The UK Government has officially unveiled its Spring Budget, with a whole host of spending commitments for the electrical industry included.
In a series of articles on Electrical Review, we plan to share both the industry’s reaction as well as the top announcements from the Spring Budget, which was unveiled on March 15.
In this part three, we will detail the UK Government’s decision to promise carbon capture and storage projects up to £20 billion in investment. Make sure to check out all the other parts to ensure you don’t miss out.
Will carbon capture and storage really receive £20 billion?
One of the headline features for the industry in the Spring Budget was the commitment to invest £20 billion over the next two decades on low-carbon energy projects, with a particular focus on carbon capture and storage.
For those who are still unaware, carbon capture and storage is seen as the holy grail in reducing the country’s carbon emissions. That’s because it promises to capture the carbon being produced, transport it, and then store it deep underground without ever letting it enter the atmosphere.
That’s why the UK Government is especially keen on investing in the technology, as it means that businesses would not have to find a completely new way to produce items such as steel or cement, and can continue operating largely the way they do today. The only difference is rather than the carbon they produce leaking into the atmosphere, it gets buried underground.
There are already several CCUS pilot projects being built in the UK today, including one by oil giant BP off the coast of Scarborough. That particular project is currently involved in a disagreement with wind farm builder Ørsted, as both BP and Ørsted given permission to build their competing projects in the same area, with neither willing to cede land to the other.
However, while the UK Government has previously committed to providing £1 billion of funding to deliver four CCUS industrial hubs by 2030, Rishi Sunak wants to do much more under his premiership — or at least that’s the impression being given by his Chancellor’s Spring Budget.
Jeremy Hunt has said that he was allocating up to £20 billion to support the deployment of CCUS, with up to £1 billion per year to be spent by the UK Government. However, dive deeper into the Spring Budget, and you’ll find that it’s not in the formal budget policy costings, nor is the money set to be spent before the next general election in 2024.
Instead, it’s likely that this Government’s CCUS policy goes one of two ways. It either gets dropped after the next election if the opposition comes to power, which the current polling suggests, or the £20 billion is funded through levies.
It’s likely that a Labour Government would continue to invest in CCUS, with Shadow Chancellor Rachel Reeves previously including a Scottish carbon capture scheme as part of Labour’s £8 billion green investment programme. However, it’s not known whether the party would have the same ambition for the technology as the current Government, which hopes to achieve 20-30 million tonnes of carbon dioxide being captured and stored per year by 2030.
Carbon capture and storage is often a controversial topic within the industry, with some, such as our Gossage Gossip columnist, describing the technology as a ‘scam’. However, thus far reaction to the Spring Budget’s commitments from elsewhere in the industry has been somewhat warmer.
Mike Hodgson, Strategy Development Manager at James Fisher Renewables, commented, “We welcome the Chancellor’s £20 billion of funding for carbon capture announced today, but we’d urge the government to think bigger to drive the industry forward. Investment is only one piece of the puzzle to reach net zero while ensuring energy security. The UK is making good pace towards its 2050 target, but in order to get there the industry also needs a competent energy workforce, built through skills and on-the-job experience, as well as an overhaul of consenting and applications processes.”
James Larnder, Managing Director, Aquaterra Energy, added, “The significant funding of £20bn for UK carbon capture and storage is a landmark for the industry. Alongside our ambitious targets, it should be the catalyst for the country realising its potential as a global CCS leader.
“With the policy, funding and ambition established, the onus falls onto operators to seize the opportunity. The UK’s existing skillset from North Sea oil and gas provides a key advantage and much of the essential technology and expertise is already in place. Operators who can adapt these existing practices for CCS will have a significant head start in this vital industry for the UK’s net zero ambitions.”