Carbon capture and storage – can the UK afford not to?
Locations
The UK government confirmed on 31 July 2023 that the Acorn site in North East Scotland and the Viking project in Yorkshire's Humber region have been chosen as the third and fourth carbon capture usage and storage (CCUS) clusters in the UK.
The government has already committed to deploy CCUS in two industrial clusters by the mid-2020s – the HyNet cluster in North West England and North Wales, and the East Coast Cluster in the Teesside and Humber area.
Acorn and Viking are set to be deployed by 2030.
The announcement of new carbon capture projects has been welcomed by some for its potential to re-develop some of the UK's existing oil and gas infrastructure, using legacy gas pipelines and fields to transport and store carbon dioxide (CO2), respectively.
One of the strengths of CCUS is its ability to allow workers and industries that would otherwise be substantially disrupted by the energy transition to instead be vital contributors to achieving net zero.
There is significant commercial interest in CCUS and higher carbon prices are starting to improve the business case for CCS investment.
The areas earmarked for storage facilities have the right combination of geology, proximity to existing infrastructure and links to industrial clusters looking to CCUS to meet their decarbonisation goals.
In some cases these CCUS projects (such as the Stanlow Oil Refinery and Hynet tie up) are tied to developing hydrogen projects under the UK Government’s new Hydrogen Strategy (launched in August 2021) – representing another strand of the UK's approach to energy transition.
The challenge to making a success of CCUS will be ensuring enough storage sites are adequately characterised and developed within a timeframe that matches CO2 emissions-reduction goals. It is estimated that up to 100 CO2 stores could be needed for the UK to meet the 2050 net zero commitment, according to the North Sea Transition Authority (NSTA).
Another obstacle CCUS needs to overcome is opposition from pressure groups who see the technology as a 'get out of jail free' card that can be exploited by big carbon emitters, rather than a means of reducing the current emissions tally.
Is CCUS part of the climate change solution?
Carbon capture and storage/sequestration (CCS) and CCUS technology has taken huge leaps forward in the past decade.
Improvements in technology mean capturing CO2 emitted from industrial processes, power generation or directly from the air, and either storing or using it, is no longer viewed as a marginal solution with limited applications.
But CCUS is still in the early stages of commercial deployment and should not be expected to shoulder a disproportionate burden of decarbonising the UK economy.
Rather, it will form part of the UK's energy infrastructure and can only contribute to a meaningful reduction in carbon emissions if renewable energy production, energy storage, hydrogen and (potentially and controversially) nuclear projects are developed rapidly and in synchrony with CCUS.
According to figures from the UK's Department for Energy Security and Net Zero, in 2022 79.1% of the country's energy needs came from fossil fuels, down from 87.2% in 2021, representing a growing share of renewable power in the UK's energy mix and falling oil and gas production.
But figures from the Department for Energy Security and Net Zero also show that the UK's dependency on energy imports is increasing, standing at 43.6% in the first quarter of 2023 (which included electricity via interconnectors as well as fossil fuel products), up five percentage points on the same quarter of 2022 – putting the UK in an unenviable position when it comes to energy security.
This combination of factors suggests an unbalanced strategy to achieving net zero CO2 emissions in the UK and arguably obscures the role of CCUS, giving the perhaps unfair impression that it serves as a crutch for big polluters.
Front-loading investment into carbon transport and storage infrastructure could however enable economies of scale and expand the potential of CCUS as tool for combatting emissions from all sources.
While CCUS cannot solve the problem of carbon emissions, evidence suggests it has a key role to play in the UK's transition to a zero carbon future.
This article was authored by Emily Tetley-Jones, Real Estate Director at Fieldfisher. The themes covered in this article were discussed in a letter published by the Financial Times on 7 August.