The UK government’s £20 billion carbon capture and storage (CCS) policy is disproportionately supporting the development of ‘blue’ hydrogen projects, thereby increasing long-term reliance on fossil gas in the energy mix, warns a new report by the Institute for Energy Economics & Financial Analysis (IEEFA).
The study reveals that 78% of carbon capture in 2030 is expected to come from projects requiring long-term fossil fuel use. This strategy falls short of the country’s net-zero targets and puts at risk the UK’s ambition of decarbonising the power sector by 2035.
Earlier this year, the UK government committed £20 billion in public funds over the next two decades for the deployment of carbon capture, usage, and storage (CCUS) facilities. Despite this, the government’s current Track 1 capture projects primarily back ‘blue’ hydrogen developments, which are produced from gas, not renewable power.
Eight projects within the HyNet and East Coast Cluster have been chosen to proceed to negotiations for support as part of Phase 2, Track 1 of the government’s CCUS initiative. A staggering 81% of captured emissions from these projects are proposed to come from processes that require long-term fossil gas use.
Fossil fuel firms, particularly oil and gas companies, stand to benefit most from the government’s current Track 1 strategy, accounting for 78% of carbon capture in 2035. One notable project includes the proposed new-build Net Zero Teesside Power gas-fired power station co-developed by BP. Currently, there are no operational gas power CCS projects worldwide.
Despite plans to expand the Track 1 clusters, the eight selected projects will not meet the UK’s CCS requirements outlined by the Climate Change Committee (CCC) in its Sixth Carbon Budget.
The projects are expected to capture roughly 6 million tonnes of CO2 per annum during their initial phase, only meeting 27% of the CCC’s 2030 forecast. Even with increased capacity from follow-on phases before the end of the decade, the projects will still fall short, achieving just 52% of the carbon capture target.
Andrew Reid, author of the report and a guest contributor at IEEFA Europe, calls for the UK government to prioritise supporting CCS projects that enhance electricity supply decarbonisation. He voiced concerns over the current disproportionate focus on blue hydrogen production which could impede meeting CCC targets and is questionable longer term as the UK increases renewable power generation and the potential for green hydrogen production.
Reid suggests that the government’s decision in July to consider additional clusters for support, including Acorn and Viking, presents an opportunity to prioritise power generation projects over blue hydrogen. This shift could help align the UK’s carbon capture strategy more closely with the Climate Change Committee’s projections.
