UK government pledges nearly £22bn for carbon capture and hydrogen

The announcement confirms funding over 25 years to support HyNet and Northern Endurance Partnership East Coast Cluster projects in Merseyside and Teesside.

HyNet provides the infrastructure to produce, transport and store low-carbon hydrogen across north-west England and north Wales, as well as infrastructure to capture, transport and lock away CO₂ emissions from industry. The East Coast Cluster projects include industrial carbon capture, low-carbon hydrogen production, negative emissions power, and power with carbon capture. In March 2023, the Department for Energy Security and Net Zero (DESNZ) selected three East Coast Cluster projects – Net Zero Teesside Power, H2Teesside and Teesside Hydrogen CO₂ Capture – to connect first to the cluster from 2027.

Expected to ‘set the UK on course to become a global leader in CCUS and hydrogen – delivering good jobs and turbocharged growth for decades to come’, the projects are forecast to bring in £8bn of private investment to the region. Capturing some 8.5mn t/y of CO₂ once fully operational, they will play a key role in meeting the UK government’s target of capturing and storing between 20–30mn t/y of CO₂ by 2030.

‘We’re reigniting our industrial heartlands by investing in the industry of the future,’ said Prime Minister Keir Starmer, making the funding announcement during a visit to Encirc Glass in Runcorn, accompanied by Chancellor Rachel Reeves and Energy Security and Net Zero Secretary Ed Miliband. ‘Today’s announcement will give industry the certainty it needs – committing to 25 years of funding in this groundbreaking technology – to help deliver jobs, kickstart growth, and repair this country once and for all.’

The news was welcomed by the energy sector. Emma Pinchbeck, Energy UK’s Chief Executive, said: ‘CCUS is a tool in our armoury of technologies which we need to decarbonise parts of energy that we currently can’t do with clean electricity, such as major industrial processes.’ Olivia Powis, CEO of the Carbon Capture and Storage Association, added: ‘Today’s announcement shows that decarbonisation does not mean de-industrialisation, and highlights the UK’s leadership in these important technologies.’

Meanwhile, Celia Greaves, CEO of the Hydrogen Energy Association, noted: ‘This is a vital step forward, catapulting hydrogen towards long-term certainty we need in the UK’. Clare Jackson, CEO of Hydrogen UK, continued: ‘The integration of CCUS technology with hydrogen production is pivotal for achieving our net zero targets. CCUS-enabled hydrogen not only provides a low-carbon and scalable energy solution but also ensures the UK remains at the forefront of the global hydrogen economy.’

However, some environmental campaigners were less enthusiastic, with Friends of the Earth’s Head of Policy, Mike Childs, accusing the government of using ‘taxpayer money to subsidise the continued lifespan of the fossil fuel industry’. Stating the government must ‘reject the false solutions peddled by the fossil fuel industry’, he said that ‘blue hydrogen, produced from gas with CCS, is not clean; there are fugitive emissions from extracting the gas and not all of the carbon emissions from manufacturing it can be captured’. He urged the government to use the forthcoming budget and spending review to develop ‘a coherent industrial strategy to secure genuine green jobs and switch to clean energy’.

These sentiments were echoed by Greenpeace UK’s Policy Director, Doug Parr. While acknowledging that carbon capture ‘may be needed for hard to abate sectors, such as cement production’, he called for investment to instead be focused on ‘creating new jobs in the green industries of the future, like in offshore wind, or rolling out a nationwide home insulation programme that will keep our homes warmer, energy bills lower and less dependent on gas’.