UK’s first carbon storage licensing round brings 26 bids from 19 players

While energy security is on everyone’s mind recently, putting the oil and gas sector in the front seat once again throughout the world, decarbonisation efforts are still making strides to help bolster the energy transition and usher in a low-carbon future. This is further demonstrated by 26 bids received during the UK’s first-ever carbon storage licensing round, encompassing 13 areas.

The UK’s regulator North Sea Transition Authority (NSTA) highlighted on Thursday that the future of carbon storage moved a step closer with 26 bids coming in for the UK’s carbon storage licensing round, which was launched on 14 June with applications closing on 13 September. The NSTA will now evaluate these bids with plans to award licences in early 2023 while the first injection could occur as early as 2027. 

According to the regulator, 19 companies, “eager to play a part in the energy transition,” expressed interest in the 13 areas on offer, which are located off the coasts of Aberdeen, Teesside, Liverpool and Lincolnshire. Once these sites are in operation, the North Sea Transition Authority believes that they could make a significant contribution to the aim of storing 20-30 million tonnes of carbon dioxide (CO2) per year by 2030. 

Nick Richardson, NSTA Head of Exploration and New Ventures, remarked: “We were very pleased with the quantity and quality of applications we have received from a diverse range of applicants. The clear appetite among companies to get involved shows that the UK is well-positioned to become a world-leader in the sector.”

Furthermore, the UK regulator explained that the round was opened in response to government targets and “significant commercial interest” while the areas were selected as they offered “a combination of attributes such as the right geology, proximity to existing infrastructure and links to industrial clusters which are looking to carbon storage to meet their decarbonisation goals.”

The NSTA further elaborated that these sites were only made available for licensing after “thorough consideration” of matters such as co-location with offshore wind, potential overlaps with petroleum licences and environmental issues. Moreover, the regulator underlines that this round is “likely to be the first of many” as up to 100 CO2 stores could be needed for the UK to meet the net-zero by 2050 target with the Intergovernmental Panel on Climate Change report in April 2022 emphasising that carbon capture and storage (CCS) technologies are necessary for power and industry sectors to reach net-zero emissions. 

The North Sea Transition Authority explains that during a CCS process, CO2 is captured from industrial processes and then transported, via ship or pipeline, for storage in rocks deep beneath the seabed. While the differing sizes and scale of each project mean they will progress at different speeds, the regulator still thinks that the first injection of CO2 could come 4-6 years after a licence is awarded. 

As the CCS industry requires close cooperation between a number of organisations, once an applicant has been awarded a licence from the NSTA, they will also need to obtain a lease from The Crown Estate or Crown Estate Scotland before they can progress a project, based on the regulator’s statement.

“Carbon storage can play a big part in reducing greenhouse gas emissions into the atmosphere and awarding additional licences in 2023 will be a significant step forward,” concluded Richardson.

When it comes to curbing emissions, the NSTA confirmed a few days ago in its new report that the oil and gas industry was making progress on emission reduction targets.

However, the regulator also emphasised that more action would be required to halve emissions by 2030 as agreed in the North Sea Transition Deal (NSTD).