The True Cost of Carbon Capture and Storage in the UK

Eighteen miles off the Norfolk coast, last week marked a pivotal moment in Britain’s energy transition. The Valaris 72 oil rig, typically associated with petroleum exploration, was instead drilling the first carbon dioxide appraisal well in UK waters. Far from searching for hydrocarbons, this project is seeking to establish safe long-term storage deep beneath the seabed for carbon emissions. Success here could pave the way for billions of tonnes of CO2 to be stored not just from the UK, but potentially from across Europe, positioning Britain as a continental repository for waste carbon.

The North Sea Transition Authority, the government’s regulator, has estimated the basin could accommodate up to 78 billion tonnes of CO2—enough to store all the emissions produced in the UK since the dawn of the industrial revolution. Ed Miliband, Energy Secretary, has expressed that carbon capture and storage (CCS) is not just a tool for slashing emissions toward net zero by 2050 but a catalyst for a new industry capable of supporting up to 50000 jobs by the 2030s. Ambitious, but undeniably expensive.

Miliband’s £22 billion pledge to CCS projects is only the initial instalment, most of it to appear as surcharges on consumers’ energy bills, the rest from general taxation—equivalent to around £800 per UK household over two decades. But industry insiders and economists warn far more will be necessary, with estimates reaching £400 billion by 2050. This raises harsh questions for a country already shouldering some of the globe’s highest electricity bills: can British households manage these additional costs, even for such a transformative promise?

Kayte O’Neill, chief operating officer of the National Energy System Operator, presented the scale at a recent industry conference—tens of gigawatts of CCS and hydrogen capacity will be needed by 2050. Given that the largest UK power plant, Drax, generates just 2.6 gigawatts, this ambition implies the construction of dozens of new major facilities. When The Telegraph pressed O’Neill about the consumer cost, her response was notably opaque; there is simply no way forward without factoring in higher bills, layered with green levies that, according to energy executives, could add £300 annually by 2030.

CCS technology broadly falls into three categories. The first is capturing emissions at source from burning fossil fuels in power stations or factories using chemical treatment. The second approach, so-called Bioenergy with Carbon Capture and Storage, proposes adding CCS to wood-fired plants, rendering them carbon-negative. The most audacious method, Direct Air Capture, removes CO2 directly from the atmosphere. All are energy-intensive—compromising up to 20 per cent of a plant’s output—and expensive, with little direct market demand, meaning their viability relies on subsidies or carbon taxes.

Recent projects are already absorbing government support: Net Zero Teesside and HyNet North West in Merseyside will create power and infrastructure for carbon transport and storage, while the Acorn project in Scotland will use disused fossil fuel pipelines. Even so, the financial burden is daunting. The Fuel Poverty Action group estimates the total bill for construction and operation of CCS by 2050 could eclipse £400 billion, with annual running costs of £18 billion by mid-century. Track-1 projects alone, like those in Teesside and HyNet, may soak up more than £50 billion in support before the end of this decade. Some experts liken the scale of cost overruns to HS2.

The industry sees promise in the global market; over 70 commercial CCS sites now operate worldwide, with more in the pipeline, and demand for certified low-carbon products and negative emissions services is growing, exemplified by companies such as Microsoft and Heidelberg Materials. Yet for British consumers, the stark question remains whether the combined cost of CCS, renewables, and supporting infrastructure—already accounting for 40 per cent of the electricity supply’s expense—will prove affordable. As Professor John Constable notes, stacking subsidies for CCS atop those for wind and solar may well outstrip the ability of both the economy and its citizens to pay.