the UK’s Net Zero ambitions.  

Jamie McRorie is a confirmed speaker at All-Energy, the UK’s largest renewable and low-carbon energy exhibition and conference, taking place in Glasgow on 15-16 May. Visit Shepherd and Wedderburn’s All-Energy hub at