Energy Transition Outlook 2019

TR & NSITION ENERGY

Energy Transition Outlook 2019

Unlocking investment into Carbon Capture, Use and Storage (CCUS) at scale • For too long the UK has been contemplating CCUS. Development of this technology at scale is a fundamental requirement if the UK is to meet its net-zero obligations. • Five industrial clusters have emerged which will rely on material CCUS projects. Urgent action is now needed to support their trail-blazing efforts to decarbonise industrial activity in the UK. • Unlocking funding for FEED (Front-End Engineering and Design studies) is key to getting these CCUS projects moving. The government must move quickly to support these cluster projects via the Industrial Strategy Challenge Fund (ISCF) and Industrial Energy Transformation Fund (IETF) such that FEED on all five projects has commenced by Q4 2020. • As CCUS emerges as a business model, it is anticipated transport and storage infrastructure will be the common theme to a variety of capture and utilisation schemes. A specific contractual model is needed for transport and storage infrastructure, recognising the realistic potential for re-use of oil and gas assets. This may require scope for a revenue stream independent of oil and gas production with appropriate resolution of different regulatory responsibilities and interfaces. Pursue the opportunities that hydrogen offers the UK • Government should further develop a hydrogen market design, including appropriate support mechanisms, that recognises all sources of production and its versatility across a range of heat, transport, and feedstock applications. As well as the gas quality regime, this will need modified rules and processes and physical infrastructure. • As a first step, action is required to allow hydrogen to be injected into gas transmission and distribution networks. An increase in the permitted hydrogen limit in the gas grid from 0.1% to 2-3% should be initially addressed and then further increases contemplated over time.

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