Carbon capture utilisation and storage, a key part of our net zero transitions

Earlier in the year it was reported in The Economist that "no amount of new solar panels or wind turbines will be enough to avoid catastrophic levels of global warming."

Science shows that apart from cutting down on greenhouse gas emissions, we will need to remove vast quantities of greenhouse gases from the atmosphere. The Economist reports here that "The researchers calculated that keeping temperature rises within the [Paris aligned] range would require scrubbing anything from 450bn to 1,100bn tonnes of CO2 from the air by 2100. At the moment just 2bn tonnes are removed each year."

This shortfall will need to be met by new innovations and technologies. It is here that Carbon capture utilisation and storage (CCUS) can play a role, as also mentioned by the International Energy Agency  here.

It is of course important to highlight that emissions reduction will need to be front-and-centre of our transition to net zero. However, CCUS provides an interim solution to enable transitions and allows historic emissions to be captured and stored in order to tackle the urgency to rachet up efforts to keep average temperature between 1.5°C and 2°C above pre-industrial levels – the goal set by the Paris agreement.

The CCC's recent report "Delivering a reliable decarbonised power system" has said that the government needs to focus also on low-carbon flexible solutions. It suggests a (flexible) supply mix which includes around 70% of annual generation from variable renewables such as offshore wind (primarily) and 20% (approx.) from relatively inflexible generation such as nuclear and bioenergy with carbon capture and storage.

Globally, we are of course seeing an increased focus being provided to climate aligned regulation. The UK will soon need to respond with our own version of the US Inflation Reduction Act and the EU Net Zero Industry Act, both of which plan on introducing billions of dollars of investment into clean tech industries.

Foot Anstey expects that the Chancellor's budget this week will  respond to the growing need for a clear approach in clean energy, but one that will also include CCUS as a solution, as reported here in Business Green also.

This is not a new emerging focus, but one that has always existed but will now see renewed focus provided to us as part of the UK's net zero strategy. In December 2022 the Industrial Carbon Capture ("ICC") business models were introduced by the government. These were designed to incentivise the deployment of carbon capture technology where users traditionally had no viable alternative to achieve decarbonisation.

Support is available through two channels:

• A capital grant for Track-1/Phase 2 of the Cluster Sequencing Process for Carbon Capture, Usage and Storage projects (funded by a £1 billion CCS Infrastructure Fund).
• Ongoing revenue support funded by the Industrial Decarbonisation and Hydrogen Revenue Support scheme.

There are two variants of the revenue support contracts; the ‘generic’ “ICC Contract” for successful CCUS projects from all eligible industrial sectors apart from successful waste management CCUS projects, which would be offered the “Waste ICC Contract”.

CCUS is going to be an evolving area in the next few years, and one that is driven by new technologies. It is here that Foot Anstey's multidisciplinary team can help. Importantly Foot Anstey's technical and market resource spans our work in nuclear, renewables, energy market, ports & infrastructure and the built environment more generally. We are actively involved in encouraging and accelerating net zero projects, which can include support and advice in deploying CCUS technologies.

Foot Anstey can support clients with all aspects of CCUS projects and transactions (in the "generic" (i.e., mainstream) and waste specific sectors), including:

• Development of facilities and projects for CCUS infrastructure.
• Supply chain structuring and risk mitigation.
• Structuring CCUS projects (including JVs).
• Dealing with reporting to funders and board in respect of  CCUS projects (ESG matters).
• Drafting and negotiation of construction contracts such as EPC arrangements for CCUS technologies (including in respect of ICC business models and ICC contracts).
• As above in respect of CCUS CO2 capture, production, logistics, and storage related agreements. This can also include purchase agreements for captured carbon oxide.
• Dealing with climate aligned drafting facilitated by liaison with The Chancery Lane Project.
• Review of the regulatory frameworks and risk mitigation.
• Copyright and IP in respect of CCUS technologies.
• Purchase and leasing of storage facilities. Of course we also advice on all land, property and planning matters.
• Support with health & safety matters in respect of CCUS projects.
• Review of potential environmental liabilities and advice in respect of the same.
• Advising on UK Emissions Trading (ETS), carbon and emissions matters, carbon offsets and hydrogen strategies.
• Co-counselling relationships where we can work with other legal advisors to provide support in respect of CCUS projects.