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.

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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.

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