UK Opens Bidding in First Carbon-Storage Licensing Round
The new areas are expected to make a significant contribution to the government’s target of capturing and storing 20 million–30 million tonnes of carbon dioxide per year.
The North Sea Transition Authority (NSTA) launched on 14 June the UK’s first carbon-storage licensing round with 13 areas available. The new carbon-storage areas, along with the six licenses that have been issued previously, is expected to help the government reach its goal of storing 20 million–30 million tonnes of carbon dioxide (CO2) by 2030.
“This is an important day on the path to net-zero emissions. In addition to the huge environmental benefits of significantly reducing carbon dioxide emissions into the atmosphere, the facilities will provide opportunities for many thousands of highly skilled jobs,” said Andy Samuel, the chief executive for the NSTA. “Carbon storage is going to be needed across the world. There is growing investor appetite, and we are keen to accelerate development of the carbon-storage sector so that UK is well-positioned to be a global leader.
The areas being offered for licensing are off the coast of Aberdeen, Teesside, Liverpool, and Lincolnshire in the Southern North Sea, Central North Sea, Northern North Sea, and East Irish Sea and are made up of a mixture of saline aquifers and depleted oil and gas fields.
The NSTA has said this round will be the first of many because an estimated 100 CO2 stores could be required to meet the target of net zero by 2050.
An Intergovernmental Panel on Climate Change report published in April 2022 emphasized the need for carbon capture and storage (CCS) to reach net-zero emissions from the power and industry sectors.
The NSTA has launched this licensing round in response to what it called unprecedented levels of interest from companies eager to enter the market. The areas on offer have a combination of attributes such as the right geological conditions, proximity to existing infrastructure that may be able to be re-purposed, and links to industrial clusters that are looking to carbon storage to help meet their decarbonization goals.
In choosing suitable areas for licensing, the NSTA considered issues such as colocation with offshore wind—whether any known challenges and mitigations exist around existing or future offshore wind developments—environmental issues, potential overlaps with existing or future petroleum licenses, and other activities to ensure key technologies can all be taken forward.
Currently, six carbon-storage licenses on the UK Continental Shelf could meet up to one-fifth of storage needs if they reach their maximum potential injection rates of 40 million tonnes per year by the mid-2030s.
The application window is open for 90 days, closing on 13 September, and will be evaluated by the NSTA on technical and financial criteria.
New licenses are expected to be awarded in early 2023. The size and scale of the licensed stores mean that they are likely to proceed at different paces, but first injection of CO2 could come as early as 4–6 years after the license award.
The Government’s Ten-Point Plan, published in November 2020, supported the establishment of carbon capture, usage, and storage in four clusters— in areas such as the North East, the Humber, North West, Scotland, and Wales— and encouraged private sector investment.
“We’re determined to make the UK a world leader in carbon capture, which will be crucial in helping us reduce emissions and protect the viability and competitiveness of British industry,” said UK Energy and Climate Change Minister Greg Hands. “This licensing round is an important step in making this a reality, helping support new jobs across the UK and encouraging investment in our industrial heartlands.”
Because CCS is a developing industry, it requires close cooperation between many organizations. The NSTA, The Crown Estate and Crown Estate Scotland recently published a joint statement explaining how they intend to work together, and the NSTA, separately, has signed a memorandum of understanding with Ofgem, which will act as the economic regulator for the transportation and storage of carbon dioxide.
In addition to being awarded a license from the NSTA, successful applicants will also need to obtain a lease from The Crown Estate or Crown Estate Scotland, depending on location, before they can progress a project.