15 March 2023
Today, Jeremy Hunt unveiled his Spring Budget, including further commitments to strengthening the UK's energy security and fresh investment in carbon capture technologies, amounting to £20 billion.
Commenting on the investment support announced for Carbon Capture Usage and Storage announced in the budget, Chris Matson, Partner at LCP Delta, said:
“This scale of investment is certainly welcome news and can provide a ‘low regrets’ option for the government in decarbonising the electricity sector, supporting the deployment of CO2 and hydrogen infrastructure in industrial clusters, and positioning the UK as a global leader in CCS.
CCUS provides a route to a net zero power system and is an essential technology in helping Britain reduce emissions. LCP Delta analysis suggests that with government renewable ambitions, deploying around 7GW of Gas CCUS (equivalent to 10 – 12 power plants) by 2030, alongside other technologies such as hydrogen and energy storage, would provide net benefits, and it is therefore encouraging to see funds made available to make progress toward this. It is vital that this investment support begins filtering through as soon as possible and that the industry is given the thumbs up that it needs on ready-to-go projects so that construction can begin.
“Decarbonising the electricity system is essential and can pave the way to decarbonising other critical sectors such as heating and transport. It is equally important that these sectors see future investment as part of the government’s net-zero goals.”
Discussing the lack of wider support announced for the energy sector, Sam Hollister, Head of Markets and Engagement, LCP Delta, said:
“Today’s budget lacked the decisive support that the energy industry needs to deliver net zero. This only puts more expectations and urgency on the much-anticipated update to the energy strategy in the response to the Inflation Reduction Act. Today was a missed opportunity to double down on immediate support to households to actively lower emissions.
While decarbonising the UK’s electricity generation has attracted attention today, there remain huge gaps in wider support that directly impact the way that consumers interact with energy. Decarbonising how we heat our homes has to be higher up the agenda and backed by tangible action. With relatively minimal uptake of domestic low-carbon heating solutions currently, and questions around hydrogen’s future role in home heating, a greater emphasis needs to be placed on the measures that homeowners can do now - and that’s insulating their homes. The UK has the leakiest housing stock in Europe, and the solutions to fix this problem already exist. Government support is critical in overcoming this challenge by supporting homeowners in funding these improvements, which will ultimately reduce energy bills and help with the UK’s energy security.”