Budget 2023: carbon capture and nuclear among UK announcements

Stacey Collins, a CCUS & low-carbon hydrogen expert at Pinsent Masons, said the £20 billion fund “could be a game changer” for the industry. The technology extracts CO2 from industrial processes before it is emitted into the atmosphere; it is then stored underground where it can remain undisturbed for thousands of years. “It’s encouraging to see the government doubling down on its commitment to this technology,” Collins said.

Unveiling the financial package, the chancellor, Jeremy Hunt, told MPs that the fund “would support up to 50,000 jobs, attract private sector investment and help capture 20 to 30 million tonnes of CO2 per year” by 2030. Collins said: “There are a number of CCUS projects in the advanced stages of development, poised and waiting for the green light from the government to gain financial backing. No doubt those leading on these developments will be on tenterhooks as they wait to hear whether they will now be able to push ahead with projects that could form a critical part of homegrown energy supply.”

The chancellor also confirmed that two additional industrial clusters will be selected through ‘track 2’ of the government’s CCUS cluster sequencing process, and announced that there will be an “expansion” of track 1 to allow for further CCUS projects to enter the selection process. Collins said: “It’s great that track 2 is going to proceed, but the announcement of an expansion of track 1 is a significant new development. This is a massive boost to the industry, and to those projects that are investing time and resources in developing CCUS projects in the expectation of government financial support.”

In an effort to encourage private sector investment into the UK’s nuclear programme, Hunt confirmed that, subject to consultation, nuclear power will be classed as ‘environmentally sustainable’ in the government’s green taxonomy. The move will give nuclear projects access to the same investment incentives as renewable energy. The change follows the chancellor’s confirmation of a £700 million investment in Sizewell C – the first state-financed nuclear project for nearly 30 years – in the Autumn Statement.

Hunt also announced the launch of ‘Great British Nuclear’ (GBN), a new development body that will “bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050.” He added that the first competition for small modular reactors would take place this year. “If [the technology is] demonstrated as viable, we will co-fund this exciting new technology,” Hund said.

Richard Griffiths of Pinsent Masons said: “While it’s positive that the government is demonstrating its commitment to nuclear a year after GBN was first unveiled, detail about how the body will work in practice – and how development will be underpinned by a national planning policy statement – must be a priority.”

“The package of measures to support nuclear is a welcome step change, but developers and investors require detail on both the remit of GBN, and on how the planning system for new small nuclear reactors will be modernised. Put simply, the planning regime for this technology is out of date and not-fit-for-purpose,” he added.