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Following best practice for major infrastructure projects, we have established a Cluster Sponsor Function to support government鈥檚 ongoing interests in the projects that have already signed contracts with HMG.听

The Track-1 Cluster Sponsor Function team is responsible for overseeing and supporting the initial clusters selected for CCUS development. They ensure that these projects meet their milestones, adhere to regulatory requirements, and align with the government鈥檚 overall strategy to scale up CCUS technology.

Evaluation of the Track-1 Cluster Sequencing Processes:

Carbon capture, usage and storage (CCUS) is vital to decarbonising industries and meeting our climate change commitments and has the potential to create world-leading low carbon manufacturing clusters, while attracting investment in new facilities and sectors.

Industrial carbon capture and storage is fundamental to the deep decarbonisation of industries such as chemicals, oil refining and cement. Options for decarbonising industry are limited and, in some cases, fuel switching can only partially decarbonise industry, beyond which CCUS will be required to provide deep decarbonisation of the rest.

However, the current market for CCUS is not investable for most industrial sectors as the cost of deploying CCUS is higher than can be supported by the current carbon price. Additionally, businesses may face challenges raising capital finance to invest in CCUS until it has been more widely deployed in the UK.听聽

Therefore, the government is developing business models to support CCUS projects and stimulate private sector investment. By providing an incentive mechanism for industrial carbon capture and storage, we can support industries to decarbonise and ensure that the UK鈥檚 emissions from these sectors are not offshored.

These business models have been developed following our initial consultation on possible new business models for carbon capture usage and storage (CCUS) held in July 2019, with business model development updates released between December 2020 and July 2022, following engagement with CCUS expert groups, industry and relevant regulators.

Power CCUS focuses on the integration of CCUS technology within the power sector. The goal is to decarbonise electricity generation by capturing emissions from power plants, thereby contributing to a cleaner energy grid and helping the UK meet its climate goals.

GGR technologies will be important for achieving net zero, balancing residual emissions and creating new economic opportunities. Engineered GGRs, such as BECCS and DACCS, need access to a CO₂ transport network for permanent storage. By the mid-2030s, GGRs are expected to be major users of the CO₂ transport network. The most significant removals will likely come from GGR technologies requiring geological CO₂ storage. GGR and Power BECCS projects were eligible for the HyNet cluster expansion, with submissions closed on 28 March 2024.听

The government has been developing the GGR business model and the power BECCS business model to incentivise private investment in large-scale GGR projects. In December 2023, a business model design update was published, providing details of the design of the GGR and Power BECCS Business Model, alongside the indicative Heads of Terms for GGR Business Model Agreements and an independent research report on standards for GGRs, conducted by ERM.听聽聽

In May 2024, the UKETS Authority published a consultation on the inclusion of engineered and nature-based GGRs in the UK ETS.听The government will look to respond in due course.听

The government recognises that high-integrity Voluntary Carbon Markets (VCMs) could play a valuable role in mobilising private investment to early stage GGR projects. On 15 November, the government published six Principles for Voluntary Carbon and Nature Market Integrity, to support organisations engaged in action towards net zero and nature positive transitions.

Power BECCS

Power bioenergy with carbon capture (power BECCS) is the process of generating electricity using sustainable biomass feedstock and capturing and permanently storing the CO₂ generated in the process. Power BECCS is one of a suite of Greenhouse Gas Removal (GGR) technologies that has the potential to provide removals that are needed to offset the residual emissions from hard-to-decarbonise areas, whilst delivering low carbon electricity to the system. Large-scale power BECCS projects (>100 MW) are eligible for support under the power BECCS business model whilst small-scale power BECCS projects (<100MW) are eligible under the GGR business model.

Transport and Storage policy is developing the infrastructure needed to transport and store captured carbon dioxide safely and efficiently. DESNZ focus in this space is on creating pipelines and storage facilities and ensuring that these components meet safety and environmental standards.

Market Transition entails an ambitious transition to a self-sustaining CCUS sector in the UK, which is largely industry-led and requires significantly less government intervention than the UK CCUS sector presently does. We think of the Market Transition as having a three-phase process made up of:

• a market creation stage up to 2030
• a market transition up to around 2035
• towards a self-sustaining CCUS market from around 2035 onwards

There are several integral steps to the transition to a self-sustaining market, including:

• collaborating with organisations like Great British Energy (GBE) or National Wealth Fund (NWF) where appropriate on possible co-investment
• exploring non-pipeline methods of CO₂ transportation (road, rail, ship)
• addressing regulatory barriers and forming agreements with third countries to enable cross-border CO₂ T&S
• ensuring sufficient levels of storage capacity by working with industry and the North Sea Transition Authority (NSTA) to accelerate appraisal activity and storage development
• developing the strategic direction for CO₂ transport networks, with a focus on strategic national energy and industrial co-ordination
• splitting out the CO₂ transport and storage value chain, including the network code, economic licence and development of other commercial agreements
• reviewing third party access arrangements to reduce risk of monopolistic behaviour
• exploring potential policy proposals, such as Carbon Mandates, and seeking to understand how wider policies such as this may support the transition to a sustainable CCUS sector

Under the previous administration, government set out its vision for the UK CCUS sector in the 2030s.

Policy is currently being developed for the non-pipeline transportation (NPT) of carbon dioxide (CO₂), for example via ship, road and/or rail. The government called for evidence and published a summary of responses in 2024, and these responses will inform a consultation on the government鈥檚 policy proposals in H2 2025.

NPT聽will play an important role in the development of聽CCUS, providing alternative options in instances where pipelines are too difficult or too expensive to use.听NPT聽will allow CO₂ emitters outside of聽CCUS聽industrial clusters or within clusters without direct access to a pipeline to send their CO₂ to an offshore storage site.听

NPT聽will therefore be critical in supporting the government鈥檚 net zero and energy security objectives by expanding access to CCUS across multiple regions and sectors of the economy. In turn this will secure good jobs in these areas, supporting local communities and ensuring a just transition.

The Track-2 process aims to establish two new clusters as part of the further development of CCUS.

CCUS requires significant resources, and future deployment of CCUS will be considered as part of the government鈥檚 2025 Spending Review process. We continue to engage with all future projects, including Track-2 and beyond, and further decisions for future CCUS deployment will be taken in due course.

The government established a new聽CCUS聽Council with senior representatives from across the聽CCUS聽sector to review progress and priorities on聽CCUS. The Council is co-chaired by the Minister of State for Energy and Clean Growth and James Smith, Chair of the Carbon Trust.

罢丑别听CCUS聽Council is the primary forum for engaging the聽CCUS聽sector on聽CCUS. It replaces the聽CCS聽Development Forum.

This strategy sets out the approach to developing a thriving low carbon hydrogen sector in the UK to meet our increased ambition for 10 GW of low carbon hydrogen production capacity by 2030.