{"id":61338,"title":"Industry warns £2bn budget cut threatens UK carbon capture and storage plans","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-10-13T06:08:10+00:00","modified":"2026-10-13T06:08:10+00:00","canonical_url":"https://stockmark.it/slashing-energy-budget-by-2bn-will-thwart-ccs/","markdown_url":"https://stockmark.it/slashing-energy-budget-by-2bn-will-thwart-ccs.md","json_url":"https://stockmark.it/slashing-energy-budget-by-2bn-will-thwart-ccs.json","category":"Business","categories":["Business","Energy"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/industry-warns-2bn-budget-cut-threatens-uk-carbon-capture.png?fit=1536%2C1024&quality=80&ssl=1","format":"news","language":"en-GB","content":"The nascent carbon capture and storage sector in the United Kingdom faces significant headwinds as the government is reported to be considering substantial reductions in public funding. Industry leaders have cautioned that slashing the energy department’s budget by two billion pounds would stymie investment and damage investor confidence in a sector that currently relies heavily on state support. These warnings come amid reports that the energy secretary, Miatta Fahnbulleh, has been asked to identify savings across CCS, hydrogen, and heat pump programmes to help finance defence spending.\n\nExecutives in the energy sector argue that removing public financial backing now would jeopardise projects already under way and leave vital infrastructure underused. Olivia Powis, chief executive of the Carbon Capture and Storage Association, stated that such a move would send a damaging signal to global investors that the United Kingdom cannot be relied upon to see major industrial strategies through. She warned that investment would not wait for conditions to improve but would instead move to competing markets, taking jobs, supply chains, and industrial capacity with it. The association noted that more than four billion pounds has already been awarded in supply chain contracts to UK firms for the country’s first CCS projects, creating approximately 5,500 construction jobs and exceeding voluntary domestic content targets.\n\nAt the Natixis green summit in Paris, Nick Terrell, executive director of Carbon Catalyst, explained that the first wave of CCS projects in north-west Europe has depended on state involvement to manage cross-chain risks and make projects bankable. While there is a strong desire from both government and industry to reduce the burden on the public balance sheet and attract private capital, Terrell emphasised that this transition requires projects to be executed safely and reliably. He added that the sector needs insurance mechanisms to address leakage risks and supply chain conflicts, which would help drive costs down. Terrell also highlighted the emerging role of the compliance market for biogenic carbon dioxide, noting that while the voluntary market is still developing, the compliance market is expected to play a key role in the sector’s growth.\n\nCarbon Catalyst advises Perenco on the Poseidon project in the North Sea, the UK’s first carbon injection scheme. Terrell said the project expects to bring an anchor emitter, an energy from waste plant, on board before the end of the year. The company is currently in detailed discussions with the government regarding the project’s funding. Meanwhile, in Norway, the Northern Lights project is scaling its ambitions. Equinor has announced an investment of 7.5 billion Norwegian kroner to increase storage capacity from 1.5 million to a minimum of five million tonnes of carbon dioxide per year. Partner Air Liquide has also outlined its own roadmap for sustainability, with deputy vice president Guillaume de Smedt acknowledging that geopolitical issues have shaped European energy markets and may impact the project’s kinetics.\n\nDe Smedt stated that the first CCS and hydrogen projects of their kind still require direct support to manage risk across the value chain, including for cement producers, capture operators, and transport and storage operators. He argued that while public support is necessary at this stage to manage risk, the ultimate goal is to create markets that allow the business to operate independently in the long run. Terrell noted that while offshore transport and storage of carbon dioxide increases costs, it allows the industry to step into a well-established regulatory regime for oil and gas in the North Sea, where permitting is relatively straightforward.\n\nPowis urged the government to finish what it started, warning of the risk of losing ground on its 21.7 billion pound commitment to growing the sector. She described carbon capture and utilisation as no longer a promise but a driver of growth, reindustrialisation, and jobs. The government faces a clear choice between securing reindustrialisation and energy resilience or risking the UK’s hard-won lead in the sector. Separately, concerns have been raised regarding the impact of budget cuts on residential heating. Russell Dean, deputy divisional manager at Mitsubishi Electric, warned that slashing the boiler upgrade scheme would be a serious mistake, arguing that households need help to move away from gas and that cutting support would undermine the government’s commitment to tackling the climate crisis."}