Chancellor of the Exchequer, Jeremy Hunt, announced on the 15th of March the government's plans to invest £20 billion in carbon capture usage and storage (CCUS) over the next two decades. This forms part of the UK's transition to a net zero economy, starting with projects on the East Coast, in Merseyside and in North Wales, and paving the way for CCUS across the UK by 2050.
The Chancellor also announced that, subject to consultation, nuclear power will be classed as "environmentally sustainable", giving it access to the same investment incentives as renewable energy.
We set out below some of the key announcements made at the 2023 Budget.
Carbon Capture Usage and Storage (CCUS)
The £20 billion investment will be spent on projects aiming to store between 20 and 30 million tons of CO2 annually by 2023, and will be welcome by developers of CCUS projects such as the Acorn CCS project, which aims to capture CO2 emissions from the St Fergus Gas Terminal, and the Viking CCS project, which will transport CO2 along a pipeline from Immingham to Theddlethorpe.
The Chancellor also mentioned a shortlist of projects for the first phase of CCUS deployment to be announced later this month, with Track 1 to be expanded in 2023 to allow further projects to enter the selection process, and two additional clusters to be selected through a Track 2 process.
However, while the £20 billion pledge to CCUS is generally welcome, none of the promised budget will be spent before the next election in 2024 and the government has yet to announce whether it would be funded via taxes or levies.
Nuclear Power
In his speech, the Chancellor presented nuclear power as "another critical source of cheap and reliable energy" and stated that increasing nuclear capacity would be vital to meet the UK's net zero obligations.
This has led to a push for private sector investment, as subject to consultation and following in the EU's footsteps, nuclear power will be classed as "environmentally sustainable" with a view to it receiving the same investment incentives as renewable energy.
Building on his Autumn Statement, the Chancellor also announced two further developments in the nuclear space; the first of which aims to reduce costs across the nuclear supply chain, and the second plan being the competition for small modular reactors, which could lead to further co-funding in this technology.
Global Race for Investment
These announcements follow in the footsteps of recent developments in the EU and US, such as the US Inflation Reduction Act offering $369 billion in green subsidies. It is seen as part of a larger push to maintain the UK as an appealing jurisdiction for green businesses and to avoid losing out on investment. Critics have argued that the UK needs to do more in order to remain an attractive place to invest in wind and solar, as well as the next generation of clean industries like sustainable aviation fuel and green hydrogen. Whilst the announcements for CCUS and nuclear are positive, it remains to be seen whether these developments will be sufficient incentive to make the UK's plans a reality in the near future.
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