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BEIS steps up CCUS policy development

Nick Palmer Senior Writer

As part of BEIS’s tranche of consultations in late July in lieu of the promised white paper, the department published two on carbon capture, utilisation and storage (CCUS). One concerned proposed business models and the other considered the repurposing of oil and gas assets for CCUS. The UK’s curent aim is to roll out CCUS technology at scale by the 2030s, subject to costs coming down. BEIS said it would play an essential role in meeting the net zero target for 2050, a year by which UK CCUS exports could potentially be worth billions of pounds per year. BEIS proposed that CCUS business models should be market-based and cost-efficient and they should drive decarbonisation. They should be compatible with market operation and existing market frameworks, and give investors confidence and attract innovation and new entrants to the market. There should be an appropriate allocation of risk between the government and developers that evolves as the industry matures, and there should be potential to become subsidy free. BEIS also wants to explore the use of a Regulated Asset Base (RAB) model to fund CCUS in an effort to attract significant private investment. Concerning power generated from CCUS projects, BEIS proposed a standard Contract for Difference (CfD) model. This would provide a CCUS generator with a fixed strike price, where a difference payment would top up revenue to the generator above the wholesale electricity price. It also considered a “dispatchable” CfD option, which would aim to enable ...

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