On 30 March 2023 and as part of the “Energy Security Day”, the Department Energy Security and Net Zero (DESNZ) published its latest plans to scale up carbon capture (CCUS), hydrogen production and Bioenergy with carbon capture and storage (BECCs).
CCUS – emitters selected for Track 1 negotiations and Track 2 expressions of interest open
Government has confirmed the eight capture projects they will take through to negotiations on the dispatchable power agreements as the capture projects that will connect and form the first two CCUS clusters (the “Track-1 Clusters”). Scotland and the Humber projects have been excluded from Track-1 but DESNZ stress that the narrow geographic nature of the list does not represent the extent of its ambition; they intend to launch a process later this year to enable further expansion of the Track-1 Clusters.
In addition, DESNZ announced the launch of the Track-2 Cluster process.Track-2 aims to identify two further clusters, each becoming operational in the 2030s, in line with the UK Government’s ambition to capture 20-30 Mt CO2 per year across the economy by 2030. DESNZ opened a four-week expression of interest period for T&S systems that may meet the Track-2 eligibility criteria. Formal expressions of interest must be submitted by 28 April 2023.
BECCs
Government has published its responses (the “Response”) to its 2022 consultation on the proposed BECCs business model. The Response confirms its intention to proceed with its minded-to position of a dual CfD business model. This will entail a 10-15 year contract to incentivise the production of negative emissions with a co-benefit of low carbon power generation. Government anticipates that the dual CfD model will comprise a three-part payment mechanism; a difference payment for the low-carbon electricity generated (referred to as a CfDe); a difference payment for carbon captured (referred to as a CfDc); and, to support the use of the T&S Network, a T&S Charges Payment.
The business model will not specify which biomass feedstocks will be eligible for support but will instead establish the supply chain emissions thresholds and sustainability requirements for eligible feedstocks.
Next steps require determination of the