Government backs carbon capture and storage to meet net zero goals and boost North Sea industry
The government has announced the latest winners of its carbon capture and storage (CCS) approval process, amid a backlash from green groups and climate bodies.
Prime Minister Rishi Sunak has confirmed that the Humber-based Viking CCS project and Acorn CCS project in North East Scotland have been selected for ‘track 2’ approval, the latest round of its bidding process for mooted projects.
This will take the number of clusters – designated development areas for projects – up to four, with Scotland and Humber joining the HyNet cluster in North West England and North Wales and the East Coast Cluster in the Teesside and Humber.
Downing Street already chose eight lucky winners for £20bn funding during its track 1 process earlier this year.
The Viking project will be operated by Harbour and backed by BP, while the Acorn development is being overseen by Storegga, with Harbour, NSMP, and Shell also supporting the project.
Neither are currently expected to require direct taxpayer support, but do require economic licences from the government before final investment decisions are made by the two companies – with both parties effectively setting up a new industry.
Carbon capture and storage involves obtaining the carbon dioxide produced by power generation and industrial activity, such as steel or cement making, transporting it and then storing it deep underground such as in rock formations in the sea bed.
The government is targeting 20-30 metric tonnes of carbon capture per year by the end of the decade, and considers the process fundamental to its net zero ambitions.
Acorn is targeting the capture and storage of up to 5m tonnes of CO2 annually by 2030, while Viking aims to transport and store up to 10m tonnes of CO2 annually over the same time period and 15m tonnes of CO2 per year by 2035.
Viking’s project director Graeme Davies told City A.M. he expects the government’s approach will be similar to the contracts for difference model for offshore wind.
He said: “There is a model similar to what we’ve seen with the offshore wind deployment or what we call the contracts for difference type approach, which enables a linkage to the carbon price and a way for industrial investors to look at and appraise their investment on the CO2 capture side. This can then used for the infrastructure we plan to deploy for transport and storage.”
Simon Roddy, senior vice president of Shell UK‘s upstream business, added: “To stimulate investment in this and other CCS clusters, continued co-operation with governments will be key to finding the most innovative approaches and business models to allow CCS to reach the scale needed to help the UK achieve net zero.”
Green groups criticise carbon capture embrace
The government’s decision to ramp up carbon capture projects has also provoked criticism from climate groups and critics of the UK’s oil and gas sector.
Tessa Khan, executive director of Uplift, which is pushing for a green energy transition in the North Sea, argued that the new licences are “giving the oil and gas industry what it wants” but that the “policies don’t help the British public one bit”.
“The only way to deliver an affordable supply of energy, and lower bills, is to move the UK away from expensive oil and gas, by helping people insulate homes and unblocking onshore renewable energy, which is so much cheaper than gas,” she said.
Jess Ralston, head of energy at Westminster’s Energy and Climate Intelligence Unit (ECIU), argued that the government was “prioritising oil and gas over cheaper renewables”, which was against the advice from the International Energy Agency, United Nations and Climate Change Committee.
“While carbon capture will be an important technology for some industries, like manufacturing, it’s yet to be seen how much it will cost or where it will be most useful,” she said.
Dustin Benton, analyst at Green Alliance, said on Twitter: “The CCS logic is bad: most Scottish North Sea fields are oil-heavy. Most oil is used for transport, and we can’t capture CO2 from cars, vans, HGVs, and jets.
“The public spending logic is bad: fossil fuel companies are making extraordinary profits and had tax subsidies in the ‘lean years’ of 2015-2019. Instead of paying the polluter, why not make fossil companies clean up their own mess via a CCS obligation?”