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    UK Budget Offers CCS Cash [Update]


But it is to raise the climate change levy on gas.

by: William Powell

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UK Budget Offers CCS Cash [Update]

(Adds IGEM reaction at end)

UK finance minister Rishi Sunak has promised government spending on at least two carbon capture and storage (CCS) projects, cleaner heating and a push towards electric vehicle ownership in his first Budget, which he presented to parliament March 11. However he has not raised the duty on red diesel, which is used in off-road industries such as farming and construction.

The government is aiming to make the UK a net-zero carbon country by 2050, which some estimates say will cost £30bn ($38.7bn)/yr over the next three decades. The ministry will publish a review this year into the economic costs and opportunities of this goal, which means decarbonising industry.

"There are a number of possible routes – from using low carbon energy sources like hydrogen or electricity, to capturing industrial emissions and storing them safely under the ground. This challenge provides opportunities not only to reduce emissions, but also to enable our manufacturing heartlands to become leaders in the green markets of the future," says the Budget.

The Budget announces a CCS fund for "at least two UK sites, one by the mid-2020s, a second by 2030. Using consumer subsidies, the government will also support the construction of the UK’s first CCS power plant."

Home heating, according to the Budget, will need to be "virtually zero carbon by 2050, replacing natural gas and other fossil fuels with low carbon alternatives – likely to be primarily a mix of green gas, heat pumps and heat networks."

The Budget accelerates the "greening of the gas grid by announcing a new support scheme for biomethane, funded by a Green Gas Levy. The government will also support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme, extending the Heat Networks Investment Project for a further year to 2022 and providing £270 ($344)mn of new funding to enable new and existing heat networks to adopt low carbon heat sources," the document says.

To encourage businesses to operate in a more environmentally friendly way, the government is raising the Climate Change Levy on gas in 2022-23 and 2023-24 but freezing the rate on electricity. Further climate policy measures will follow in the coming months, it said.

The Budget will also invest over £900mn to ensure UK businesses are leading the way in high-potential technologies. This will involve commercialising nuclear fusion technology, offering potentially limitless clean energy. A portion of this funding contributes to a wider investment of up to £1bn to develop UK supply chains for the large‑scale production of electric vehicles.

Reactions are mixed

Drax Group CEO, said: "The funding pledged today for the development of two or more carbon capture and storage clusters demonstrates the government's commitment to communities and businesses in the north – ensuring the region is well placed to take advantage of new opportunities created by a decarbonising economy.  

Bioenergy combined with carbon capture and storage, which is being pioneered by Drax, can permanently remove millions of tons of CO2 each year from the atmosphere, it said. 

Other entities were less complimentary. According to the Energy & Utilities Alliance, the commitments are inadequate.  "EUA are, of course, pleased that Chancellor Sunak's has included green gas, heat pumps and heat networks, in addition to a Low Carbon Heat Support Scheme – a successor to the Renewable Heat Incentive, in his first budget, but in all honesty, it's not enough. An affordable, secure and sustainable energy system is of paramount importance to the UK. If we are to achieve it, we must put in what we seek to get out," it said.

EUA said that carbon capture is one of the most significant potential contributors to reducing carbon emissions whilst continuing to utilise the UK's most valuable asset – the gas grid – but was not impressed with the £800mn the government has earmarked for this decade.  

However, the Institution of Gas Engineers and Managers' head of technical services Ian McCluskey welcomed the doubling of investment in energy innovation, to support the UK's journey towards net zero carbon emissions. "We also welcome the government's acknowledgement that the UK needs reliable low carbon power from technologies such as gas, with CCS and hydrogen.

"Natural gas continues to have an important role in providing power and heat across the UK and, as we transition to a decarbonised energy sector, the scaling up of biomethane, hydrogen and CCS will underpin a successful transition," he said.

"As such, it is promising to see £800mn being committed to establishing two carbon capture clusters, one by the mid-2020s and one by 2030. We would urge that immediate action is taken to get these projects off the ground. We note that the Green Gas Levy is a proposal that will go through consultation. We eagerly await its publication and details of how it will be funded, in order to formulate a response on behalf of our members."