Demystifying decarbonisation: Carbon capture and storage

What is carbon capture and storage (CCS)?

Carbon capture and storage is the process of capturing carbon dioxide (CO2) from an industrial process (point-source capture) or directly from the atmosphere and injecting it underground.

The first stage involves capturing the CO2 produced by power generation or industrial activity, such as hydrogen production, steel or cement making, and separating it from other gases through different carbon capture technologies.

The second stage is compressing the "captured" CO2 and transporting it via pipelines, road transport or ships to a site for storage. Of these transport modes, pipelines and ships are the most scalable options with the lowest cost per tonne of CO2 transported.

In the third and final stage, the stored CO2 is injected into rock formations deep underground for permanent storage. These permanent storage sites could be saline aquifers (rocks in the sea that can absorb lots of salt water) or depleted oil and gas reservoirs, which are usually 1km or more underground. This means the CO2 is often piped a fairly long way offshore and deep into the seabed.

To complete the picture, CCUS takes it a step further by including an additional step in the process, utilisation, or otherwise known as usage. The difference here is that instead of storing the CO2 far away, you instead use it for industrial processes by converting it, for example, into plastics, concrete or biofuel. This doesn't lead to emission reductions but is a way to utilise the captured CO2.

Benefits of CCS

The point of carbon capture technology is to prevent large amounts of CO2 from entering the atmosphere and therefore heating up the planet. This makes CCS a way to reduce carbon emissions into the atmosphere and decarbonise heavy industry. It is therefore seen as a critical part of the global transition to net zero.

CCS technologies can be retrofitted to existing power and industrial plants, many of which were built recently and could operate for many years. This allows those plants and infrastructure to continue to operate but with reduced emissions. Also, CCS can tackle emissions in hard-to-abate sectors (such as steel or cement) where reaching zero emissions may not be economically or technically feasible.

Critics of CCS argue that the first priority should be the reduction of carbon emissions and that CCS encourages the continued use of fossil fuels. However, CCS is a way of helping those sectors that are typically carbon intensive and at this point in time, are unavoidable until we have the scale of renewable energy needed. Whilst we won't reduce emissions with CCS alone, it can bridge the gap between fossil fuel producers and renewable energy.

Challenges to CCS

• Cross chain risk – managing the various stakeholders across the CCS value chain (emissions, transportation and storage) is a key challenge.
• Higher costs for early investments – it's inevitable that those who 'go first' will suffer higher costs, meaning government support mechanisms will be required.
• Risk allocation – it will be important to allocate responsibility for risks (such as CO2 leakage, decommissioning or transportation risk) in a way that incentivises investment.
• Long term liability – policymakers and regulators will need to help manage risks and liability throughout the project lifecycle.
• Economies of scale – in pipeline and storage.

These are all challenges that need to be addressed in order to make CCS a viable option for businesses, whether you are an emitter, a transporter or sit on the storage side.

Current UK government position

CCS has a key role in the UK's net zero strategy by helping meet the UK’s legally binding commitment to reduce greenhouse gas emissions to net zero by 2050.

In early October 2024, the Labour government pledged £21.7 billion over the next 25 years to kickstart the first CCS projects into action.

Keir Starmer announced that the funds would be used to subsidise three projects on Teeside and Merseyside to support the development of carbon capture clusters. The government funding will include support for two transport and storage networks carrying the captured carbon to deep geological storage in Liverpool Bay and the North Sea.

The plans build on the previous Conservative government's "Track" programme, which set up plans for industrial clusters across the UK.

Looking forward

The UK government's CCS plans intend to remove 8.5 million tonnes of carbon emissions each year. However, to put that into perspective, the UK emitted approximately 384.2 million tonnes of carbon in 2023 alone. CCS is therefore another tool for the UK to have in its arsenal to fight carbon emissions, but it needs to be deployed alongside all our other decarbonisation technologies, with renewables at the forefront.

In terms of our predictions looking forwards, we expect CCS will be made easier through:

• technological improvements;
• transport developments (especially in pipeline and shipping sectors); and
• policy drivers (under the UK’s Emissions Trading Scheme as well as revenue support mechanisms).

We look forward to tracking the growth of CCS over the coming years!

Our energy transition team

At Stephenson Harwood, we have market-leading expertise in three sectors that will be the key pillars in achieving net zero:

• energy,
• transportation and trade, and
• the built and natural environment.

This gives our clients the benefit of cross-sector insights as we support them on their pathway to net zero.

Our energy transition team is international, with specialists spread across eight offices in Europe, Asia and the Middle East. When coupled with our strategic relationships with other key independent law firms, this means we can support our clients wherever their business interests are based.