How carbon capture, usage and storage could help ‘level up’ across the UK
The Government should firmly embed CCUS within its Net Zero Strategy, to boost jobs in the UK’s regions and demonstrate its commitment ahead of COP26 to stopping climate change, says Esin Serin.
Carbon capture, usage and storage (CCUS) will be essential to achieve net-zero emissions. This is increasingly recognised in the UK and globally, hence not a month going by without a major project announcement or policy development. The Dutch government committed over US$2bn earlier in the year to support the Porthos project, which plans to store around 2.5 million tonnes of carbon dioxide (CO2) per year, and the world’s largest ‘direct air capture’ plant to date opened in Iceland this month. But even more needs to be done – and faster – to realise the much-needed contribution of CCUS towards limiting the worst impacts of climate change.
CCUS is a collection of technologies that allow the permanent storage of CO2, capturing it either directly from the air or from major emitters. CCUS can enable not only a cost-effective – and in some cases, the only technologically viable – method to address hard-to-abate emissions, for instance in steel and cement industries, but also a way to deliver negative emissions at scale. Evidence suggests the world will need to deliver negative emissions by 2050 and beyond in order to stabilise global temperatures (NIC, 2021 based on IPCC, 2005, 2018).
As countries around the world seek to deploy CCUS projects, they will also drive economic growth and create jobs domestically while contributing to emissions reductions. The UK has some competitive advantages, including much of Europe’s geological capacity for storing CO2, and expertise that it can transfer into CCUS – notably from its well-established oil and gas sector, which needs to reorient itself for a net-zero future. These can unlock export opportunities in the rapidly growing global market for CCUS technologies and services.
Innovation hot spots and regional growth
The analysis of trade and patents we have conducted at LSE illustrates the potential to stimulate growth from CCUS in various regions of the UK. Our new report reveals innovation hot spots in the South East, North East and North West of England. Our analysis also shows potential in North Eastern and Eastern Scotland – areas where a track record of innovation in the oil and gas industry could provide the foundation for CCUS.
These could be good locations for research and development hubs, boosting the potential for growth and jobs from innovation in CCUS, and contributing to the Government’s ambitions for ‘levelling-up’ across the UK. The potential from CCUS was already clear from previous research which found that by 2030, it could support up to 31,000 openings, primarily from construction, and help to preserve 53,000 jobs in industrial sectors where alternative decarbonisation options are unavailable.
The extent to which regional growth opportunities are realised will depend on where new knowledge is generated, patterns of knowledge spillovers, the structure of supply chains and the skills base. If political will and support are directed strategically to address the disparities in innovative performance across the UK, more regions could benefit from the long-term economic opportunities from CCUS.
The UK’s competitiveness in CCUS
In terms of existing export capabilities for CCUS products, the UK is currently in a position of slight disadvantage compared with some of its competitors like Germany and the United States. But countries’ specialisms vary across the different products and no single country has yet established dominance across the entire product portfolio, so plenty of opportunities remain for the UK.
The UK demonstrates competitiveness in exporting products relating to measuring, monitoring and verification (MMV). These are not only crucial to ensuring the technology works but they will also be the backbone of any commercial framework for CCUS since you cannot monetise flows of CO2 that you cannot credibly measure.
Our analysis also found that there may be sources of indirect comparative advantage for the UK from technologies that appear to be ‘adjacent’ to CCUS. For example, 60% of CCUS patents co-occur with innovation in physical or chemical separation processes – suggesting there is potential for a wider pool of companies to diversify into CCUS as the UK seeks to position itself as a global leader in innovation.
Overcoming past obstacles to development
So what has held back CCUS development in the UK to date? The primary problem has been an inconsistent policy environment, including two failed major demonstration competitions. But the commitment to deploy CCUS in the UK, while capturing opportunities from a domestic supply chain, is now firmer than ever. Consistent messaging since the Prime Minister published his Ten Point Plan for a Green Industrial Revolution, as well as specific frameworks under CCUS business models and cluster sequencing, have made clear that CCUS is a strategic priority for the Government. Industry has already put forward an ambitious portfolio of CCUS projects to be deployed in the 2020s, which would exceed the Government’s currently stated ambition to capture 10 MtCO2 per year by 2030.
Now is the time to make up for years of little progress in developing and deploying this essential technology with coordinated investments across infrastructure, innovation and skills, and underpinned by a consistent, long-term policy framework that provides funding certainty to investors. The Government needs to recognise the industry’s appetite to deliver, and to step up its ambition by fully supporting a pipeline of domestic projects with a policy framework that truly reflects the critical contribution that CCUS must make to the UK’s net-zero target.
As Greg Hands MP settles into his new role as Minister of State for Business, Energy and Clean Growth, CCUS should be top of his in-tray alongside the many other essential technologies we need to ramp up over this decade. The Government should firmly embed CCUS within its overdue Net Zero Strategy, to demonstrate its commitment ahead of COP26 to stopping climate change.
A version of this commentary was first published by Business Green and has been reproduced here with permission.
The report ‘Seizing Sustainable Growth Opportunities from CCUS in the UK’ and a summary brief, by Esin Serin, Anna Valero, Ralf Martin, Arjun Shah, Pia Andres and Penny Mealy, are available to download from https://www.lse.ac.uk/granthaminstitute/publication/seizing-sustainable-growth-opportunities-from-carbon-capture-usage-and-storage-in-the-uk/.