Here are the climate-related sections of speeches by MPs during the Commons debate Draft Carbon Capture Revenue Support (Directions, Eligibility and Counterparty) Regulations 2024 Draft Carbon Dioxide Transport and Storage Revenue Support (Directions and Counterparty) Regulations 2024.
16:34 Andrew Bowie (Conservative)
I will first provide some important background on the UK’s carbon capture landscape, before turning to the rationale and detail of the regulations. Carbon capture, usage and storage—CCUS—supports the UK’s legally binding commitment to reduce greenhouse gas emissions to net zero by 2050. In 2021, the HyNet and East Coast clusters were announced as the UK’s first CCUS clusters, where CO 2 will be captured from a range of sources to support the low carbon economic transformation of our industrial regions. The CO 2 transport and storage—T&S—network is essential for building CCUS capability, and it is the enabling infrastructure for captured CO 2 to be transported to permanent offshore storage.
To facilitate the development of the T&S infrastructure, the Energy Act makes provision for revenue support to be available to any transport and storage company. Revenue support is part of the broader T&S regulatory investment model, or TRI model. Under the TRI model, an allowed revenue will be determined for T&S companies, and exposure to revenue gaps—instances in which annual revenue from user charges is less than a T&S company’s allowed revenue—will be mitigated. For example, where a revenue gap arises beyond a T&S company’s control, such as where a network user is late in joining the network, a shortfall in the allowed revenue may arise. In such instances, T&S companies can increase charges across the user base, up to a cap. We propose that, should the increase in charges across the user base up to the cap be insufficient, the T&S companies will be entitled to revenue support as a last resort mechanism, funded by His Majesty’s Government. That will enable T&S companies to recover shortfalls through a revenue support agreement, or RSA. Without that, there would remain a significant barrier to investment in the T&S infrastructure in the early stages of the CCUS sector’s development.
Let me turn to the carbon capture regulations, and set out the context of industrial carbon capture. ICC is critical to decarbonising industries with hard-to-abate emissions and to achieving net zero by 2050. The Government’s ambition is to capture and store 6 megatonnes of CO 2 from industrial emissions annually by 2030, increasing to 9 megatonnes of CO 2 by 2035. The ICC business models are designed to incentivise deployment of carbon capture technology by industrial and waste users, who often have no viable alternative to achieve deep decarbonisation.
The ICC business models have been developed to support decarbonisation of the industrial sector, including the waste management sector. We do not consider it appropriate for the ICC business models to support carbon capture deployment for certain parts of the power sector. Therefore, the regulations set out that an entity will be ineligible if it is capturing CO 2 produced by the generation of electricity and is connected to the transmission and/or distribution system in respect of all the electricity that the generation station produces. However, capture from combined heat and power plants and energy recovery generating stations will be eligible regardless of how or whether they are connected to the transmission and distribution systems. It should be noted that the regulations form only one part of the assessment for whether projects would be awarded an ICC or waste ICC contract. Further eligibility criteria are expected to be set for individual allocation rounds in allocation guidance.
In conclusion, in implementing transport and storage infrastructure and the industrial carbon capture business models, the regulations represent an essential step towards achieving our 2030 deployment ambitions and net zero. I commend the regulations to the Committee.
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16:38 Dr Alan Whitehead (Southampton, Test) (Lab)
and we have discussed gas importation and storage zones previously. The point is that it is not immediately apparent that all the activities of a carbon capture and storage transportation company will land within the UK’s territorial waters, inasmuch as it is widely anticipated that captured carbon will, at a fairly early stage in the development of CCS arrangements, be barged in from jurisdictions outside the UK for storage in UK territorial waters. Indeed, one ambition of a number of the hub-based storage arrangements is that they will attract custom from other European jurisdictions, outside the UK. The position of the hubs in the North sea makes that an enticing proposition for countries whose storage facilities are not as developed as those we are likely to have in the UK.
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16:48 Andrew Bowie (Conservative)
The carbon dioxide transport and storage regulations will enable the effective delivery of the RSA, which is essential to build a functioning T&S network. This is one part of the TRI model that has been designed to overcome barriers to private investment that exist when building first-of-a-kind infrastructure to support the nation’s carbon capture, utilisation and storage sector to thrive. The deployment of transport and storage infrastructure is key to our ambition to capture and store 20 million to 30 million tonnes of carbon dioxide by 2030. We are well placed to lead the world in CCS technology, with an estimated potential 78 gigatonnes of CO 2 storage capacity on the UK continental shelf.
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