Nine areas win £171M in CCUS and hydrogen funding as BEIS sets out Industrial Decarbonisation Strategy

The Department for Business, Energy and Industrial Strategy has announced major investment to cut emissions from industry and from public buildings in a new Industrial Decarbonisation Strategy.

It will allocate £171 million from the Industrial Decarbonisation Challenge to nine projects to undertake engineering and design studies for the rollout of decarbonisation infrastructure, such as carbon capture, use and storage (CCUS) and hydrogen (see below). Meanwhile, the Public Sector Decarbonisation Scheme has directed £932 million to 429 projects across England to fund low carbon heating systems.

The government will also introduce new rules on measuring the energy and carbon performance of the UK’s largest commercial and industrial buildings, including office blocks and factories, in England and Wales. It says that could reduce annual carbon emissions by over 2 million tonnes – approximately 10% of the current emissions from commercial and industrial buildings.

Business and Energy Secretary Kwasi Kwarteng said: … “today’s plans will make a considerable dent in the amount of carbon emissions emitting from our economy and put us on the path to eliminate our contribution to climate change by 2050.

“The Industrial Decarbonisation Strategy will send a clear signal to the market by setting out how the government expects decarbonisation to happen, while improving investor confidence to unleash the private capital necessary to reach net zero by 2050. In the process, the government will create the right framework for new industrial sectors to base themselves in the UK and attract inward investment, while future-proofing businesses to secure the long-term viability of jobs in our industrial heartlands”.

The Industrial Decarbonisation Strategy will also have measures:

  • To use carbon pricing as tool for getting industry to take account of their emissions in business and investment decisions
  • To establish a policy framework to ensure industry switches from fossil fuels to hydrogen, electricity or biomass
  • To mitigate carbon leakage
  • To develop proposals for new low-carbon product standards
  • To explore the role of coordinated action on public procurement to create demand for green industrial products
  • To use the government’s Infrastructure Delivery Taskforce, named ‘Project Speed’, to ensure the land planning regime is fit for building low carbon infrastructure
  • To work with the recently re-constituted Steel Council to consider the implications of the recommendation of the Climate Change Committee to ‘set targets for ore-based steelmaking to reach near-zero emissions by 2035’
  • To support new green jobs

Its expectation is that at least 3Mt of CO2 will be captured within industry per year by 2030, compared to minimal levels at present, and that  industrial emissions will fall by two-thirds by 2035, and by at least 90% by 2050, compared to 2018.

CBI Chief Economist Rain Newton-Smith said: “Ahead of COP26, this is a welcome demonstration of the UK’s commitment to act on climate change, to make our post-pandemic recovery a green one, and to give businesses the certainty they need to invest in the technologies of the future.”

Stephen Phipson, chief executive of Make UK, welcomed the announcement and added: “The promise of financial help is critical. Britain’s big corporations have large ring-fenced budgets for green initiatives, but our smaller firms will need support to make sure they are able to make the changes necessary to ensure the UK meets its carbon targets and that they can benefit from the dramatic changes to the way industry will work in the coming years.

“Plans to reduce carbon emissions in industrial buildings is particularly welcome as it will enable our SMEs to get started with this most urgent and basic need, before even green tech projects.”

Nick Molho, executive director of the Aldersgate Group, said: “We welcome the ambition to cut heavy industrial emissions by at least two-thirds by 2035. With continued ambitious support on innovation and the development of stable market mechanisms, the decarbonisation of heavy industry can provide UK businesses with competitive advantages in the production of low carbon industrial goods and deliver significant benefits in terms of job creation, skills development and the revival of industrial heartlands in many parts of the UK.

 

The projects awarded funds from the £171 million Industrial Decarbonisation Fund were:

  • Almost £33 million for HyNet North West will fund for two projects directly capturing and storing emissions, including repurposing old oil and gas facilities. HyNet North West will provide green energy for local homes and businesses – a blend of hydrogen and natural gas.
  • Over £31 million for Scotland’s Net Zero Infrastructure project will fund offshore and onshore engineering studies connecting industrial sites across East Scotland with access to carbon storage resources in rock below the North Sea. This programme of new work and reusing infrastructure in St Fergus and Aberdeenshire will help Scotland transition away from oil and gas.
  • Over £52 million for Net Zero Teesside and the Northern Endurance Partnership who aim to decarbonise the Teesside industrial cluster in the mid-2020s. Two projects aim to use the funding for a flexible gas-fired power plant with CCUS, and to create an offshore CO2 transport and storage system. 
  • Over £21 million for the Zero Carbon Humber Partnership project which aims to deliver H2H Saltend, an at-scale low carbon hydrogen production plant on the north bank of the Humber, and CO2 and hydrogen pipelines enabling industrial sites and power stations across the Humber to switch to hydrogen or capture and transport their emissions.
  • Over £12 million to project Humber Zero which plans to decarbonise the industrial complex at Immingham, North East Lincolnshire, by creating a CCUS and hydrogen hub, including storage.
  • Nearly £20 million to the South Wales Industrial Cluster which aims to create a net zero industrial zone from Pembrokeshire to the Welsh/English border by 2040. It will look at options to support the deployment of hydrogen across regions and to develop CCUS. The project will therefore create a sustainable plan for the region.

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