UK Government launches first licensing round for carbon storage projects

Areas off of coast in locations including Teesside (pictured) are up for bids

Operated by the North Sea Transition Authority (NSTA), the licensing round is inviting bids for projects in 13 areas within the North Sea and will be open rob ifs until 13 September. Plots of land are being offered off the coast in Aberdeen, Teesside, Liverpool and Lincolnshire.

The chosen 13 areas are “a mixture of saline aquifers and depleted oil and gas field storage opportunities”, the NSTA said in a statement, adding that it has “fully considered issues including co-location with offshore wind… environmental issues and potential overlaps with existing or future [oil and gas] licences”.

It is expected that the new licences will be awarded in early 2023. Applicants will also need to secure a lease from The Crown Estate or Crown Estate Scotland, as they would if they were applying to host offshore wind. The timelines for commencing the injection of carbon dioxide will depend on the project sizes and the approaches of the bidding companies, but the NSTA expects some projects to come online within six years of being granted a license and lease.

To date, the UK Government has only issued six licences to carbon storage projects in the North Sea. It first began issuing licenses in 2010, under the Energy Act of 2008.

The launch of the new licencing round, which is set to be the first of many through to 2030 and beyond, has been taken “in response to unprecedented levels of interest from companies eager to enter the market”, the NSTA has stated. These companies include existing oil and gas firms and new firms created to develop CCS technologies, often working in partnership.

NSTA boss Andy Samuel said: “This is an important day on the path to net-zero emissions. In addition to the huge environmental benefits of significantly reducing carbon dioxide emissions into the atmosphere, the facilities will provide opportunities for many thousands of highly-skilled jobs.

“Carbon storage is going to be needed across the world. There is growing investor appetite and we are keen to accelerate the development of the carbon storage sector so that the UK is well-positioned to be a global leader.”

The NSTA was known as the Oil and Gas Authority (OGA) prior to this March. Oil and gas activities are still its primary remit.

Policy vision, market stimulation

The UK’s decision to legislate for net-zero by 2050, made under Theresa May’s Government in 2019, provided the foundation for a new groundswell of interest in carbon capture and storage (CCS). Efforts to scale the sector had been made in the 2010s, but the Government’s decision to axe a £1bn fund to commercialise CCS technologies in 2015 was a major spanner in the works.

On the policy piece, the UK Government’s Ten-Point Plan, published in November 2020, envisions the creation of four industrial clusters utilizing CCS – the first of which should come online fully this decade. Policymakers have emphasised the importance of public-private collaboration in commercialising CCS technologies and scaling them up rapidly. The Ten-Point Plan’s specific target is for the UK to capture at least 20 million tonnes of CO2 annually by 2030, but some believe that capacity of just 10 million tonnes will be likely within this timeframe.

The Carbon Capture and Storage Association has pointed out that the Climate Change Committee (CCC) has recommended that the UK aims to bring 22-30 million tonnes of annual CCS capacity online by 2030. Achieving this aim will require at least £1.2bn of funding by the Association’s estimates.

CCS has been described by the CCC as a “non-optional” component of the UK’s net-zero transition.

However, significant concerns remain around whether it will truly be used to address emissions from hard-to-abate sectors. MPs and researchers have questioned whether sectors which are easier to abate could simply purchase up credits, leaving none for heavy emitting sectors like steel. There are also concerns that the use of CCS could be used as an excuse to de-prioritise emissions reductions, which could be risky in terms of climate impact, as CCS technologies are in their relative infancy at a commercial scale.

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