Carbon Emissions, Pricing and Removals 

An area in which the UK originally demonstrated global leadership, carbon removals or carbon capture, usage, and storage (CCUS) was included in the UK government’s 2017 in the Clean Growth Strategy. The strategy aims at making CCUS technologies deployable at scale from 2030, subject to significant cost reductions.

In order to deliver on said cost reductions, the UK is undertaking significant levels of research and development, has committed to working with key trading partners, such as Norway, and has set-up industrial hubs across the East and North-West coasts to house multi-billion-pound carbon capture projects. Should the UK maintain its position as a global leader in CCUS and should there be a wider uptake of carbon pricing internationally, it will mean that UK companies – producing close to zero-emissions products due to carbon removals – will be at a substantial cost advantage to their competitors.

Following the 2022 IPCC reports and the prominent role played by CCUS, the European Commission now appears to understand the importance of carbon removals to achieving a net-zero and negative emissions economy by 2050.

While in 2009, the EU passed the Carbon Capture and Storage (CCS) Directive, laying down the extensive requirements for carbon capture sites, the industry has suffered from a lack of investment and policy prioritisation in the ensuing years. This coupled with market challenges such as the need for enduring liability insurance, means that there are currently no large-scale CCS projects operational in the EU.

However, at a recent CCUS conference in Norway, European Commissioner Kadri Simson announced that “without carbon capture and storage it will be practically impossible to limit the global warming to the 1.5°C”. The European Commission is now planning on publishing a Communication in 2023 on the technology. This could lead to a kick-starting of the CCUS sector in Europe and provide an option for companies in hard-to-abate sectors (such as cement), to decarbonise their processes.

In advance of that, the European Commission will publish a Regulation to establish a voluntary market for carbon removal certification, to help support the growth of the sector. On top of that, the revised TEN-E Regulation, which governs large-scale energy infrastructure development has been updated to make specific room for CCUS transportation and storage networks, meaning they will benefit from expedited permitting and capital grant opportunities. Such initiatives will mean greater adoption and cost reductions of CCUS; with cost being a contributing factor to the industry’s stagnation since the 2009 CCS Directive.