UK opens first-ever carbon storage licensing round

CCUS

United Kingdom – The North Sea Transition Authority (NSTA) has opened the first-ever carbon storage licensing round in the UK, with 13 areas of exciting potential.

Together with the six previous licenses, the new carbon storage areas may be able to make a significant contribution toward the goal of storing 20-30 million tonnes of carbon dioxide (CO2) by 2030.

The licensing areas are located off the coasts of Aberdeen, Teesside, Liverpool, and Lincolnshire in the Southern North Sea, Central North Sea, Northern North Sea, and East Irish Sea, and consist of a mix of saline aquifers and depleted oil and gas field storage opportunities.

This round is expected to be the first of many, as it is estimated that up to 100 CO2 storage facilities will be required to achieve the net zero by 2050 goal. Carbon capture and storage technologies must be deployed to achieve net zero emissions from power and industry sectors, according to a report released by the Intergovernmental Panel on Climate Change in April 2022.

Decarbonizing industrial hubs

Carbon capture and storage (CCS) is the process of capturing CO2 emissions from industrial processes, and it will be critical in decarbonizing the UK’s major industrial hubs like Teesside and Humberside. The CO2 is then transported by ship or pipeline from the point of production and stored offshore, deep underground in geological formations.

This round of carbon storage licensing has been launched by the NSTA in response to unprecedented levels of interest from companies looking to enter the market. The areas on offer have a mix of characteristics, including favorable geological conditions, proximity to existing infrastructure that could be repurposed, and connections to industrial clusters that are looking to carbon storage to help them meet their decarbonization goals. Because of the high level of interest already expressed, there is likely to be fierce competition, requiring prospective licensees to submit high-quality bids in order to win licenses.

Co-location with offshore wind – whether there are any known challenges and mitigations around existing or future offshore wind developments – environmental issues, potential overlaps with existing or future petroleum licences, and other activities were all taken into account by the NSTA when deciding which areas to make available for licensing.

On the UK Continental Shelf, there are currently six carbon storage licenses that could meet up to one-fifth of storage needs if they reach their maximum potential of up to 40 million tonnes per annum (MTPA) injection rates by the mid-2030s. While the capacity estimates for the areas offered in this round are still subject to some uncertainty, they have the potential to make a significant contribution to the UK’s decarbonisation.

Close collaboration

The application window will be open for 90 days, closing on September 13th, and will be judged by the NSTA based on technical and financial criteria. Any new licenses are expected to be awarded in early 2023. Because of the size and scope of the licensed stores, they are likely to move at different speeds, but the first CO2 injection could happen as soon as four to six years after the license is granted.

The government’s Ten-Point Plan, released in November 2020, encouraged private sector investment in carbon capture, usage, and storage in four clusters, including the North East, the Humber, the North West, Scotland, and Wales. CCS is a growing industry that necessitates close collaboration among numerous organizations. The NSTA, The Crown Estate, and Crown Estate Scotland recently released a joint statement outlining how they plan to collaborate, and the NSTA has also signed a Memorandum of Understanding with Ofgem, the economic regulator for carbon dioxide transportation and storage.

In addition to receiving a license from the NSTA, successful applicants will need to obtain a lease from The Crown Estate or Crown Estate Scotland, depending on their location, in order to move forward with a project.

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