UK Govt Sets Goals for CCUS Business Models

The UK Department for Business, Energy and Industrial Strategy (Beis) plans to develop a business model for carbon capture, use and sequestration (CCUS) this year, according to its consultation report published August 17. It believes the UK's 'net zero carbon target by 2050' will be economically impossible without CCUS, costly and commercially untested though that technology is.

Giving its rationale for the consultation, it said this decade “will be critical for CCUS; one in which the public and private sectors need to transition from planning, to the operational delivery of the UK’s first CCUS clusters.”

It has held a series of engagements with 15 events for a combined attendance of around 350 individuals, covering the main areas of the consultation: CO₂ transportation and storage (T&S), low-carbon power, decarbonised industry and low carbon hydrogen, meaning either blue or green hydrogen.

It said that industry “broadly agrees that the business model should be focused on the costs of low carbon hydrogen production” and include provision for all low carbon production methods. However there is “a lack of consensus on an appropriate hydrogen business model, and we will work closely with industry to assess potential options.”

By the end of this year the government aims to award funding under the second phase of the industrial decarbonisation challenge; provide an update on commercial frameworks for industry, CO₂ T&S networks and power; update on its assessment of potential business models to deploy low carbon hydrogen; and publish a draft value for money methodology and criteria and metrics for assessing affordability of CCUS enabled industrial clusters.

Within the next two years it aims to finalise business models for CCUS and low carbon hydrogen, in line with expected final investment decisions for projects.

“As the Budget makes clear, we are committed to investing at least £800 ($1033)mn to facilitate deployment of CCUS in at least two UK sites across the decade," Beis said. "We will work with industry as we progress work to develop the design and delivery of the Fund."

Key strategic priorities for the government include timely deployment and delivering value for money by maximising CO₂ capture per pound of government investment, unlocking private sector investment, maximising future learning for clusters and reducing impact on consumers and taxpayers.

Beis said it will “also continue our work on price discovery and risk allocation in the second half of 2020, primarily through the transport and storage expert group as well as our commercial, legal and technical advisors, to develop a common understanding of the construction and operation costs of these networks in the UK and the full technical specification of any T&S network.

One CCS project that has already had funding from government is Acorn, intended to decarbonise North Sea gas delivered to St Fergus using the commonest and cheapest method – steam reformation of methane – and ship the CO2 back offshore, for reinjection into the depleted Goldeneye field. The owners are also planning to hold a "town hall" meeting September 2 at 12.30: see www.theacornproject.uk/townhall.