UK government gives funding to just three of first CCUS cluster projects

The UK government has given funding to just three of the eight Track 1 carbon capture, use and storage projects under its Track 1 industrial decarbonization program, along with the associated CO2 infrastructure.

The government announced almost GBP22 billion in funding for the country’s first two CCUS clusters -- Hynet and the East Coast Cluster -- on Oct. 4.

However, the Department for Energy Security and Net Zero (DESNZ) confirmed that it had made funding available to only two projects in the HyNet cluster in the northwest of England and a single project in the East Coast Cluster, focused around Teesside, together with the associated CO2 transport and storage infrastructure in each cluster.

“The funding is being spent on grants to support construction and top-up payments to emitters and transport and storage companies to make operating the capture facilities and networks economically viable,” a DESNZ spokesperson told S&P Global Commodity Insights by email Oct. 8.

The projects to receive funding are:

HyNet

• Eni’s Liverpool Bay CO2 transport and storage system
• EET Hydrogen’s 350-MW HPP1 CCS-enabled hydrogen plant
• Protos’ CCS-enabled energy from waste facility

East Coast Cluster

• The Northern Endurance Partnership CO2 transport and storage system
• The Net Zero Teesside Power CCS plant, being developed by BP and Equinor

Five other projects were invited to funding negotiations under the Track 1 sequencing round announced in December 2023: BP’s 500-MW phase one blue hydrogen plant and another CCS project at BOC’s existing hydrogen plant in the East Coast Cluster; and two industrial CCS projects and a waste CCS project in HyNet.

The companies involved in the other projects did not respond to requests for comment.

“The record funding in Merseyside and Teesside we are announcing […] is just the start,” the DESNZ spokesperson said. “We will have more to say in in the coming months about the next steps for carbon capture in Humberside, Scotland and elsewhere around the country.”

The government has granted Track 2 CCUS cluster status to the Acorn project in Scotland and the Viking project on the east coast of England.

In December, the government also announced plans to move to a competitive allocation process for CCS projects from 2027, and to open the HyNet CCS cluster to more companies from 2030.

DESNZ said it aimed to award the CO2 transport and storage economic licenses in the coming months, "subject to the finalization of contractual conditions and consideration of statutory processes."

Platts, part of Commodity Insights, assessed UK nearest December CO2 allowance prices at GBP36.12 per metric ton ($47.22/t) Oct. 8, compared with tech carbon capture credits at $140/t.

The UK aims to capture and store 20-30 MMt/y CO2 by 2030, backed by GBP20 billion ($25 billion) funding, rising to over 50 MMt/y by 2035.