UK throws support behind carbon capture and storage pair set to unlock $34 billion by 2035

Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), has deemed the UK’s backing of carbon capture, usage, and storage (CCUS) projects as an important step for the domestic offshore energy industry, as the country works to bankroll its transition from oil and gas to low-carbon technology.

The UK’s announcement of new funding for two carbon capture and storage (CCS) projects is seen as an important move towards final investment decisions (FIDs) for the Acorn CCS project in Northeast Scotland and the Viking project on Humberside, alongside the expansion of existing carbon capture projects on Teesside and Merseyside.

The Viking CCS project, previously known as V Net Zero, which is close to the Humber region, is envisioned to transport and store up to 10 million tonnes of CO2 annually by 2030 and 15 million tonnes of CO2 annually by 2035.

On the other hand, Acorn, a joint venture with Storegga, Shell UK, Harbour Energy, and North Sea Midstream Partners, is a CCS project often described as a catalyst for industrial decarbonization in Scotland.

This project is envisioned to enable the infrastructure for the decarbonization of the Scottish Cluster, which will capture and move CO2 emissions permanently to the Acorn CCS geological stores, deep under the North Sea.

As Viking and Acorn are estimated to have the potential to bring £25 billion (around $33.96 billion) in investments by 2035, OEUK interprets Britain’s investment in the offshore energy industry, which is outlined in the ‘Comprehensive Spending Review’ (SP), as progress towards a clearer picture of how the government will support homegrown energy.

Within this document, which sets out the government’s plans to invest in Britain’s security, health, and economy with departmental budgets for day-to-day spending until 2028-29, and until 2029-30 for capital investment, the UK has expressed its support for the development of homegrown clean power by confirming up to £80 million ($108.8 million) over the spending review period for port investment to support floating offshore wind deployment in Port Talbot, subject to final due diligence.

Furthermore, the government has detailed its support to boost the net zero race, while driving growth by allocating £9.4 billion ($12.8 billion) to CCUS over the spending review period to attract private investment and support thousands of jobs across the supply chain. The UK also committed £2.6 billion ($3.54 billion) in capital investment to decarbonize transport from 2026-27 to 2029-30, including £1.4 billion ($1.9 billion) to support the continued uptake of electric vehicles.

Offshore Energies UK, which has repeatedly highlighted the need to prioritize domestic energy production to unlock economic and industrial growth, safeguard jobs and energy security, and meet net zero targets, is adamant that CCS is a key technology for the country’s goal of removing 30 million tonnes of CO2 a year from the atmosphere by 2030 to decarbonize and help grow its industry.

Moreover, OEUK claims that more information will be needed from the government about the long-term support for these projects to incentivize the industry to take advantage of the economic opportunities carbon storage presents to the UK.

Britain’s trade body for the offshore energy industry is convinced that supportive policy for the carbon capture and storage sector could protect over 100,000 jobs in industrial regions across the UK, contribute billions to the economy this decade, and be worth £100 billion (approximately $136.2 billion) to the supply chain by 2050.

David Whitehouse, OEUK’s CEO, commented: “The Chancellor was right to say that energy security is national security and also to recognise the need to reduce reliance on overseas oil and gas. Domestic production is the path to energy security and economic growth.

“The support for the next phase of carbon storage projects in Scotland and Humberside is welcome, and an important step towards final investment decisions later in this parliament. Together Viking and Acorn have the potential to unlock over £25 billion of investment by 2035, creating over 30,000 jobs at peak construction.”

Given that research is said to have demonstrated that the existing domestic oil and gas supply chain already has at least 80% of the resources required to deliver these projects, Offshore Energies UK portrays CCS endeavors as critical to decarbonization of the country’s energy-intensive industries from power generation to chemicals, refining, glass and cement production.

While noting that the government’s backing for the CCS project pipeline is coming to light at a critical time for the offshore energy sector and the drive to reduce reliance on overseas oil and gas, OEUK points out that ongoing consultations will shape the future of the North Sea and the role it will play in providing energy in the coming years.

Even though the government has reconfirmed its £300 million (about $407.9 million) commitment to support the offshore wind supply chain through GB Energy, the full disclosure of details surrounding the UK government’s forthcoming wind and renewable energy auction round (AR7) remains to be spelled out ahead of its launch later this year.

In the meantime, OEUK believes that domestic oil and gas production from the North Sea is not only crucial to curbing the UK’s dependency on imported power but also a vital pillar in the development of offshore wind energy, which is expected to fuel a major new energy export industry.

Britain’s offshore energy sector currently supports over 200,000 jobs in oil and gas alone and generates some £25 billion (more than $34 billion) a year in gross value added to the UK economy.

Whitehouse noted: “These projects will provide the pathway to support the decarbonisation of UK industries and are critical to the government’s clean power objectives. We will continue to work with government to detail the long-term support required to deliver these projects and unlock the UK’s wider CCS ambitions.

“We agree with the chancellor that it matters where we make things and who makes them. Homegrown energy production which will protect security and jobs, must be at the heart of our industrial strategy.”