Background to the report
The government sees Carbon Capture, Usage and Storage (CCUS) as
central to achieving net zero by 2050. CCUS can potentially
address several challenges to decarbonising the economy, such as
in the power sector, and may be the only practical way to
decarbonise some industries, such as cement production.
Through its CCUS programme, the Department for Energy Security
and Net Zero (DESNZ) aims to establish the technology in four
industrial areas, or clusters, in the UK to capture and then
store 20 to 30 million tonnes of carbon per year by 2030.
In the March 2023 Budget, HM Treasury announced up to £20 billion
to support the early development of the CCUS programme.
Scope of the report
This report examines:
- how DESNZ responded to the lessons of previous attempts to
support CCUS in designing the current programme
- the progress DESNZ has made with the current CCUS programme
- the key risks and issues that DESNZ will need to address to
meet its targets for CCUS deployment
Conclusions
DESNZ and the CCC have described CCUS as being ‘essential' to
achieving net zero. The government does not have and is currently
not developing a credible alternative pathway without the use of
CCUS. In this context, it is critical that DESNZ succeeds with
its CCUS programme if the UK is to achieve its legally binding
climate ambitions.
DESNZ has applied lessons it has learnt from previous failed
attempts to launch CCUS. But the inherently challenging nature of
CCUS remains, given the nascency of aspects of the
technology. And DESNZ's current approach brings new complexities
to be managed, depending on parallel, interdependent negotiations
with projects across different technologies.
Completing negotiations to support the Track-1 projects will be a
very significant milestone in signalling the programme's
commercial feasibility and the government's commitment to CCUS.
Achieving this may require the government to accept that some
risks can only be partly mitigated, including higher costs to
support early projects, but this could be a risk worth taking if
it determines that the potential costs of delays or pursuing
alternatives could be significantly higher. The government will
extract greater value for money from the first wave of projects
if it ensures lessons are captured, both in terms of
the negotiation process and technologically, to enable costs to
come down in future, as has been the experience for
offshore wind.
