Policy paper

CCUS Net Zero investment roadmap: Capturing carbon and a global opportunity

Published 5 April 2023

This was published under the 2022 to 2024 Sunak Conservative government

The UK is leading the charge towards a net zero, nature-positive future

The UK has the potential to be one of the greatest CO2 storage bases in Europe, with billions of tonnes worth of storage-opening up economic growth and exciting global investment opportunities.

Rt Hon Grant Shapps MP
Secretary of State for Department for Energy Security and Net Zero

Carbon capture, usage and storage (CCUS) will play a critical role in the transition to net zero by 2050.

The UK is well placed to lead in CCUS globally with:

• A worldwide reputation as an international centre of engineering excellence
• Extensive experience from the oil, gas, and petrochemicals sector
• Substantial CO2storage potential and industrial infrastructure

The UK is a first mover; we are aiming to support the establishment of 2 CCUS clusters by the mid-2020s and a further 2 by 2030,through which we aim to capture 20-30 MtCO2 per year.

The UK has one of the world’s most attractive business and investment environments

78Gt Potential CO2 storage capacity^{[Reference 1]}

1st in Europe for value of start–up & scale–up ecosystem^{[Reference 2]}

Potential £4-5bn in GVA from UK CCUS exports by 2050^{[Reference 3]}

2nd in Europe for FDI attractiveness^{[Reference 4]}

£1bn Funding for Net Zero Innovation Portfolio^{[Reference 5]}

£22bn committed to raise R&D to 2.4% of GDP^{[Reference 6]}

1st Ranked best global green finance centre^{[Reference 7]}

1st in G20 as a globally connected economy^{[Reference 8]}

Engineering employs 5.6m people^{[Reference 9]}

5th Largest economy^{[Reference 10]}

• Open, liberal economy
• Stable regulatory regime with independent legal system
• Globally competitive and transparent tax regime
• Generous R&D and patent tax relief
• The UK-EU Trade and Cooperation Agreement allows zero tariff market access with the EU
• Flexible labour market
• World class professional services sector supporting businesses with insurance and finance

Why invest in UK CCUS?

A sector with ambitious targets and major opportunities for growth.

£20bn for the early deployment of CCUS^{[Reference 11]}

Up to £210m Industrial Strategy Challenge Fund^{[Reference 12]}

Up to £115m in new R&D spending to develop CCUS & Carbon Removal techs in the UK^{[Reference 13]}

Up to £8bn of potential turnover captured by the UK from global turnover of the CCUS industry in 2050^{[Reference 14]}

Up to £18bn private financial capacity available from UK Infrastructure Bank for sectors including H2/CCUS^{[Reference 15]}

UK aims to capture 20-30 MtCO2 per year by 2030

Opportunities in an advanced and growing sector:

• Global player: the UK is in the top 5 countries globally for CCUS readiness^{[Reference 16]}
• CCUS clusters: The government is committed to deploying 2 CCUS clusters by the mid-2020s and a further 2 by 2030 through which we aim to capture 20-30 MtCO2 per year
• Regulatory environment: Bespoke business models
• Could support 50,000 jobs in 2030^{[Reference 17]}

UK CO2 storage capacity by store type

Overall UK CO2 storage capacity in offshore geological formations by type of store.

Source: Based on Bentham et al. (2014) CO2 Storage Evaluation Database

Data from chart:

Store type	Storage capacity (Gt)
Sandstone saline aquifers	60
Chalk saline aquifers	8
Gas fields	5
Oil fields	3
Unites under 20 Mt	2

The UK can lead the world in the provision of CO2 transport and storage services with:

• An estimated 78 billion tonnes of theoretical CO2 storage capacity in the UK continental shelf
• One of the largest potential CO2 storage capacities in Europe

Building the market

Major UK industrial cluster emissions

Map of major UK industrial cluster emissions from large point sources. There are other areas of industrial activity across the UK with an interest in developing CCUS.

Source: NAEI 2019 data. Annual emissions. Does not capture non-ETS emissions in a cluster.

Data from map:

Location	Cluster	Emissions (MtCO2e)
Humberside	Track-1 clusters	8.8
Merseyside	Track-1 clusters	5.2
Teeside	Track-1 clusters	3.8
Grangemouth	Reserve Track-1 cluster	4.2
South Wales	Other industrial clusters	9.2
Southampton	Other industrial clusters	3.3
Black County	Other industrial clusters	0.5

• Industrial CCUS clusters can be the starting point for a new carbon capture industry with a sizeable export potential
• The cluster sequencing process maps a logical path for CCUS deployment in the UK. Clusters sequenced for the mid-2020s are ‘Track-1’ and those by 2030 are ‘Track-2’
• This approach will help drive investment across the sector. We remain committed to helping all industrial clusters to decarbonise as we work to reach net zero emissions by 2050.
• The CCUS sector could support up to 50,000 jobs in the UK in 2030.

Track-1 CCUS clusters for the mid-2020s

Delivering first of a kind carbon capture projects in the UK

Data from map:

Cluster	Project	Type
HyNet	Hanson Padeswood Cement Works Carbon Capture and Storage Project	ICC
HyNet	Buxton Lime Net Zero	ICC
HyNet	Viridor Runcorn Industrial CCS	Waste ICC
HyNet	Protos Energy Recovery Facility	Waste ICC
HyNet	HyNet Hydrogen Production Plant (HPP1)	Hydrogen
East Coast Cluster	Net Zero Teesside Power	Power
East Coast Cluster	bpH2Teesside	Hydrogen
East Coast Cluster	Teesside Hydrogen CO2 Capture	ICC

• The Track-1 Project Negotiation List includes 8 projects selected through the cluster sequencing process to progress to negotiations to form the start of the CCUS clusters, based in HyNet and the East Coast Cluster
• This is a significant step towards the UK’s first operational CCUS networks, underlining the government’s commitment to delivering our Net Zero ambitions

Opportunities for investment

Track-1 cluster expansion and Track-2 clusters

Track-1 expansion

• The government will launch a process,later in 2023, to enablefurther expansion of Track-1clustersbeyond the initial Track-1 deployment, identifying and selecting projects within HyNet and East Coast Cluster–including the Humber –and their associated storesas they become viable, to be operational by 2030.
• The expansion of the Track-1 clusters is expected to include greater utilisation of the initial HyNet storage capacity and the development of the Bunter Closure stores for the East Coast Cluster to 2030, subject to further assessment and value for money.
• Government will work to identify projects that could be potential alternatives to any of the initial Track-1 projects, if any are unable to agree contracts within the criteria and timelines required. The government will continuously monitor the value for money offered by the Track-1 shortlist, to ensure only the best and most cost-effective capture projects reach FID.
• Subject to criteria under development, the government is minded to enable engineered greenhouse gas removals (GGRs) to apply to Track-1 expansion and Track-2.

Track-2

• Government has launched Track-2 of the CCUS cluster sequencing process to establish 2 further CCUS clusters.
• At this stage, government is seeking to identify 2 Transport and Storage (T&S) systems that can deliver government’s objectives for Track 2 and considers the Acorn and Viking T&S systems as able to meet the Track-2 eligibility criteria, and best placed to deliver on the objectives for Track-2, subject to due diligence and value for money assessments.
• Other T&S systems that are able to meet the eligibility criteria have the opportunity to express an interest in being considered for Track-2. The deadline for submitting an expression of interest (EoI) is 28 April 2023.
• We intend to provide an update in summer 2023, following closure of the EoI process.

Incentives to invest

Addressing commercial barriers to investment through world leading commercial frameworks and capital and revenue funding

Business models for CCUS deployment

• Industrial Carbon Capture (ICC) Business Models (including the Waste ICC Business Model) are designed to incentivise the deployment of carbon capture technology for industrial users who often have no viable alternatives available to achieve deep decarbonisation.
• The Dispatchable Power Agreement (DPA) will incentivise the mobilisation of private finance to enable power CCUS to play a valuable mid-merit role in our generation mix.
• For Power Bioenergy CCS (BECCS) we are designing a firstof a kind Power BECCS business model to incentivise private finance enabled projects that will provide negative emissions and firm low carbon electricity.
• Greenhouse Gas Removals (GGRs) Business Model is being developed to attract private investment in a portfolio of engineered GGR technologies including Direct Air Carbon Capture and Storage (DACCS).
• Transport and Storage (T&S) Regulatory Investment (TRI) Model is based on the successful regulated asset base model. It has 3 key objectives: to attract investment in the T&S network to establish a new CCUS sector; enable low-cost decarbonisation in multiple sectors; and develop a market for carbon capture –a long-term vision.
• The Hydrogen Production Business Model will provide revenue support to producers to overcome the operating cost gap between low carbon hydrogen and high carbon counterfactual fuels.

Capital and revenue funding available

• £20 billion investment in the early deployment of CCUS, including the £1 billion CCUS Infrastructure Fund to support the capital costs of strategic CCUS infrastructure, T&S networks, and ICC projects.
• Industrial Decarbonisation and Hydrogen Revenue Support scheme to fund business models for low carbon hydrogen production and industrial carbon capture that give investors the long-term revenue certainty they require.

Creating a supportive regulatory environment

Supportive regulatory environment

• The Energy Bill establishes the legislative framework, subject to Royal Assent, for the economic regulation of CO2 Transport and Storage, Industrial Carbon Capture, and low carbon hydrogen business models. The framework is designed to attract private finance and remove market barriers to investment, providing long-term revenue certainty needed to establish and scale up these industries across the UK.
• Powering Up Britain builds on our ambitions in the British Energy Security Strategy and the Net Zero Strategy. The package sets out how the government will enhance our country’s energy security, seize the economic opportunities of the transition, and deliver on our net zero commitments.
• The Green Finance Strategy will strengthen the UK’s leading position at the forefront of the global green finance market and provide the financing needed for our energy security, net zero, and environmental targets.The Strategy sets a framework for the UK’s ambition to become the world’s first Net Zero-aligned Financial Centre.

Supply chains

Developing strong supply chains to put the UK at the forefront of global CCUS markets

Building infrastructure and supply chains

• CCUS Supply Chain Strategy is being developed by industry through the CCUS Council. The strategy will act as a supply chain guidance/charter document for Track-1 and successive CCUS clusters. Developers will sign up to a voluntary industry-wide process to share best practice and publish and track progress against supply chain ambitions.
• Increasing visibility of CCUS across the supply chain after government worked with industry to organise a successful ‘Meet the Specifier’ event for the Transport and Storage portion of a CCUS project in 2022. We will organise future events around the country to continue raising awareness of procurement opportunities and ensure the supply chain is ready to deliver our ambitious deployment programme.
• Collaborating to deliver a strong,industrialised UK CCUS supply chain by government working with industry to maximise the economic opportunity presented by CCUS, identify skills requirements, attract investment,and facilitate new export opportunities through UK Export Finance, the Department for Business and Trade, and the Foreign, Commonwealth & Development Office overseas networks.

Skills and innovation

Building on the UK’s existing industrial and technological expertise

Skills and capability

• We are supporting Institutes of Technology across England with £120 million for institutes specialising in delivering higher technical education and developing green skills.
• Free Courses for Jobs supports eligible adults to gain high value Level 3 (A level-equivalent) qualifications, many of which can help them to transition to or specialise in roles in the green economy.
• We are reforming the skills system through Local Skills Improvement Plans. We have instituted a Lifetime Skills Guarantee supporting workers to gain the skills they need to transition to the green economy, including through targeted support for retraining.
• In England, Department for Education is investing an additional £3.8 billion in skills by 2024-25. This includes funding for programmes to support green skills, including apprenticeships, T levels, and Skills Bootcamps.
• The Green Jobs Delivery Group has been established as the central forum through which government and industry are working together to accelerate the supply of a skilled workforce for our low carbon sectors.
• The North Sea Transition Deal has developed an integrated People and Skills Plan to ensure the highly skilled oil and gas workforce with skills transferability to adjacent energy sectors can be deployed to develop our CCUS industry.

Support for world leading innovation

• Between 2004-2021 we provided over £346 million public funding for CCUS Research and Innovation.
• The Industrial Strategy Challenge Fund provides up to £210 million through the Industrial Decarbonisation Challenge, including £170 million, matched by £261 million from industry,to support low-carbon technology development in UK industrial clusters.
• Industrial Decarbonisation Research and Innovation Centre has been established.
• £1 billion Net Zero Innovation Portfolio is providing up to £115 million grant funding to support the research and development of CCUS and Greenhouse Gas Removal technologies.

Addressing barriers to investment

Creating a coherent pathway to storage permitting

• Working with the North Sea Transition Authority to further our understanding of geological CO2 storage potential and to ensure sufficient CO2 stores are available to deliver net zero.

Providing timelines for non-pipeline transport (NPT) of CO2

• Working with industry and clusters located away from pipeline transport solutions to develop an NPT strategy.
• Continuing to engage with industry and international counterparts on their NPT position to learn from the approach of others and understand NPT requirements.

Providing certainty on CCUS deployment pipeline

• We have now published the Track-1 Project Negotiation List which includes 8 projects which we have selected through the Cluster Sequencing Process to progress to negotiations to form the first 2 CCUS clusters, based in HyNet and the East Coast Cluster.
• We have launched Track-2 of the CCUS cluster sequencing process to establish 2 further CCUS clusters and we will launch a process within 2023 to enable further expansion of Track-1 clusters.
• We will set out a vision for the UK CCUS sector, setting out how CCUS will support our net zero ambitions to raise confidence and improve visibility for investors.

Ensuring workforce availability to deliver CCUS

• The Green Jobs Delivery Group acts to upskill and train the green workforce of the future.
• Integrated People and Skills Strategy launched to highlight the benefits of a just and managed energy transition for the workforce, the industry, governments and communities.

Internationally competitive

• The UK’s bespoke cluster sequencing process will be the starting point for a stable, regulated and investable CCUS industry.
• The Energy Bill will, subject to Royal Assent, provide the legislative framework for business models for CCUS, providing investors with the long-term revenue certainty to establish and scale up the CCUS industry across the UK.

Our 2035 Delivery Plan

Critical activities and milestones on a path to developing the UK CCUS sector.

Industrial clusters

2021 to 2022: Track-1 Cluster sequencing process [Government activity]

2021 to 2024: Track-1 Cluster FEED [Industry activity]

2022 to 2030: Track-2 Second cluster sequencing development, launch, negotiations, and construction [Joint government & industry activity]

2023 to 2025: Track-1 Negotiations with transport and storage companies and capture projects [Joint government & industry activity]

2023 to 2030: Track-1 Cluster consents, construction, commissioning [Industry activity]

Track-1 Expansion development, launch, negotiations, and construction [Joint government & industry activity]

2021

• Launch Phase-2 of the cluster sequencing process

2023

• Track-1 Project Negotiation List announced
• Track-1 Cluster consents, construction, commissioning Launch Track-2

2025 to 2030

• Up to 1GW of CCUS-enabled hydrogen in construction or operation
• 2 clusters (including one power CCUS plant) by mid 2020s

2030 to 2035

• Capture 20-30 MtCO2 per annum by 2030 including 6 MtCO2 from industrial CCS [Government target]
• 4 CCUS clusters by 2030
• Deploy at least 5MtCO2 per annum of engineered greenhouse gas removals (GGRs) by 2030
• Capture and store 9MtCO2 from industrial CCS by 2035

UK policy framework and funding

2021

• Confirmation of £1 billion CCUS Infrastructure Fund (CIF)
• Launch £20 million CCUS Innovation 2.0 programme
• Publication of UK Hydrogen Strategy

2022

• Launch £240 million Net Zero Hydrogen Fund (NZHF)
• Publication of T&S, ICC, and power business model updates
• Announce winners of £60 million DACCS and other GGRs innovation programme
• Launch £140 million Industrial Decarbonisation& Hydrogen Revenue Support (IDHRS) scheme
• Publication of hydrogen production business model Heads of Terms

2023

• £20 billion announced for early deployment of CCUS
• GGR and power BECCS Business Model Consultation Government Responses
• Announce Call 2 winners of£20 million CCUS Innovation 2.0 programme

2030 to 2035

• Up to 10GW of hydrogen production, half of which may be from CCUS [Government target]
• Deliver a fully decarbonised power system by 2035 [Government target]
• Legally binding target equivalentof 78% emissions reductions by 2035 [Government target]

Further ways we help you invest and develop in the UK

The UK’s commitment to support global investment is unparalleled.

The Department for Business and Trade (DBT)

DBT supports businesses to invest, grow and export, creating jobs and opportunities across the country.

Office for Investment (OfI)

OfI is a joint DBT and No.10 team that provides a single front door to government for high-value and high-impact investors, facilitating with access and insights through a concierge offer. The OfI works across departments to drive increased investment in line with the government’s Net Zero agenda.

UK Export Finance (UKEF)

The UK’s export credit agency, has enhanced its support to attract investment into supply chains and building export capability.

UK infrastructure Bank (UKIB)

The UKIB can invest across the capital structure (senior debt, mezzanine, first loss, debt guarantees and equity) to help crowd private finance into net zero infrastructure.

Support moving a tech business

The Global Entrepreneur Programme (GEP) helps high-growth overseas companies relocate to the UK.

Economic development agencies

There are a number of organisations with significant experience in delivering public sector investment packages. For example, Scottish National Investment Bank is a mission-led development bank that provides patient capital to build a stronger, fairer, more sustainable Scotland.

Helpful guides

Guidance on expanding to the UK, including visas and migration; tax and incentives; regulatory and business planning; staff recruitment, retention and training; and immigration.

Links to key organisations

In addition to centres of excellence and industry clusters, we will facilitate introductions to universities, Local Enterprise Partnerships (LEPs) and Enterprise Zones.

Find a UK specialist

The UK Investment Support Directory allows you to find companies with skills and experience in helping overseas businesses set up or expand in the UK.

Visit great.gov.uk

---

1. Pale Blue Dot Report (2016) ↩

2. Dealroom ↩

3. Energy Innovation Needs Assessment (2019) ↩

4. EY Attractiveness Survey (2022) ↩

5. Net Zero Innovation Portfolio (2023) ↩

6. UK Innovation Strategy (2021) ↩

7. The Global Green Finance Index 10 (2022) ↩

8. Global Connectedness Index (2022) ↩

9. Workforce trends (2022) ↩

10. Official statistics converted at market exchange rates as a source ↩

11. Spring Budget (2023) ↩

12. Industrial Strategy Challenge Fund (2023) ↩

13. Net Zero Innovation Portfolio ↩

14. Analysis based on Energy Innovation Needs Assessment (2019) ↩

15. UKIB Strategic Plan (2022) ↩

16. CO2RE (2023) ↩

17. Energy Innovation Needs Assessment (2019) ↩