UK invests £22bn in CCS clusters and hydrogen projects

THE UK is investing almost £22bn (US$28.8bn) in carbon capture and storage and hydrogen projects as the government seeks to take a lead in greener technologies.

It says it has reached commercial agreement with industry to invest £21.7bn over 25 years in carbon capture clusters planned for Teesside and Merseyside in northern England. It expects the state funding will bring in £8bn of private investment, create 4,000 jobs, and store 8.5m t/y of CO2.

The clusters being funded

The Hynet project in the northwest of England and North Wales is centred around a new blue hydrogen production facility that will be based at EET’s Stanlow refinery. The plan is that the hydrogen produced from the 350 MW plant will be used by the refinery and then a widening network of manufacturers and power producers that would connect to the cluster. These could include Tata Chemicals, and glassmakers Encirc and Pilkington.

The hydrogen production plant will reform natural gas using Johnson Matthey’s Low Carbon Hydrogen technology that it says can capture 99% of the CO2 produced. Italian energy firm Eni will pipe the CO2 for storage under the sea in Liverpool Bay after being granted approval today by the Crown Estate to repurpose existing pipelines for a network that could transport 4.7m t/y of CO2 for storage.

The government says that the CO2 produced at the Protos energy-from-waste plant being built by Encyclis and Biffa in Ellesmere Port is among the projects funded under the fresh announcement.

Teesside’s East Coast Cluster involves several projects including Equinor and bp’s Net Zero Teesside Power venture that will build an 860 MW gas-fired power plant with the capability to capture up to 2m t/y of CO2. bp is also involved in a second project called H2Teesside that will involve a new blue hydrogen production plant. The funding announced today will support the construction of a network capable of transporting up to 4m t/y of CO2 for offshore storage in the North Sea. It will be built by the Northern Endurance Partnership which involves bp, Equinor, and TotalEnergies.

The government says the projects it is funding will set the UK on course to become a global leader in CCUS and hydrogen, bolstering economic growth, and supporting an estimated 50,000 skilled jobs as the carbon capture sector matures in the 2030s.

Prime minister Keir Starmer said: “Today’s announcement will give industry the certainty it needs – committing to 25 years of funding in this groundbreaking technology – to help deliver jobs, kickstart growth, and repair this country once and for all.”

Three false starts

The announcement has received a mixed response with some concerned it will prolong the UK’s reliance on fossil fuels. Others have welcomed a pragmatic approach to decarbonisation from the government after decades of false starts while CCS has been successfully implemented elsewhere including the Norwegian North Sea.

Stuart Haszeldine, professor of carbon capture and storage at the University of Edinburgh, said:  “The UK’s long CCS design journey started in 2005 with an unexpected offer from bp – not accepted by government, leading to a competition to retrofit coal power electricity not awarded in 2011, then last-minute cancellation in 2016 of funding for gas-powered capture, and from 2018 a pivot to industrial projects mutually supporting shared pipelines and stores.

“This is fourth time lucky for CCS in the UK. After three false starts on projects with single sources to capture CO2, a change of philosophy has produced multiple industrial CO2 capture projects, mutually supporting pipelines feeding into secure geological stores. This ambitious and complex pathway is starting to convert the world’s first nation to industrialise coal use into the world’s first nation to decarbonise industry.”

Reactions

Geoffrey Maitland, professor of energy engineering at Imperial College London, said the funding is excellent news for the UK economy and will help decarbonise heavy industry as part of national targets to be net zero by 2050.

“The hard stuff is decarbonising the major industries which generate CO2 as a byproduct such as cement manufacture, key to the construction industry, and steel and chemicals production where, even if they can in time be powered by electricity rather than fossil fuels, there will not be enough spare renewable electricity to do this for decades.”

Among the reaction from environmental action groups, Greenpeace said the government should be funding industry to tackle the climate crisis and job creation but instead of supporting hydrogen produced from fossil fuels, it should fund renewables instead.

"The bulk of this cash should be invested instead in creating new jobs in the green industries of the future, like in offshore wind, or rolling out a nationwide home insulation programme that will keep our homes warmer, energy bills lower and less dependent on gas,” said Doug Parr, Greenpeace UK's policy director.

Maurits van Tol, CEO of Johnson Matthey Catalyst Technologies: “This is a real statement of intent and is a huge opportunity for the UK to cut emissions, create quality jobs, and become a global exporter of leading technologies.”

James Richardson, acting CEO of the UK’s independent Climate Change Committee, said: “We can’t hit the country’s targets without CCUS so this commitment to it is very reassuring. It will no doubt provide comfort to investors and business about the direction of travel for the country.”

The government has not replied to requests for a breakdown of precisely what projects the funding covers. It has also not given any details about support for later phases of the Hynet and East Coast cluster projects or the so-called second-tier clusters in Scotland and the Humber that the previous government pledged to support. The Financial Times reports that the £21.7bn will be funded through a mixture of levies on energy bills and Treasury funding.

Maitland, a former IChemE president who served as a member of the 2018 government taskforce on CCS costs, said that building CCS at scale within clusters would “bring the cost down to levels which are within the noise of normal energy price fluctuations”. He added that the clusters will offer opportunities to reskill workers in economically deprived areas of the country.

The government is coming under increasing pressure to support workers affected by the green transition. In recent weeks, the UK’s heavy industries have followed through with plans for thousands of jobs cuts. This includes 2,800 losses at Tata Steel following the closure of the last remaining blast furnace at Port Talbot in September to make way for greener steel production requiring fewer workers. Four hundred jobs are to go next year when Grangemouth refinery is converted into a fuels import terminal on the back of projected lower demand for fossil-based transport fuels.

Unions and climate groups are organising a rally outside the Treasury in London next week when they will call for the government to invest £1.9bn a year in a just transition fund to create renewable energy jobs for workers in the oil and gas industry.