Capturing the imagination: How the UK is aiming to become a world leading CCUS hub

Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I’m your host Lisa Raitt and in this podcast I’m going to share insights on current hot topics in the areas of public policy, politics and business, with some guests along the way. Welcome back to The Raitt Stuff. You know, we started in 2024 talking about how this was going to be a year of political change, that 50% of the world was going to the polls, and that we’d see some different governments. One of the places where we do see a new government now, of course, is in the United Kingdom, and we have a new labor government. There’s always going to be a question as to what happens in a new government to energy policy, to policy with respect to the environment. Here in Canada, there’s a lot of discussion around it and certainly in the United States there is as well. In September of 2023, I had the great pleasure of having a guest on the podcast named Ruth Herbert. And she gave us an update as to what was happening. And it was very exciting to hear about the things that the UK were undertaking when it came to CCS. I was curious after the change in government whether or not the UK was still on the same path. And we have Ruth here with us today to give us an update. Ruth now is the Managing Director of Strategic Initiatives at Essar Energy Transition in the UK. But she has 15 years of energy industry experience. she was the Chief Executive of the Carbon Capture and Storage Association, where she did help shape public policy and help to foster partnerships that really did advance the industry’s progress. She has extensive UK government experience and holds a Master of Physics from the University of Oxford, so she is far smarter than I am today. Thank you very much, Ruth, for joining me.

Ruth Herbert: It’s a pleasure to be here again Lisa.

Lisa Raitt: As I said at the top, a lot of political change around the world and you’ve had a change in government from a Conservative government to a Labour government since last we spoke. Can you give me an update as to how the new government is approaching energy policy?

Ruth Herbert: Yeah, absolutely. I think the biggest announcement really is the Clean Power by 2030 mission. This is actually a big part of Labour’s campaigning prior to arrival in government spearheaded by Ed Miliband And I think overall this sits within Keir Starmer’s focus on mission-led government. So overall there’s a kind of series of missions that are meant to provide focus to policy making and make sure departments are orientated towards delivery of the targets. So Clean Power by 2030 has been quite an important one. I think it’s fair to say the first phase of that has been focused around trying to define what do we mean by clean power, which is not straightforward and has been the subject of lots of analysis and debate. But I think now that we’re there, there’s a series of things happening as a consequence of that in terms of looking at what that means for the grid and what that means for government initiatives. I think the other big thing is the creation of Great British Energy, which is aimed at co-investing in infrastructure where the private sector’s unable to go alone. So for example, like common or shared port side infrastructure that supports other investments in the energy sector. And this sort of complements the National Wealth Fund, which is another big policy announcement, which essentially now encompasses what was the UK Investment Bank and this sort of bigger and we’ve been told will be bolder and will also make some big investments in this space. But obviously they’re working across a wider portfolio than GB Energy. But we’ll align with them and take their prioritization from them. And I suppose that gets back into GB Energy is not, I think, just an investment arm, but we’ll take a view on the pipeline of projects to achieve government targets, achieve the clean power by 2030 and will provide support projects to enable them to move forward at pace. And we don’t quite know what that looks like yet. And it’s safe to say that it’s an early stage because legislation’s going through and they’re still recruiting and building up the team that will deliver this. But the feeling that you get is a much more hands-on, we will make sure we meet this target as best we can by co-investing, by helping the pipeline of projects move forward, easing the way, speeding up approvals, these kind of things. So lots of new bodies with clear missions to make this happen a lot faster, and we want to get there by 2030. 

Lisa Raitt: So the 2030 target is really interesting to me because we have a target here in Canada as well. And our grid is relatively clean compared to other grids around the world. We’re struggling just to try to find the capacity to be able to not only reformulate the grid, but also be prepared for the surge in demand that is coming, both from projects that are happening and of course, people moving to electrification. Do you think 2030 is something that’s going to be difficult for the UK? Or do you sit somewhere differently in the public policy world where five years is going to be enough time?

Ruth Herbert: I could give you a cynical answer and an optimistic answer to this because I think the cynic in me suspects that 2030 is important because it comes before that big uptick in demand that we would have seen and I think EV’s policy has moved out to the right maybe kind of it’s the optimum date to pick where you can just about do it and then you’re going to have to do more beyond that. So it’s definitely not the end goal, sure. It cannot be because the challenge then starts again in the 2030s. And actually a lot of the conversation in the UK has been about national energy system operator, There’s been a debate about don’t solve just for 2030 and not think about what happens beyond. We need to do the things that will work into the 2030s and choosing the quick thing now and not preparing for the medium term thing might be the wrong answer when it comes to planning networks. But the optimistic answer, I suppose the way I feel having worked in climate energy policy in the past, aiming high, having an ambitious target is really important. Even if you think perhaps we may overshoot it a little bit, aiming for it provides a certain amount of clarity and purpose and pulling in the same direction that is really necessary and an urgency to this that we all know the climate demands So the ambition I think is the right one. It is challenging. It’s only going to get more challenging into the 2030s anyway.

Lisa Raitt: Yeah, exactly.

Ruth Herbert: So we’ve got to go as fast as we can go. I don’t think there’s any point whining about that. And let’s just make sure when we’re making those decisions for the short term and trying to get that pace in that we don’t like preclude scenarios that are going to be more important in the medium term.

Lisa Raitt: Yeah. So to get to the goal of Clean Power by 2030, I’m going to assume that carbon capture utilization and storage is going to play a big role.

Ruth Herbert: Yeah, it plays some role and the Clean Power 2030 plan that the NISO came out with something like 2.7 gigawatts of dispatchable low carbon generation in there. the view was that that can either be post combustion capture on a gas-fired power station or it could be hydrogen-fired power station with low carbon hydrogen as the input. So to get low carbon hydrogen of that scale actually you’ve got to have CCUS enabled hydrogen which is what my company is developing in the north west. So CCUS is part of it whichever way you look at that dispatchable power and it’s not a huge amount pre 2030 but given obviously that we’ve not actually got CO2 storage up and running at scale yet, that is a significant challenge. And it comes alongside the industrial decarbonization plans that the government’s announced and the targets that the industrial strategy that’s in the I would say still forming and in the wings but was clearly kind of part of Labour’s pre-government promise, which was to kind of decarbonize industry and make industry more competitive in the UK. So I think one of the things that we’ve been conscious of in looking at, well, how do you prioritize who gets good connection first and that kind of thing is it’s really important to think about industrial decarbonization deadlines as well, because they’re also really urgent, especially as the emissions trading scheme pre-allowances will be withdrawn over time. For some industry, it’s a pre 2030 problem. So we need to make sure not only that there’s enough CO2 transport storage for this clean power, if it’s going to be post combustion, or either way, if it’s going to be more clean hydrogen production for power, we’ve also got to make sure it’s for decarbonization of industry. I think they’re all urgent. 

Lisa Raitt: You may have heard in Canada, we have a project in our oil sands and it’s named Pathways and it has to do with putting carbon capture together in one of our industries, the oil and gas industry. The Pathways group is still struggling though with coming up with an agreement with the Canadian government as to exactly how this change is going to be funded. But I noted that in the United Kingdom, the UK government has been giving funding to some CCUS cluster projects and have made some announcements in the last number of months that show that the government actually is assisting and investing in carbon capture in the UK.

Ruth Herbert: That’s right. Back in the beginning of October, the government confirmed that 21.7 billion of funding was available for two CCUS clusters sites in Teesside and Merseyside. there was a lot of speculation about whether the new government would continue with the CCUS program and to what extent. We had Keir Starmer, Rachel Reeves and Ed Miliband all come to the NSERC glass factory which is round the corner from our Stanley refinery where our hydrogen production plant is going to be and NSERC are going to use some of the hydrogen from that first phase production. They all came and engaged with the workforce there It was a really positive day and I think it was really important to hear that from the very top, all aligned at the start of their new administration. It was a big boost and it really helped with engaging investors on the final stages of the project. So it’s going to bring huge investment into communities. And I think it was great to hear just a couple of hours ago that the East Coast Cluster, so the Northern Endurance Partnership that will operate the CO2 store there and the Net Zero T side, which is post combustion capture on gas fire power station, that, they’ve reached financial close, they’ve taken the final investment decision today. So you’ve got to look at that and say, OK, new government came in, confirmed the funding was there. That enabled those projects to go forward and reach financial close. And we’re really keen to follow them as soon as possible on the West Coast. it’s really exciting now to know that those projects are going into execution. And that has a huge boost for the supply chain offshore and onshore for those projects. So it’s exactly what we need. It’s big investment and it’s in transition technology of the future. I think this is the culmination of many years work by many people to get to that point. So all the civil servants that have worked across different administrations deserve some credit.

Lisa Raitt: Well, congratulations. And for people listening in, we’re recording this on December 10th. That’s why you’re referring to it happening a couple hours ago. Ruth, just out of curiosity, obviously, political will is incredibly important when you’re talking about the size of the investment. How do the voters react? Do you seem to have an agreement within civil society that carbon capture is the way to go forward for industrial carbonization into a smaller part of clean power?

Ruth Herbert: The announcement at the funding, which was for both sites in Teesside and Merseyside. So it’s a big number, but I suppose those clusters have got big ambitions. Initially, they’ll bring in eight billion of private investment into those communities. And I should have said that funding is available over 25 years. So that funding is kind of the revenue support that enables that upfront investment. The upfront investment is a capital investment made by the private sector. And so this isn’t competing with, you know, money for schools and hospitals. So I suppose there hasn’t been the debate that that money is somehow displacing money that urgently needs to be spent on public sector things in the short term. And the other thing that the government has tried to do more broadly actually, this is one of Rachel Reeves goals has been to make a real distinction in her budget between funding the day-to-day running of services, public services and this kind of forward-thinking long play of investment in infrastructure which will make us more competitive and attract more inward investment. I think trying to make that distinction, she’s borrowing more, but she’s borrowing to invest in things that she thinks will drive long-term economic growth and improve GDP Time will tell, right. I think people have focused in those regions more on the jobs that will be available. The continuation of industry that was in decline, perhaps a resurgence of that industry ability to compete on a different playing field now of lower carbon product, green premium, a different future, maybe ultimately a future that won’t always need subsidy, but in the first instance it does. So I think all that positivity was there around the announcement. I think they played that really. we’ve got to get there on the West. I don’t think there’s a one size fits all when it comes to taking these projects forward. 

Lisa Raitt: Well, good luck with the West Coast project. Hopefully you’ll have somewhat of a similar announcement coming out. And just the last question, do you think that the projects that we talked about will do what’s needed to create a CCUS market in the UK?

Ruth Herbert: I think despite the fact that it sounds like a large number, financially, it’s spread over a long period of time. the projects that are going forward, there were three projects that were confirmed back in October, which was Net Zero T-side that’s just taken financial decision. There was in Hynet on the West Coast, where our project is, there was our first 350 megawatts CCF enabled hydrogen production plant. was the Encyclis Protus Waste to Energy Plant with CCS. So it’s three projects. And as I say, one’s now taken feed along with the store on the East Coast It’s still a drop in the ocean in terms of the targets and the level of decarbonization needed across power and industry. it’s a starting point but I think what’s more important is that momentum, so if this pace that the new government is talking about continues and there’s momentum then what we really need to see in the spring in the comprehensive spending review and in the three-year plan that’s coming up is that we have a plan for expansion of those areas. We’ve got two projects we’d like to move forward in the expansion of high net in the Northwest. it’s how do you get that momentum? Because when the supply chain can see continuity, repetition of this, this is going to be happening at scale over the next 10, 15 years, then you start to see people, local supply chain get properly involved, start investing, you start being able to get economies of scale, bring costs down. I mean, it’s much cheaper to do large hydrogen production plants like we see in the US. And we’d be encouraging the UK government to think a bit bigger rather than piecemeal. It’s a really good start obviously and it’s a good day.

Lisa Raitt: Well, it’s a great day. Well, thank you. I appreciate you taking the time to chat with us today. We’re clearly looking for a path forward for our Pathways project in Alberta. And maybe we’ll learn some things from the successes in the UK. So thanks for sharing with us today.

Ruth Herbert: It’s been great to talk again, Lisa. Thank you.

Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at [email protected]. Your interactions actually will make this better. I’m your host, Lisa Raitt, and this has been The Raitt Stuff.

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