The Carbon Capture and Storage Association (CCSA) has this week made its submission to Hunt ahead of his Budget speech in early March, calling for a commitment to back the nascent sector with £2-3bn annually from 2028 onwards.
As it stands, Hunt has pledged to support the industry with £1bn per year over a 20-year period commencing in 2024. This pledge was first unveiled at the 2023 Budget.
The CCSA claims that an uplift in Whitehall funding is necessary for the UK to lead the global race to scale man-made carbon capture, usage and storage (CCUS) technologies amid increased subsidy provisions in markets such as the EU, US and China.
Moreover, it notes that a £1bn commitment per year seems steep now but will be less so post-2030 as the nation’s installed CCUS capacity grows.
The trade body is calling for the Government to accelerate its carbon capture cluster work, bringing four major projects online by 2030. This timeline is being targeted by the Government, but concerns persist about delays caused by slower policymaking during the Covid-19 pandemic and the two changes in Prime Minister in 2022.
Should deployment buoyed by Government funding come to fruition, the CCSA claims, some £30bn of private sector investment could be unlocked this decade.
Show me the money
The CCSA is also seeking clarity on when funding already announced will be provided, arguing that investors will be reluctant to move without this information, and with no funding provided to date.
“With lead-in times of six to seven years for CO2 storage sites and three to four years for capture projects, time is running out” for final investment decisions to be taken on projects that should receive initial funding, the CCSA stated.
CCSA chief executive Ruth Herbert said: “As deployment begins to ramp up around the world, UK can play a leading role in the rapidly growing global CCUS market. Significant progress has been made by the Government in 2023, however, increased pace and forward visibility are paramount for investor and supply chain confidence.”
The UK Government published a CCUS ‘Vision’ paper in late 2023. The key new announcement was a competitive allocation process for projects, similar to the contracts for difference (CfD) auctions for renewables. This is set for a 2027 launch.
Under this process, the Government will support not only clusters but smaller, more dispersed sites.
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