There is a lot to celebrate when it comes to delivering a net zero UK. Some would argue we could have done more, faster, but the changes that we see on a daily basis in terms of the circular economy, the rise of electric vehicles, and the vast development of wind farms demonstrate that progress is being made.
It’s important to maintain momentum, and this can be achieved by an enabling domestic policy environment and a competitive international market.
Domestically, the UK Government’s Ten Point Green Industrial Revolution Plan established the need for a growing low-carbon hydrogen economy and investment in carbon dioxide capture, storage, and utilisation (CCUS).
Combined, these technologies are critical to decarbonise the industry and working synergistically as one enables the other. The production of low-carbon hydrogen using processes like steam methane reforming, autothermal reforming, or partial oxidation requires carbon capture, with the carbon dioxide being permanently sequestered in depleted oil/gas fields underground. The UK has an undeniable competitive advantage. It is practically surrounded by offshore depleting oil and gas fields along the Irish Sea and the North Sea.
It is argued that government support for carbon capture gives oil and gas companies an inappropriate lifeline in a net zero world. Instead, carbon capture is supporting the re-purpose of existing assets and accelerating the journey to net zero at a much lower cost, utilising and adapting technologies that already exist today.
In supporting such industries, society is supporting industries that generate tax revenue and a higher demand for high-skilled jobs, delivering social mobility in some of the UK’s most deprived communities. Ultimately, the focus should be on the technologies that deliver net zero fastest and at a lower cost, delivering real value for money for governments.
Companies like Essar Energy Transition (EET), part of the wider Essar Group, are committed to leading industrial decarbonisation. Owning and operating the Stanlow Refinery, a complex manufacturing facility producing 16% of the fuels consumed in the UK, the company has reduced its scope of greenhouse gas emissions by 22% since 2011.
It is now leading the industry with a clear target to decarbonise manufacturing operations before the turn of the decade through a combination of carbon capture and storage, energy efficiency, low carbon hydrogen production, and fuel-switching to hydrogen. It is setting a global benchmark for high-emitting industries by developing the UK’s first low-carbon refinery.
"It’s important to maintain momentum and this can be achieved by an enabling domestic policy environment and a competitive international market"
EET Hydrogen will become the primary supplier of CCS-enabled low-carbon hydrogen, supporting the decarbonisation of our region’s energy-intensive industries. The first CCS-enabled hydrogen plant has been selected as part of the DESNZ Track One cluster programme and is aiming to achieve its final investment decision (FID) in 2024.
Overall, the company is investing in excess of $2.4Bn to transform the business into an energy transition hub providing the low-carbon energy vectors the market will need in the future.
Significant investments like those being undertaken by Essar require the right policy environment. Business models that share a common language, have a track record from sectors like onshore and offshore windfarms, and which the finance sector is familiar with and willing to back, share the risks, and give investors confidence.
Work done by the Department for Energy Security and Net Zero (DESNZ, former BEIS), in consultation with multiple stakeholders, is delivering a policy that provides an investable proposition. There must be an urgency to finalise such business models and expedite negotiations to kick off the low-carbon hydrogen and CCS economy.
We urge the Government to work with those projects that are technically advanced and have direct, easy access to other dependent investments, for example, the soon to be consented CO2 pipelines. Such prioritisation will deliver overall net zero outcomes efficiently and effectively. This is essential for the UK to achieve its ambition of 20 to 30 million tons per annum of CO2 captured and stored by 2030.
The other threat to keep momentum on delivering net zero is the threat to UK international competitiveness. The policy being developed elsewhere, like the US Government’s Inflationary Reduction Act, is attracting investment and incentivising the accelerated deployment of a vast amount of capital in low-carbon hydrogen, CCS, and low-carbon fuel production.
Another element is carbon leakage – where taxes are paid at home and products are imported cheaper from countries where carbon taxes don’t apply.
The EU and UK are working on developing a cross-border adjustment mechanism (CBAM) to put products on par, this needs to be accelerated to enable UK industries to remain competitive while these transition to a net zero world.
The race to net zero is a competition worth pursuing, and the reward will be to create growth, new jobs and wealth. The alternatives are industries shutting down on the back of ever-increasing carbon levies, or migrating to countries with no carbon taxes or where there are the right incentives to invest in green technologies, none of which will ensure the UK remains at the forefront of delivering a decarbonised economy.