North Sea Transition Authority opens UK’s first carbon storage licensing round

The North Sea Transition Authority (NSTA) is launched the UK’s first-ever carbon storage licensing round with 13 areas of potential available.   

The new carbon storage areas, alongside the six licenses which have been issued previously, could have the ability to make a significant contribution towards the aim of storing 20-30 million tons of carbon dioxide (CO₂) by 2030. 

The areas being offered for licensing are off the coast of Aberdeen, Teesside, Liverpool and Lincolnshire in the Southern North Sea, Central North Sea, Northern North Sea, and East Irish Sea and are made up of a mixture of saline aquifers and depleted oil and gas field storage opportunities.   

This round is envisaged to be the first of many as it is estimated that as many as 100 CO₂ stores could be required in order to meet the net zero by 2050 target. 

The Intergovernmental Panel on Climate Change report published in April 2022 emphasized the need for carbon capture and storage technologies to be deployed to reach net zero emissions from power and industry sectors.    

Carbon capture and storage (CCS) involves the capture of CO₂ emissions from industrial processes and will play a crucial role in decarbonizing the UK’s major industrial hubs such as Teesside and Humberside. This CO₂ is then transported from where it was produced, via ship or in a pipeline, and stored offshore, deep underground in geological formations.    

The NSTA has launched this carbon storage licensing round in response to unprecedented levels of interest from companies eager to enter the market. The areas on offer have a combination of attributes such as the right geological conditions, proximity to existing infrastructure which may be able to be re-purposed, and links to industrial clusters which are looking to carbon storage to help meet their decarbonization goals. 

The level of interest already expressed suggests there will be strong competition meaning that prospective licensees will need to produce high-quality bids to win licenses.  

In choosing suitable areas to make available for licensing, the NSTA fully considered issues including co-location with offshore wind – whether there are any known challenges and mitigations around existing or future offshore wind developments – environmental issues, potential overlaps with existing or future petroleum licenses, and other activities to ensure key technologies can all be taken forward.   

There are currently six carbon storage licenses on the UK Continental Shelf which could meet up to one-fifth of storage needs, if they reach their maximum potential of up to 40 million tons per annum (MTPA) injection rates by the mid-2030s. Whilst the capacity estimates of the areas offered in this round carry some uncertainty at this stage, they offer the potential to make a very significant contribution to decarbonization of the UK.   

The application window is open for 90 days, closing on 13 September, and will be evaluated by the NSTA on technical and financial criteria.    

It is expected that any new licenses will be awarded in early 2023. The size and scale of the licensed stores mean that they are likely to proceed at different paces, but first injection of CO₂ could come as early as four to six years after the license award.    

The Government’s Ten-Point Plan, published in November 2020, supported the establishment of carbon capture, usage and storage in four clusters - in areas such as the North East, the Humber, North West, Scotland and Wales – encouraging private sector investment. 

CCS is a developing industry and requires close co-operation between many organizations. The NSTA, The Crown Estate and Crown Estate Scotland have recently published a joint statement explaining how they intend to work together and the NSTA has, separately, agreed a Memorandum of Understanding with Ofgem, which will act as the economic regulator for the transportation and storage of carbon dioxide.    

In addition to being awarded a license from the NSTA, successful applicants will also need to obtain a lease from The Crown Estate or Crown Estate Scotland, depending on location, before they can progress a project.       

“This is an important day on the path to net zero emissions. In addition to the huge environmental benefits of significantly reducing carbon dioxide emissions into the atmosphere, the facilities will provide opportunities for many thousands of highly skilled jobs,” said Andy Samuel, NSTA chief executive. 

“Carbon storage is going to be needed across the world. There is growing investor appetite and we are keen to accelerate development of the carbon storage sector so that UK is well-positioned to be a global leader. 

“The NSTA is ready to work with industry, government, regulators and others to deliver these exciting projects at pace.”   

Energy & Climate Change Minister Greg Hands said they are determined to make the UK a world leader in carbon capture, which will be crucial in helping reduce emissions and protect the viability and competitiveness of British industry.

“This licensing round is an important step in making this a reality, helping support new jobs across the UK and encouraging investment in our industrial heartland,” Hands said.