UK 2020 Budget announces funding for carbon capture schemes

Matthew Farmer 12 March 2020 (Last Updated March 12th, 2020 19:33)

The UK government Budget has announced £800m funding for multiple carbon capture schemes, with no change for North Sea oil and gas extraction.

UK 2020 Budget announces funding for carbon capture schemes
Several CCS schemes across the UK may receive funding as the UK moves back towards CCS. Credit: BBC.

The UK government has announced its Budget for 2020, including funding for multiple carbon capture schemes. UK chancellor Rishi Sunak used his first Budget to emphasise environmentally-friendly investment and did not mention any new measures for North Sea oil and gas extraction.

In his speech to parliament, UK chancellor Rishi Sunak said: “Carbon capture and storage is precisely the kind of exciting technology where Britain can lead the world over the next decade. I can announce today that we will invest at least £800m to establish two or more new carbon capture storage clusters by 2030.”

“The new clusters will create up to 6,000 high-skill, high-wage, low-carbon jobs, in areas like Teeside, Humberside, Merseyside, or St Fergus in Scotland.”

This was a reference to the Net-Zero Teeside project, the Zero Carbon Humber project, the HyNet scheme in Northwest England and the Acorn CCS facility in St Fergus. These carbon capture and storage (CCS) schemes are at various stages of development and use different offshore fields to store CO₂.

UK developing multiple CCS schemes

The UK Committee on Climate Change has recommended the country’s first carbon capture, utilisation and storage (CCUS) facility should be working by 2026. By 2035, the committee expects large-scale CCUS to be available.

Committee chairman Lord Deben said the Budget gave a “realistic” start but said the real proof would be in the government’s Infrastructure Strategy, due for publication later in the spring.

The chancellor began his speech by announcing funding for health systems to combat the coronavirus. He later mentioned fuel duty would freeze for another year, the tenth in a row.

Responding to the Budget, leader of the opposition Jeremy Corbyn said: “The government has maintained the freeze in fuel duty without lowering bus and rail fares, showing complacency about the climate emergency.

“Young people especially dismayed at the lack of urgency to reduce our emissions. They rightly see this as the Conservatives once again putting the profits of big polluters and oil companies above people’s safety and wellbeing.”

Industry quietly invites CCS funding

National Grid UK executive director Nicola Shaw said: “We welcome today’s Budget which makes key commitments on the areas of electric vehicle charging and carbon capture and storage.

“We welcome also the funding commitment for carbon capture and storage in multiple clusters, which is critical to the decarbonisation of Britain’s industrial heartlands. Deploying this technology and accelerating progress in the development of carbon transport and storage infrastructure will drive future growth in places like the Humber and help to preserve tens of thousands of jobs.”

The Zero Carbon Humber scheme aims to create the world’s first zero-carbon industrial cluster. It is led by a consortium including energy company Drax Group, whose CEO Will Gardiner said: “By accelerating the development of vital negative emissions technologies like bioenergy with carbon capture and storage, which is being pioneered by Drax, we can permanently remove millions of tonnes of CO2 each year from the atmosphere.

“The Humber is the UK’s most carbon-intensive region and home to 55,000 jobs in manufacturing and other industries. Decarbonising the Humber would, therefore, have a major impact – delivering for the environment and the economy, securing jobs and a long-term future for businesses which could otherwise be left behind.”

Ernst and Young global oil and gas tax lead Derek Leith said: “The new Chancellor’s decision to hold steady and make no legislative change for the oil and gas industry is a welcome move.

“In recent years we’ve seen significant change to the tax landscape for the oil and gas sector, with successive governments acknowledging the maturity of the basin and the need to have stable fiscal conditions for investment. Last weekend’s drop in oil price demonstrates that there is significant volatility in the sector with global demand faltering and supply-side discipline disappearing.

“A stable oil and gas industry in the UK offers the best possible foundation for the oilfield services sector and supply chain to start to transition its technical competence into alternative energy.”

Edinburgh University professor of CCS Stuart Haszeldine tweeted: “£800M budget 2020 is enough to build TWO CCS systems – Acorn in NE Scotland and Hamilton in Merseyside, both demonstrating minimum viable commercial size. What’s needed now is a carbon market to make this profitable. Create a carbon takeback obligation, helping oil and gas to store [CO₂].”