In the United Kingdom’s spring budget on Wednesday, Chancellor Jeremy Hunt officially committed to provide £20 billion ($24 billion) of support for carbon capture, utilization and storage (CCUS) projects over the next 20 years. The funding will go to projects that aim to store 20-30 million tons of CO2 annually by 2030 with the goal of wide-spread CCUS projects across the UK by 2050.
In his speech announcing the funding, the Chancellor said:
“This will support 50,000 jobs, attract private sector investment and help capture 20-30 million tons of CO2 per year by 2030”.
The importance of CCUS has been echoed by other UK leaders. Prime Minister Rishi Sunak has previously told reporters that his energy security strategy would focus on “carbon capture and storage, small modular reactors and the like.”
The Prime Minister continued:
“I am very confident that we will continue to have a very vibrant set of companies and jobs created in the UK as we transition to net zero, and our track record should give everyone confidence we know how to do this and get it right.”
The UK’s commitment follows the progress seen in Europe where extensive subsidies for carbon capture already exist. But reports say that the commitment is also an attempt to compete with the tax credits for capturing carbon dioxide offered in the Biden administration’s Inflation Reduction Act (IRA).
Incentives and investment in the IRA have reportedly fueled worries that the UK will lose out on investment to the United States, with companies choosing to build CCUS projects on the other side of the Atlantic.
For example, companies with operations in the United States and abroad, such as Chevron and ExxonMobil, have signaled their intention to invest in U.S. CCS technology.
However, despite the Biden administration’s boasting about its new tax credits, progress is being halted as the Environmental Protection Agency (EPA) delays CCS permitting. As EID has previously explained, there are over 40 Class VI injection wells pending with the EPA, with only one well permit approved since President Biden took office, and none since the IRA was passed.
In addition, the EPA has also been slow to grant states primacy over Class IV wells – notably Louisiana’s application has under review for more than 500 days. These delays are significantly impacting progress on CCS – a crucial tool to lowering emissions and ensuring clearer air which have been supported broadly across the U.S. political spectrum, the oil and gas industry, and the globe.
And, providing fodder to the UK’s fears that they could lose out on investment, primacy over CO2 injection wells has been proven to incentive investment from companies – and even pull that investment beyond a nation’s borders.
Upstream reports:
“The lead that North Dakota has taken with Class VI wells dedicated to carbon dioxide sequestration is pulling in key projects, with the help of new US federal incentives. Canada-based energy developer Cerilon has included carbon capture within the framework of its plans for a $2.8 billion greenfield gas-to-liquids (GTL) plant in North Dakota…” (emphasis added)
Bottom Line: The consensus for carbon capture is clear across the globe. The UK has made a significant commitment to funding carbon capture and storage projects to ensure their energy security and compete with legislation in the United States. But ironically, despite the funding and incentives in the U.S., the administrative and bureaucratic backlog is delaying these projects and undermining the Biden administration’s own commitments.
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