The UK has awarded £171mn ($238mn) of public funding across nine significant decarbonisation projects. The capital is the second phase of the Department for Business, Energy and Industrial Strategy’s (BEIS’) “industrial clusters mission” to significantly reduce the emissions of at least one industrial cluster by 2030 on the road to it achieving net-zero status by 2040.

While the announcement has, of course, been universally welcomed by the recipient projects it does little to narrow the field for which cluster—or clusters—will ultimately receive sufficient support to achieve the BEIS target. While the phase two funding pot was larger than that for phase one, it represents enough capital only to move projects towards the point where FID could be taken, but not beyond. Factors such as the establishment of a contracts for difference regime and supporting infrastructure will be required before private companies take FID.

The funding comes via UK Research and Innovation’s (UKRI) ‘Industrial Strategy Challenge Fund (ISCF) decarbonisation of industrial clusters phase two: deployment competition’. The public funding is to be distributed widely around the industrial regions of the UK. The nine winning projects include three offshore storage sites for CO₂—located in Scotland, northwest England and northeast England—as well as six CO₂ capture and/or hydrogen production projects—in northwest England, Teesside, Humberside, Scotland and Wales.

$1.19bn – Norwegian public funding for Northern Lights CCS

Nonetheless, the sums involved are meaningful. The HyNet hydrogen and CCUS project gets £13.3mn for offshore work and £19.5mn for onshore; Scottish Net Zero Infrastructure (SNZI) gets £11.4mn for offshore and £20mn for onshore; Net Zero Teesside (NZT) receives £28.1mn, Northern Endurance Partnership (NEP), £24mn; Zero Carbon Humber (ZCH), £21.5mn; Humber Zero, £12.7mn; and South Wales Industrial Cluster, £20mn.

BEIS closed its industry consultation, Carbon capture, usage and storage: market engagement on cluster sequencing, on 10 February but has not announced its findings. As the ‘sequencing’ in its title suggests, it is likely that more than one cluster will ultimately be chosen, and the government’s real decision may only relate to which will be initially supported.

North East clusters

Norway’s Equinor is involved in three of the consortiums in the second phase—ZCH, NZT and NEP. ZCH aims to turn the UK’s largest industrial cluster net zero by deploying low-carbon hydrogen, carbon capture and negative emissions across Humber estuary sites. Within this, Equinor is leading the H2H Saltend low-carbon hydrogen facility, which is connected with National Grid Ventures developed H₂ and CO₂ pipelines across Humber sites.

NZT is set to decarbonise the Teesside cluster with a new gas-fired power station combined with state-of-the art carbon capture technology. NEP is to develop offshore CO₂ transport and storage in the UK North Sea that will serve both ZCH and NZT.

Equinor says the successful bids amount to £229mn in private and public funding, with it and its partners contributing more than two-thirds of the total. This sum will be used on engineering and design to progress towards FID, which would be taken if supportive only UK policy evolves.

“The awards are great news for the UK and for Equinor,” says Grete Tveit, senior vice president for low-carbon solutions at Equinor. “The Humber and Teesside make up nearly half of the UK’s industrial emissions so, to reach net zero, there is enormous value in tackling emissions at both clusters together. Rolling out carbon capture use & storage and hydrogen across the UK’s industrial clusters supports the government’s aims for a green recovery and to level up by safeguarding and creating many high-skilled jobs, and will establish the UK as a world leader in hydrogen and low-carbon technologies… we will continue to work with our partners to progress our projects to FID, engaging locally and nationally to make this happen.”

By contrast, an Equinor-led partnership started construction on Northern Lights CCS project in Norway in January 2021. Construction on Europe’s first full-scale project is expected to be completed by late 2023 and to start operations during 2024. The public component of the Norwegian project was far more generous: Norway’s parliament approved $1.19bn of funding in December wile Equinor, Total and Shell will contribute $440mn.

Andy Lane, managing director, NEP and NZT, adds: “I am pleased to welcome the phase two funding the projects have received through the ISCF, which will help to accelerate key elements of onshore and offshore CCUS infrastructure on the east coast of England. This support for CCUS in the UK is critical to enabling projects such as NEP, NZT and ZCH to enter front-end engineering design, a crucial step forward as we look to develop the world’s first decarbonised industrial cluster by 2030.

“Public funding demonstrates government commitment and increased ambition to establish the CCUS industry outlined in the recent Ten Point Plan and, along with clear government policy, which is currently being developed, will unlock significant further investment from the private sector.”

Scotland progress

The SNZI cluster was the other major project awarded funding for both onshore and offshore components. Pale Blue Dot Energy, a Storegga Group company, leads both the offshore and onshore components. Together, they provide a clear path to decarbonise the Scottish industrial cluster with the development of the Acorn storage site and associated infrastructure including the development of pipelines, and subsea and well-related infrastructure to transport and inject the CO₂ for long-term secure storage.

“The awards are great news for the UK and for Equinor” Tveit, Equinor

“Today’s funding for the SNZI programme is a further endorsement of the broader Acorn Project and the crucial role it plays in delivering the UK and Scotland’s net-zero plans while providing a significant boost to the region’s fast-growing low-carbon credentials,” says Nick Cooper, CEO of Pale Blue Dot.

“This funding will support a range of projects to progress Scotland’s low-carbon infrastructure, including the detailed engineering required to move Acorn CCS and Hydrogen through to final investment decisions. This is an important investment to ensure that this CCS infrastructure is operational by the mid-2020s, with the potential to store 20mn t/yr of CO₂ emissions from Scotland, the UK and Europe by the mid-2030s, delivering new economic growth opportunities, creating and sustaining jobs in Scotland and across the UK.”

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Author: Alastair O’Dell<BR>Senior Editor