Are Britain’s green and low-carbon ambitions hanging by a thread?

With speculation running rampant about the UK government’s plans to slash its green policies to tackle the cost of living crisis and growing inflation while ramping up oil and gas production, fears abound that this will put Britain’s net-zero targets in jeopardy. If this comes to pass, will the country’s ambitious carbon capture and storage (CCS) plans also be at risk or will they flourish? As the uncertainty looms over the United Kingdom’s low-carbon and green future, ample time is left to ponder whether the UK can still meet its net-zero aspirations and what it needs to do to reach these goals.

The heatwaves that are making the rounds this summer indicate that the climate crisis has brought the world to the edge of a precipice. While standing on this brink, countries need to find ways to mitigate the encroaching climate disaster before the world falls off the narrow ledge and straight into the abyss. As the world seems to be edging toward a global recession, which is already taking shape on the economic horizon, some argue that countries should adopt people over green policies stand, just like many are advocating the pursuit of people over profit culture.

The majority are in agreement about investing more in low-carbon and renewable sources as a way to strengthen the countries’ energy security and step on the gas to reach net-zero, but the consensus is lacking when it comes to determining the speed employed in this endeavour. The reason for this lies in the belief that the pivot to renewables should be a gradual shift in investment rather than turning away from new oil and gas developments right away.

This seems to be the same conundrum that is plaguing the UK government, as Rishi Sunak, the UK’s Prime Minister and Conservative Party leader, recently hinted at the possibility of putting on hold or perhaps even getting rid of green policies, which impose a direct cost on consumers in a bid to avoid making people’s bills higher and adding more fuel to the growing inflation fire.

Sunak elaborated on his green agenda rethink by saying: “We are living through a time at the moment where inflation is high. That is having an impact on household and families’ bills. I do not want to add that, I want to make it easier. So yes, we are going to make progress towards net-zero but we are going to do that in a proportionate and pragmatic way that doesn’t unnecessarily give people more hassle and more costs in their lives – that’s not what I’m interested in and prepared to do.”

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Following the Prime Minister’s remarks many underline that the UK cannot afford to row back on the progress it has made on climate action and net-zero. As a result, Sunak was accused of playing with fire on the UK’s green policies, since measures to tackle climate change are anticipated to also cut bills. The Association for Decentralised Energy (ADE) issued a warning in response to news that Sunak was considering delaying or abandoning various green policies because of suggested costs to consumers. 

Chris Friedler, Energy Efficiency Policy Manager at the ADE, remarked: “The Prime Minister is right to suggest that energy bills need to be reduced and costs for consumers need to be slashed – the best way to do this is to invest more money into measures that reduce energy consumption, such as energy efficiency. How would you like an extra £220 a year? The government’s original proposals for energy efficiency for renters found they would save just that, with £3.6 billion in net benefits overall. How about 900,000 jobs by the end of the decade? Or £100 billion of private investment?

“The implementation of climate measures would give us both of the above – measures to reduce the amount of energy required need not be burdensome, and in fact the government must do more to reap the economic benefits of net-zero. Those are our sentiments, but they are also that of the government’s own independent Net Zero Review, barely six months old. The UK cannot afford to risk these jobs, investment or our energy independence, and neither can British households.” 

Bearing in mind, the new suggestions in Whitehall about the government looking to reform energy performance certificate (EPC) standards, Friedler added: “With EPC reform also now seemingly imminent, the government must act decisively to make EPCs save money and carbon more effectively. Watering down EPCs will be a red line for industry, but equally, there is a real opportunity to improve the accuracy of the metric for the individual household, making sure they get the cost savings they greatly need.” 

Sunak disclosed on Monday, 31 July 2023, that hundreds of new oil and gas licenses would be granted in the UK while committing to future oil and gas licensing rounds subject to a climate compatibility test. The announcement shows the UK government’s willingness to continue to back the North Sea oil and gas industry as part of its drive to make Britain more energy independent, unlock new projects, protect jobs, reduce emissions, and boost the country’s energy independence. This comes on the heels of a recent analysis, which showed that domestic gas production has around one-quarter of the carbon footprint of imported LNG.

With a more flexible application process, licences could also be offered near currently licensed areas – unlocking reserves that can be brought online faster due to existing infrastructure and previous relevant assessments. As the independent Climate Change Committee predicts around a quarter of the UK’s energy demand will still be met by oil and gas when the UK reaches net-zero in 2050, the government is taking steps to slow the rapid decline in domestic production of oil and gas, which will secure domestic energy supply and reduce reliance on higher-emission imports.

The UK government claims that future licences will be “critical” to providing energy security options, unlocking carbon capture usage and storage, and hydrogen opportunities – building truly integrated offshore energy hubs that make the best use of the established infrastructure.

Sunak said: “Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses. Even when we’ve reached net-zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home.

“We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon-intensive gas imports from overseas – which will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy.”

The UK’s oil and gas industry is perceived to be vital to driving forward and investing in clean technologies needed to realise net-zero targets, like carbon capture usage and storage, by drawing from the sector’s existing supply chains, expertise and key skills whilst protecting jobs, says the government.

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To bring down the carbon footprint, North East Scotland and the Humber were chosen as locations for two new carbon capture usage and storage clusters – building a thriving clean industry in the North Sea, which could support up to 50,000 jobs.

Grant Shapps, UK Energy Security Secretary, underlined: “Our next steps to develop carbon capture and storage, in Scotland and the Humber, will also help to build a thriving new industry for our North Sea that could support as many as 50,000 jobs, as we deliver on our priority of growing the economy.

“The Prime Minister has also tasked the relevant government departments and regulators to work collaboratively and report back by the end of the year on how we can make the best use of our offshore resources in a truly integrated way as we unlock CCUS and hydrogen opportunities in the North Sea.

“A call for evidence has also been launched by government today, seeking views on the evolving context for taxes for the oil and gas sector to design a long-term fiscal regime which delivers predictability and certainty, supports investment, protects jobs and the country’s energy security.”

Multiple stakeholders have welcomed the government’s announcement as a positive sign for the future of the UK’s energy industry, however, there are also those who think the government’s climate credibility is hanging in the balance due to this.

David Whitehouse, CEO of Offshore Energies UK, is one of those who are happy about the UK’s plans, as confirmed by his comment: “Domestic production is the best pathway to net-zero and the UK government’s commitment to licences is a welcome boost for energy security and jobs. Oil and gas fields decline naturally over time. The UK needs the churn of new licences to manage production decline in line with the maturing basin. 

“There are currently 283 active oil and gas fields in the North Sea, by 2030 around 180 of those will have ceased production due to natural decline. If we do not replace maturing oil and gas fields with new ones, the rate of production will decline much faster than we can replace them with low-carbon alternatives.

“Developing our new carbon capture industry and its high-value jobs needs significant investment from our energy-producing companies. This means that the bedrock to success and delivering growth in the economy can only be collaboration between private and public capital. The UK’s skilled offshore workforce, its engineering expertise and its geology have given our nation a unique opportunity to lead the way in building a net-zero world.”

Tom Glover, RWE UK, Country Chair, is another stakeholder, who believes this is a positive sign: “RWE is delighted that Viking CCS has been awarded Track 2 status for the government’s cluster sequencing process. RWE is a long-term cluster partner of Viking CCS and is developing two projects that could use this facility, providing firm, secure and flexible low-carbon power generation to support our transition to a net-zero economy.”

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Will Gardiner, Drax Group CEO, said: “The announcement shows the importance of CCUS to the Humber and, along with the East Coast Cluster, creates an additional pathway to support our plans for bioenergy with carbon capture and storage (BECCS) at Drax Power Station. We are currently engaged in formal discussions with the UK government on this project and hope to invest billions in its development and deploy this critical, carbon removals technology by 2030.”

Steve Cox, Harbour Energy’s Executive Vice President of Net Zero and CCS, believes that this announcement shows the key role the North Sea oil and gas sector will play in helping to deliver the UK’s carbon capture goals.

Dr Nick Cooper, CEO of Acorn lead developer Storegga, also joined those welcoming the UK government’s plans: “We are thrilled that the Acorn Project has advanced directly into Track 2. Acorn has been progressed by the development partners as the Track 1 reserve since late 2021 and is ready to move promptly to support the decarbonisation of Scotland and the wider UK.

“Today’s news is a defining milestone for us, and the Scottish Cluster. Acorn will be a major contributor towards meeting the UK and Scotland’s carbon reduction targets, able to serve emitters connected by pipeline and ship.”

Ruth Herbert, Chief Executive at the CCSA, emphasised: “We are pleased to see the UK government pushing ahead with its CCUS deployment programme and selecting the next two CCUS clusters, as time is running out to meet 2030 targets. This CO2 infrastructure is critical to safeguarding the UK’s supply chain security, enabling local industries to continue to thrive whilst reducing their emissions as we transition to a net-zero economy.”

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Not everyone is happy about these plans, as they came under heavy fire from environmentalists, some NGOs and Labour Party members, pushing to end new oil and gas projects. In line with this, Richard Burgon, Labour MP for East Leeds, adamantly stated: “Granting 100+ new gas and oil licences is an act of climate vandalism. It won’t lower bills or boost energy security – as this energy will be sold on global markets at global prices. And it will undermine the urgent transition we need to cheap, renewable energy. It’s reckless.”

Reacting to the Prime Minister’s announcement today for hundreds of new oil and gas licenses in the North Sea, alongside investment in carbon capture and storage, Greenpeace said that this would do nothing to bring people’s energy bills down. According to the environmental group, the only thing this will do is “trash the climate.”

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Mike Childs, Friends of the Earth’s head of policy, commented along similar lines: “Rishi Sunak’s energy security drive should focus on energy efficiency and the UK’s vast home-grown renewable resources, rather than championing more costly and dirty fossil fuels. Climate change is already battering the planet with unprecedented wildfires and heatwaves across the globe. Granting hundreds of new oil and gas licences will simply pour more fuel on the flames, while doing nothing for energy security as these fossil fuels will be sold on international markets and not reserved for UK use.

“Talking up carbon capture and storage is an obvious attempt to put a green gloss on the Prime Minister’s announcement. Even if it ever worked, which is unlikely in the near term, CCS won’t capture all the climate pollution caused by burning fossil fuels or address the significant emissions that are created when gas and oil is extracted. If the government were serious about energy security it would invest in a nationwide street-by-street home insulation programme, focussing first on the communities that need it most. This would slash gas consumption, reduce energy bills, and help meet UK climate targets.

“Rishi Sunak’s international credibility is on the line. He promised other world leaders the UK would cut carbon by more than two-thirds by 2030. His recent announcements on energy and transport look as though he is reneging on the UK’s commitments. The Prime Minister should stop playing politics with young people’s futures and build the safe, clean economy we urgently need.”

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Following the UK government’s announcement about new oil and gas licences, Global Witness, an international NGO, deemed this to be “morally depraved.” In lieu of this, Alice Harrison, Fossil Fuels Campaign Leader at Global Witness, said: “As Rishi Sunak sets off to Scotland in his private jet to herald a new era of oil and gas production, today is a historic day for fossil fuel companies like BP and Shell, but for people and the planet, this news is about as bad as it gets.

“What the vast majority of people in the UK want is energy that’s cheap and clean, like wind and solar. Fossil fuels are expensive, they’re dirty, and as the war in Ukraine has shown us, they leave us vulnerable to the whim of despots – they belong in the ground and in the past.”

Harrison is adamant that fossil fuels are “the single biggest cause of climate breakdown,” emphasising that they are not the answer to energy security concerns, as the UK currently exports about 80 per cent of the oil produced in the North Sea and 60 per cent of gas.

“These new licenses won’t bring down our energy bills, because they’ll take years to come on stream, and the oil and gas produced will be sold to the highest bidder globally. Instead, billions of pounds of British taxpayers’ money will be spent on subsidising these oil fields, which are extremely expensive to get up and running,” underlined Harrison.

Harrison does not stop there either, as she goes on to say that carbon capture and storage will not mitigate any of this, since she sees it as “nothing more than a greenwashing gimmick by the oil and gas industry. It doesn’t remove carbon from the atmosphere, it only captures it during industrial processes. So it’s not a climate-fixing solution – it’s a get-out-of-jail-free card for industry that is only ever intended to make fossil fuel-powered industries slightly less polluting, and it has a high failure rate.“

In the meantime, the UK is taking steps to unlock more renewable energy by fixing its electricity grid, which is currently outdated for the most part and cannot connect renewables at the volume and speed needed to meet net-zero targets and provide cheaper electricity for people. To tackle this, the UK government is now passing a new law to make its energy regulator, Ofgem, put net-zero at the heart of its decision-making, which should lead to the upgrade of the grid and unleash the full potential of renewable energy. 

Currently, a huge chunk of renewable projects that could be powering millions of homes are on hold because they cannot be plugged into the grid. As multiple solar and wind projects are waiting up to ten to 15 years to be connected because of a lack of grip capacity, Greenpeace points out: “Without reliable renewable energy transmission via the grid, bills will remain high, and the UK will be unable to reach its net-zero goals. This new law should change that, forcing the energy regulator Ofgem to prioritise net-zero, and upgrade the grid to handle more renewable energy.”

The environmental group highlights that the UK government needs to make sure more storage and more transmissions and interconnections get built while also getting the grid up to scratch by using technology to make it smart, so that, it can more effectively balance demand and move excess electricity from solar panels and electric vehicles to where it is needed. 

One of the ways that can enable the UK to curb its carbon footprint in pursuit of its net-zero agenda is believed to be CCS. Recognising this, the United Kingdom has envisioned the creation of a carbon capture and storage system in the North Sea to capture 10 Mt of carbon dioxide annually by 2030, as the government believes that the space being exploited by removing oil and gas is what will partially create the space to be able to store the CO2 in the future since the North Sea floor provides numerous and vast storage reservoirs.

While discussing the benefits of CCS, Grant Shapps, UK Energy Security Secretary, said that the UKCS could have enough capacity to store about 78 billion tonnes of carbon, which is equivalent to the weight of about fifteen billion elephants or about 234 million Boeing 747s. With this in mind, the North Sea Transition Authority (NSTA) offered 12 companies awards for 20 carbon storage licenses in the UK’s first-ever CO2 storage licensing round, which was launched in June 2022, with applications closing in September.

These licences cover 12,000 square kilometres at offshore sites near Aberdeen, Teesside, Liverpool, and Lincolnshire, with some of the sites expected to be in operation in as little as six years, reducing Britain’s total greenhouse gas emissions by up to 10 per cent. It is estimated up to 100 CO2 stores could be needed for the UK to meet net-zero by 2050.  

The NSTA’s offer follows the UK government’s announcement of allocating up to £20 billion (over $25.7 billion) in support of developing carbon capture, usage, and storage (CCUS) starting with projects in the East Coast, Merseyside, and North Wales. It is estimated that the carbon capture and storage opportunity could be worth £100 billion (over $128 billion) to the UK’s energy supply chain by 2050.

However, many challenges still remain in terms of economics, contractual models, public perception, and engineering standards that need to be addressed to achieve the UK’s goal of capturing 10 million tons of carbon dioxide annually by 2030 through CCS projects. When it comes to the geological responsibility and public perception of CCS, the focus is on the long-term storage integrity of stored CO2 beneath the North Sea and the impact of public concerns and how they could be addressed.

On the other hand, the engineering solutions and monitoring process needed to ensure safe CCS implementation needs to be addressed through proactive and reactive monitoring methods, such as subsurface seismic monitoring and water column sensors.

To get a better understanding of the pieces that need to fall in place to turn the UK’s CCS vision into reality, Offshore Energy obtained insights from Aquaterra Energy’s Innovation Director, who outlined that innovation would need to be ignited across spheres shaping Britain’s CCS industry to mark the decade as “the storing ’20s,” since unresolved questions about the economics, contractual models, reputational challenges, and engineering of North Sea CCS hang over the country’s head.

Ben Cannell, Aquaterra Energy’s Innovation Director, underscored: “It is essential to deploy CCS, at scale, as soon as possible while other essential but earlier-stage decarbonisation technologies mature. What’s more, even if we can reach a point of net-zero new emissions as a society, there will remain a vital role for CCS to remove legacy emissions from the air and redress emissions overshoots. So, the question of whether CCS is necessary is a settled one. However, the questions of who pays and how much are less clear-cut.

“Most commentators seem to agree that the near-term economic case for CCS will come from coupling it with hard-to-abate industrial sectors such as cement production, plus a nascent blue hydrogen sector. Later, as technologies such as direct air capture mature, location may become less restrictive, but in the short-term, geographic concentration will be vital to make project economics work.”

Cannell is convinced that there will come a time when companies will be paying a CCS operator to store their CO2 rather than simply release it into the atmosphere, but a lot needs to be done along the value chain before this can occur. As the cost to set up the needed infrastructure, capture the CO2 at the flue (or from the atmosphere), and transport it for offshore storage via pipeline will potentially be high, Aquaterra’s Innovation Director claims that a potential way to deal with this is to set up a carbon price, either through a tax or an emissions trading scheme.

This raises a new set of challenges about the entity that will be in charge of the CO2 stored under the North Sea to ensure it stays put, thus, Cannell explains: “We want, and need, to ensure that carbon stays stored for thousands, if not tens of thousands of years. You can almost certainly bet that the operator won’t be around by then. Depending on how you measure, the oldest operating company in the world today is Japanese construction company Kongō Gumi, which was founded in 578. That’s nearly 1,500 years – still an insignificance on a geological timescale, and most companies last nowhere near so long.

“The implication is that, like it or not, the responsibilities will eventually pass back to the state. There is no practical way to hold the private sector accountable over that timeframe. Therefore, a stakeholder relationship needs to be established where the government clearly sets out the operator’s responsibilities and the timeframe it is expected to hold them for – plus provisions for ongoing risk mitigation when responsibility is passed on.”

Furthermore, Aquaterra Energy’s Innovation Director is under the impression that onshore CCS is mostly likely an “unrealistic” concept due to the waste that would be shed, as illustrated by the failed attempts to develop projects at Barendrecht in the Netherlands. While the storage beneath the North Sea is not subject to the same objections from local communities, it is far from free of public perception challenges.

Even though most people understand the benefits and agree that CCS should be implemented, feelings about its deployment are mixed due to worries that this will provide a lifeline for the fossil fuel industry and prolong the burning of oil and natural gas. In addition, people are concerned about the possibility of CO2 leaking back into the atmosphere, as some think that science is underestimating the risks involved.

Taking these public perception issues into account, Cannell argues that these issues could be at least partially sorted out with an engineering solution: “Consider monitoring: whether we are talking about utilising depleted hydrocarbon formations or saline aquifers, it is vital that we specify the highest standards. As the CO2 is injected, the operator needs to be able to demonstrate the CO2 plume is migrating within and filling the formation as expected by the reservoir engineering, and not entering areas it should not such as faults or previously abandoned legacy well locations.

“If it does so, this will demonstrate accurate knowledge of the formation and competence, therefore providing proactive reassurance in that an engineered plan is being executed. If it doesn’t, injection can be paused to investigate and rectify any issues. Subsurface repeat seismic monitoring or spotlight seismic imaging offers a proactive early warning system as well as reassurance that the injection process is going to the agreed plan. This can be coupled with water column monitoring – deploying reactive sensors to detect whether there has been a breach of CO2 – for additional reassurance.”

For Cannell, the continuation of monitoring once the field has been fully injected and resealed is “essential,” but as it cannot continue indefinitely, a required monitoring period for injection operators post-sealing will likely be on the cards for a certain number of years. Afterwards, the government will need to take over for a further defined stretch or until it is satisfied that the site is stable.

“The catch with reactive monitoring is that these sensors are theoretically redundant – their inclusion is gold-plating in a sense. If the engineering has been done well to this point, and the proactive sensors confirm the injection has gone as planned, then they will never be used. If they are, something has gone very wrong indeed. Therefore, their inclusion is a tacit acceptance that something could go wrong – yet, it is vital to reassure the public and regulators that the asset is safely contained,” underlined Aquaterra’s Innovation Director.

More engineering challenges are also waiting in the wings to be solved, such as temperature, which Cannell explains is “a key point of difference” between handling CO2 and oil and gas, as high flow rates of CO2 can produce a super cooling effect and oil and gas equipment has not been designed for this. A case in point is the fact that steel can become brittle at low temperatures and would no longer perform to the standards expected.

Therefore, Cannell outlined that equipment, such as riser systems, will need to be fabricated using special alloys to protect the areas that will be most exposed to extremely low temperatures. Managing the effects of heightened sweet corrosion on pipelines will also need to be handled to redeploy them as CO2 infrastructure.

Cannell does not perceive these challenges as an impediment since for him the real hurdle stems from economic and contractual issues. He elaborated on this by saying: “We have the knowledge and technology to tackle all of these engineering challenges quite quickly, and at Aquaterra Energy, we are already working with operators on a number of feasibility studies for North Sea CCS from vertical re-entry of legacy wells and their potential re-abandonment, as well as subsurface and water column monitoring.

“Nevertheless, as engineers, we are downstream of the real blockers on the UK’s CCS ambitions – we need our policymakers and regulators to address the small herd of elephants in the room, which are the unresolved economic and contractual questions – and we must keep one eye on perception issues too. If, and when, that happens – we’re ready and waiting to do our part in making the storing ’20s a reality.”

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