UK promises £20bn for CCUS, and launches nuclear body

Warnings that support for industry falls short and goes too slow

THE UK government has pledged to invest up to £20bn (US$24.2bn) from its spring budget to support carbon capture, use, and storage (CCUS). It has also launched Great British Nuclear, a public body that will help nuclear provide 25% of UK electricity by 2050.

UK chancellor Jeremy Hunt also announced the extension of the climate change agreement scheme for a further two years to 2027, to allow eligible businesses £600m of tax relief on energy efficiency measures.

He also announced a further round of the levelling up fund which will deliver 12 new investment zones. The government has identified areas in England to host the zones including the West Midlands, Greater Manchester, Northeast England, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. There will also be at least one in Scotland, Northern Ireland, and Wales.

Hunt also announced a new policy of full capital expensing for the next three years, with plans to make it permanent “as soon as we can responsibly do so”.

“That means every single pound a company invests in IT equipment, plant, or machinery, can be deducted in full and immediately, from taxable profit,” he said, adding that it is a corporation tax cut worth an average £9bn/y for every year it is in place.

Paving the way for CCUS

Describing the UK as a world-leader in renewable energy, Hunt said government will invest up to £20bn in early development of CCUS to build “another plank of our green economy”. This will start with projects from “our east coast, to Merseyside, to North Wales, paving the way for CCUS everywhere across the UK as we approach 2050.”

Hunt said the investment is expected to support up to 50,000 jobs, attract private sector investment, and help capture 20–30m t/y of CO2 by 2030.

The UK government is seeking to deploy two industrial CCUS clusters by the mid-2020s (track 1), and a further two by 2030 (track 2) to achieve its CO2 capture goal. In late 2021, it selected the HyNet and East Coast Clusters for track 1 development.

CCUS trade body Carbon Capture and Storage Association (CCSA) said: “Today’s announcement means that two years since the launch of the programme, we can now move forward with implementing the initial CCUS clusters. Alongside this, the industry is developing a healthy pipeline of projects to deliver on the government’s net zero strategy in industrial regions all around the UK.”

“We look forward to seeing which projects have been chosen to move to construction, the forward timeline for selecting the next CCUS clusters that need to be operational this decade, and a swift passage of the Energy Bill through Parliament, to finalise the regulatory framework for the industry.”

Nuclear support body

Hunt said that despite an increase in the proportion of electricity generated by renewables from under 10% in 2010 to nearly 40%, nuclear power is vital to achieving the UK’s net zero obligations.

“Because the wind doesn’t always blow, and the sun doesn’t always shine…we will need another critical source of cheap and reliable energy, and that is nuclear.”

He announced the launch of Great British Nuclear (GBN), a public body designed to bring down costs and provide opportunities across the supply chain to help provide a quarter of the UK’s electricity by 2050. Secondly, he launched the first competition for small modular reactors (SMRs), which is expected to be completed by the end of the year. If demonstrated to be viable, the UK government intends to co-fund “this exciting new technology”.

These measures follow the government’s £700m backing last year of Sizewell C – the first state backing of a nuclear project in more than three decades.

To encourage private sector investment, the government will class nuclear power as environmentally sustainable in its green taxonomy, though this is subject to consultation. This will facilitate access to the same investment incentives as renewable energy.

Hunt’s announcement follows the release of a report last week by the UK’s Climate Change Committee, which concludes that it is possible to deliver a decarbonised electricity system by 2035. The system would primarily rely on renewables, with support from nuclear.

Tom Greatrex, CEO of the Nuclear Industry Association, said: “Nuclear’s inclusion in the UK green taxonomy is a vital move, following the example set by other leading nuclear nations, and will drive crucial investment into new projects, making it cheaper and easier to finance new reactors.