UK Awards Initial Licences for Offshore Carbon Storage

Tuesday, 19 September 2023

In a significant move towards achieving its carbon storage aspirations, the UK has finalised the allocation of licences in its inaugural carbon storage licensing round. Prominent energy industry players such as Shell, BP, Eni, Esso, and Wintershall Dea are among the participants.

This initial round saw the distribution of 21 licences amongst 14 companies, offering the potential to offset nearly 10% of the UK's total greenhouse gas emissions. For context, the UK's CO2 emissions for 2021 stood at 341.5 million tonnes.

Stuart Payne, the Chief Executive of the North Sea Transition Authority (NSTA) – the body supervising these endeavours – emphasised the pivotal role of carbon storage in the broader energy transition. The initiative aims to securely store carbon dioxide beneath the seabed, with expectations that this programme will significantly influence hydrogen production and the establishment of energy hubs within the UK.

The awarded licences span depleted oil and gas reservoirs and saline aquifers, covering over 4,600 square miles. By 2030, these sites are projected to have the capacity to store up to 30 million tonnes of CO2 annually. With the UK Government setting ambitious targets of storing 20 to 30 million tonnes of CO2 emissions annually by 2030 and surpassing 50 million tonnes by 2035, these efforts are crucial for the nation's net zero aspirations.

Lord Callanan, the Minister for Energy Efficiency and Green Finance, commented on the UK's vast potential for carbon dioxide storage, stating, “The UK boasts one of Europe's most extensive potential capacities for carbon dioxide storage, positioning us to be at the forefront of carbon capture globally. The licences announced today are instrumental in harnessing our carbon capture, utilisation, and storage (CCUS) potential, playing an integral role in the energy transition.”

A cornerstone of the UK's strategy involves the conceptualisation of national energy hubs. The Bacton Energy Hub, envisioned as a nexus for carbon storage, hydrogen, and offshore wind energy, stands out as a prime example. Situated near Norwich on the Southeast UK coast, Bacton could be a pivotal source of sustainable energy for London and the South East for years to come. During this licensing phase, Shell, Perenco, and ENI secured licences off the Norfolk coast, potentially laying the groundwork for the nation's premier energy hub. Other notable sites in this licensing round include areas off the coasts of Aberdeen, Teesside, and Liverpool.

The NSTA has already approved six licences, with a recent announcement of a ￡20bn fund to advance these projects. Two sites, Hynet and the East Coast Cluster, have been earmarked as Track 1, while the Acorn and Viking CCS projects have been designated as Track 2 clusters.

To achieve the net zero target, it's estimated that up to 100 storage licences will be required. The sheer volume of applications in this initial round underscores the industry's appetite for more such opportunities. In light of this, the NSTA plans to evaluate the response and the potential of various UK locations before initiating a subsequent licensing round.