After Rishi Sunak’s pledge to maximize oil and gas production on Monday, the UK energy industry has called for ministers to increase their support of this nascent market to capture carbon dioxide emissions.
The prime minister had earlier pledged to continue licensing new North Sea development to “bolster” UK energy security. He also announced that the government would support two new carbon storage and capture (CCS).
The government has doubled the number of projects that receive support. The four schemes aim to create an industry to reduce the emissions of heavy industries that are struggling to reduce their dependence on fossil fuels.
Executives promoting CCS warned that the government is still moving too slowly to develop detailed policies and funding models. This will ensure CCS can scale up and the sector meets its first emissions reduction target within the next decade.
The UK government has also been warned that recent backsliding on climate commitments is making it harder to develop a sector for carbon capture in the UK.
Ruth Herbert, CEO of the Carbon Capture and Storage Association (CCSA), welcomed the support given to the two schemes — Viking on Humberside and Acorn, in Aberdeenshire, but warned that time was running out for building the infrastructure required.
She said: “It is great that we have momentum, but there’s still a lot to do by 2030.” She was referring to the target set by the government to capture between 20mn to 30mn tonnes CO2 annually by the end the decade. “Billions in investment are waiting to be deployed for decarbonising these industrial regions but firm plans must be secured to secure them.”
The capture and storage of carbon dioxide from industrial processes ranging from oil refining to manufacturing is an important part of the UK’s goal of reaching net zero by the year 2050 as well as the transition away from fossil fuels.
Nick Cooper, CEO of Storegga (developer of the Acorn Project), said that the company is ready to “roll up its sleeves”. . . “Sit down with the Government and get cracking” to discuss the details of the state’s backing for the project. Acorn is supported by Shell and Harbour Energy, two oil and gas companies.
Graeme Davies is the director of the Viking Project, led by Harbour Energy and backed by BP. He called the project’s approval a “major landmark”. He was confident that the project would capture carbon by 2030, but cautioned against underestimating the size of the challenge.
He said: “I believe the targets set by the government are very ambitious and this is the scale of decarbonisation that the UK needs.” “There is a lot of work to be done — these are large infrastructure projects which take 10 years or more to implement at scale.”
Adam Berman said that the viability of carbon sequestration on a long-term basis was not only dependent on government support, but also a strong carbon price.
Sunak’s government is under criticism for not reducing the amount of carbon allowances that are available to emitters by as much as was expected while giving additional allowances to heavy industries. The UK carbon price has been pushed down to a significant discount compared to its EU counterpart.
Berman stated: “Beyond the financing arrangements for individual project, the future UK CCS industry depends heavily on a national carbon price that encourages industry to capture rather than just emit carbon.”
Herbert, of the CCSA, said that part of the issue was because the government took too long to develop the detailed policies needed to get the carbon capture sector off the ground. Ministers are now “recognising we’re in the rear”. The government was forced to lower carbon prices to avoid damaging the industry.
She said that the industry hoped to see policies put in place for a stronger carbon price.
Sunak, who was in Scotland on a business trip, defended the decision of the Scottish government to continue licensing new oilfields and to support CCS. Sunak stated that even when we reach net zero by 2050, one quarter of our energy will be supplied by oil and gas. He argued it is safer and cleaner to produce fossils close to home.
The current 33rd round is expected to award over 100 licenses starting in the fall. The round was launched in October, and it was confirmed in January that 115 bids were received.
Sunak said that he is still committed to the two major net zero targets. The 2030 deadline for the ban on the sale of new petrol and diesel cars, and the 2050 goal of making the UK a carbon-neutral economy.