A report published this week tackles a pressing issue in UK climate policy: developing carbon storage infrastructure sustainably without burdening public budgets. Authored by Oxford Net Zero and Carbon Balance Initiative researchers, the study answers the government's request for policy solutions on CCS deployment and the Carbon Takeback Obligation (CTBO).
To meet the UK's net zero goal, fossil fuel use must significantly decline, while remaining CO2 emissions must be permanently stored underground by 2050. Building a resilient CCS sector is crucial to these goals. In 2024, the UK government allocated Pounds 21.7 billion to jumpstart CCS development, aiming to store 50 megatonnes of CO2 annually by the mid-2030s - equivalent to current emissions from all UK power plants. However, reaching these milestones will demand substantial investments beyond the existing public funding.
Through consultations with over 20 experts spanning government, academia, industry, and civil society - in collaboration with the Carbon Capture and Storage Association (CCSA) - the report concludes that relying on the UK Emissions Trading Scheme to scale CCS from the 2030s is unlikely to secure enough private funding. This dependence risks extending the CCS sector's reliance on government subsidies.
The authors propose a bold alternative: mandating fossil fuel suppliers to progressively store a percentage of their CO2 emissions through initiatives like the Carbon Takeback Obligation. This policy could stimulate a sustainable carbon storage market while easing reliance on public finances. The researchers suggest pairing such mandates with demand-side measures like carbon pricing to maximize effectiveness.
"The new Labour government faces tough choices about public spending across many sectors," said Mirte Boot, UK Director of Carbon Balance and a report author. "Our research shows that, with the right policy design, the government could create a clear investment case for CCS and GGR without pushing the costs for CO2 clean-up onto taxpayers," added Ingrid Sundvor, report author and Executive Director of Carbon Balance.
While endorsing the concept, the authors emphasize the importance of meticulous policy planning to mitigate risks, such as impacts on industrial competitiveness, energy security, consumer prices, and the potential for carbon leakage. They stress that any carbon storage mandate must align with broader efforts to phase out fossil fuels and advance the energy transition.
"The fossil fuel industry has the resources to deliver the storage capacity we need," said Professor Myles Allen, report author and Oxford Net Zero Principal Investigator. "Making this a condition of their continued operation provides a practical pathway to net zero. Further policy development on this is urgently needed."
Professor Stuart Haszeldine of the University of Edinburgh, who reviewed the report, commented, "The world heated ever-faster in 2024 - we are losing the climate fight. Commercial carbon storage has started, but models show it will need to develop 100 times faster to protect net zero. Without change, these grant-funded projects may be the last. The Government must look at a supply-side obligation that integrates the cost of CO2 storage into wholesale fossil fuel prices."
Research Report:Markets and Mandates: Policy Scenarios for UK CCS Deployment and Exploring the Role of a Carbon Takeback Obligation
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