On Friday, the UK government issued a range of updates on its development of the UK carbon capture, utilisation and storage (CCUS) regime.
Many of the updates are highly technical and we'd be happy to discuss the details with you but, in summary:
- The government is pushing on with its selection of the industrial clusters which are the most ready for CCUS networks. The plan is to select this year two clusters (possibly more) as a priority for track 1, and to have them operational by the mid-2020s. A further number of clusters will then be identified as track 2, to be operational by around 2027-2030.
- The UK government is kicking off a CCUS supply chain mapping exercise, together with a 'Fit for CCUS' programme to help UK companies to position themselves to win CCUS work. The government will also develop a skills plan to ensure that the UK can provide a sustainable CCUS skills base and it is reviewing the financial support available to UK companies for accessing global CCUS work opportunities.
- More detail has been provided on the £1bn CCS infrastructure fund which primarily will focus on supporting capital expenditure for transportation and storage networks and industrial carbon capture projects.
- There has been an update on the business models for CCUS market participants, including:
- In relation to the integrated transport and storage regulatory plan, indications of what the regulation will look like over the various development phases of a cluster. This specifically includes mitigating risks as the transport network is developed, a cost and system charging structure and more detailed proposals for government backstop support
- Detail on the Dispatchable Power Agreements for power plants. These are a form of contract for difference, with potential payments from a government counterparty to power plants feeding carbon into the system. Payments will have an 'availability' and 'variable' elements and further detail has been provided on those proposals
- There are more details on Industrial Carbon Capture contracts which will also offer government support for certain energy from waste, combined heat and power and certain retrofitted gas-to-hydrogen facilities. The government will also develop a 'Capture as a Service' model consistent with the ICC model to permit third parties to offer the service of capturing the emissions of another party.
Overall, the government continues to work at pace towards the goal of having 10 million tonnes of carbon dioxide being captured by 2030.