In a control room surrounded by the Welsh countryside, Simon Willis watches as engineers fire up the kiln, ratcheting it up to 1,400C to break down limestone to make cement for Britain’s planned construction boom.
Bone meal, wood, cardboard and other waste have helped replace coal in the fuel mix. But the Padeswood cement plant still belches about 650,000 tonnes of carbon dioxide each year, mostly from the limestone as it breaks down, putting it on the wrong side of the nation’s push to limit climate change.
To tackle these emissions, Padeswood has another plan: extract the carbon dioxide out of the flue gas, pipe the emissions about 60km northwards, and bury it all more than a kilometre offshore below the seabed in Liverpool Bay for perpetuity.
“Our ambition is to get the CO₂ into the ground,” says Willis, chief executive of the UK division of the plant’s German owner Heidelberg Materials. If it happens, it would be the first cement plant in the UK and only the second in the world to start capturing and storing its emissions, behind a sister plant in Norway set to start operations next year.
Padeswood is one of several polluting factories and power plants in Britain trying to protect their future by linking up to new carbon capture facilities, in an effort to align with the UK government’s decarbonisation targets — and its goal to reach net zero emissions by 2050.
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The plant is in line for the first tranche of financial support from the government, as the UK seeks to store some of its 400mn tonnes of annual emissions in the salt caverns and depleted oil and gas fields around its coastline.
This plan, started under the former Conservative government, has an obvious allure for industries struggling to quit fossil fuels or those with carbon-emitting chemical processes.
“We don’t live in a perfect world and there is always going to be some carbon to be captured from different processes to enable particularly heavy industry to do what it needs to do,” says Sir John Armitt, chair of the National Infrastructure Commission, which advises the government.
Yet while climate experts agree some level of carbon capture and storage will be needed if the world is to limit global warming to 1.5C above pre-industrial levels — the stated goal of the 2015 Paris Agreement — questions persist over its commercial and technical feasibility at any scale.
No one is yet capturing and storing emissions in anything like the quantity the UK is aiming for. Initial targets for the first projects have already been revised downward, amid protracted negotiations over how much financial support they will receive. Many environmentalists argue that carbon capture will only serve to prolong fossil fuel use that in some cases could be avoided.
But for Britain’s industrial sector, much rests on whether the government will make good on promises of support. Large energy companies and factories in industrial hubs in the north of England want to develop carbon capture technology that would connect directly to pipelines and carbon storage sites, but are awaiting a final decision on funding from a Labour government looking for spending cuts.
The outcome, due in the coming months, will have ramifications not just for the UK’s net zero ambitions but also the commercial future of carbon capture more broadly.
Lord Ben Houchen, Conservative mayor of Tees Valley, says this may be the last moment to act. “If [this] doesn’t get approved, the strong feedback that I’m getting from investors is that this technology will never be deployed in the UK. It’s a pretty serious inflection point.”
Carbon capture and storage involves trapping CO₂ as it is produced, before it enters the atmosphere. Emitters can be fitted with equipment that separates CO₂ from other gases, before or after combustion. It is then compressed and pumped underground, sometimes into depleted oil and gas reservoirs.
But uptake has so far been limited. Carbon capture capacity globally reached about 51mn tonnes last year, according to BloombergNEF, or a tiny 0.14 per cent of global emissions. To meet net zero targets, the International Energy Agency estimates about a billion tonnes of carbon dioxide will need to be captured and stored globally each year.
The technology has a chequered history in the UK, with the government twice pulling a potential £1bn in support for planned projects, in 2011 and 2015, leading to warnings it would never happen.
“The Treasury simply didn’t really believe in carbon capture,” says Charles Hendry, an energy minister between 2010 and 2012 who now advises one of the companies involved in carbon capture projects. “They thought it was an unproven technology: would it deliver enough and was it not just extending the life of plants which might need to close anyway?”
The Treasury’s attitude has changed markedly since then, driven by the UK making legally binding in 2019 its goal of net zero carbon emissions by 2050, taking its cue from the 2015 Paris Agreement.
In March 2023, chancellor Jeremy Hunt announced “up to £20bn” in government support to help attract private investments into the first projects and eventually reach 20mn-30mn tonnes of carbon dioxide stashed away per year by 2030. The UK’s emissions need to be cut by an average 18.8 million tons equivalent per year between now and 2030 to meet its carbon commitments.
The new Labour government is also enthusiastic about the technology, having pledged to “invest in carbon capture and storage” in its manifesto. It has set a target of cutting emissions from electricity generation to net zero by 2030, five years faster than the former government’s target, and likely to require power plants with carbon capture. “Our ambition is to take the first [financial investment decisions] this year, and we are continuing to work to make that happen,” says a spokesperson.
Developers tempted to the sector are positive about what they have seen so far. “We see the business model in the UK as very attractive,” says Guido Brusco, chief operating officer for natural resources at Milan-listed Eni, highlighting healthy returns available for its planned pipelines in north-west England and connected storage site in Liverpool Bay. “We are ready to press the button on a new era.”
Negotiations with the government have been “long and hard, but ultimately fair”, says Joe Seifert, who is leading Essar Oil’s efforts to produce hydrogen at Essar’s Stanlow oil refinery on site in Ellesmere Port by extracting it from natural gas and then capturing the emissions from this process.
The project is among eight emitters picked to negotiate first for government support, alongside two energy-from-waste plants, a new gas-fired power station being developed by BP and Equinor, and two more plants extracting hydrogen from natural gas with carbon capture.
The eight projects are located in industrial hubs in the north-west, near Liverpool, and north-east of England, around Teesside, relatively near to the first planned carbon dioxide pipelines and storage sites.
The idea is to get regional industrial hubs decarbonised one at a time, with the government helping to get pipelines and storage sites up and running so that others can join.
Once negotiations with the first batch of factories and storage sites are concluded, the government plans to move on to other industrial hubs, such as in the Humber, also north-east England, and in Scotland.
Yet whether investment is going into the right type of emitters is an open question.
Even in a net zero scenario, the UK will need some non-intermittent power plants like these to back up wind and solar power. But the limited evidence on the performance of power plants with carbon capture is discouraging.
Critics point to SaskPower’s Boundary Dam coal power plant in Canada, where capture rates have been lower than expected. Under the UK’s plans, power plant owners are financially incentivised to hit higher capture rates under the government support scheme, with penalties and the risk of the contract getting pulled if they fall below 70 per cent.
Other challenges associated with piping carbon dioxide from multiple industrial sources also need to be tackled, such as variable flow rates and contaminants that could corrode pipelines. “If you’ve got 0.001 per cent of sulphur dioxide in there — over a year, it’s a lot,” notes Willis, at Padeswood.
Simon Bittlestone, value-for-money director at the National Audit Office, says there are “risks the government will need to manage even once negotiations are concluded”. He adds: “This is a relatively new technology and certainly [has] not been applied at the scale that is being attempted with these projects.”
Further delays could create problems, developers warn. “At the moment we’ve effectively locked in our contractors,” says Chris Daykin, general manager of the Northern Endurance Partnership, the joint venture between BP, Equinor and TotalEnergies, which is developing pipelines and a storage site in salt caverns off the coast of Teesside, north-east England.
“[But] I think if there was a significant delay then that inflation concern [to project costs] would come in. We’re all on the bus ready to make this happen.”
Meanwhile, factories and power plants picked by the government to be next in line for government support are keen to get on with negotiations. This second round of talks are still waiting to start.
“It’s costing money to keep the projects ticking over from an engineering point of view,” says Simon Holt, manager for emerging energy in Europe at Phillips 66, owner of the Humber oil refinery near the banks of the River Humber on England’s east coast. “You can’t wait indefinitely.”
Phillips 66 and oil trading giant Vitol’s power company VPI plan to capture emissions from the refinery and VPI’s combined heat and power station next door, and pipe them out to the southern North Sea where they will be buried 2.7km below the seabed under layers of salt. The Viking storage site is being developed by UK-listed Harbour Energy and partners.
Holt argues the refinery merits the investment despite the UK’s plans to ban the sale of new petrol and diesel cars: “We might drive around in electric vehicles from 2035, but we still need other materials we produce, from pharmaceuticals to household goods.” The refinery is also Europe’s only producer of speciality graphite coke for electric car batteries.
Chemicals giant Ineos has slowed down engineering work on a planned hydrogen with carbon capture plant at its chemicals site in Grangemouth, Scotland, as it waits for government negotiations to start.
“I don’t want my engineering to get ahead of the government’s process,” says Andrew Gardner, chair of Ineos Grangemouth. For him, getting the commercial frameworks in place is the greater potential challenge than the technical one. “Do I trust each bit of the technology? Absolutely.”
The decision last year by Petroineos, a joint venture between Ineos and PetroChina, to close the Grangemouth oil refinery in 2025, highlights what is at stake as ministers try to provide routes for industry to decarbonise.
The EU is introducing a carbon border tax that will penalise those who do not, while both the UK and the EU plan to push up the costs for polluters as deadlines for climate targets approach.
Bosses are already making decisions about how to adapt to these kinds of levies. Tata Steel, the UK’s largest steelmaker, is not waiting for carbon capture, instead planning to replace its blast furnaces with a less carbon intensive but lower capacity electric arc furnace, costing thousands of jobs.
CF Fertilisers has shut down an ammonia plant in Billingham, in County Durham, which at one point was in line for government support to attach carbon capture, blaming high gas prices and carbon costs. Willis at Padeswood warns the cement plant would eventually follow suit unless it invests in carbon capture.
How much of the government’s “up to £20bn” of support for industry initial projects will swallow up is unclear. The funding is a mix of consumer levies and government funding. Both the National Audit Office and trade groups say more will be needed.
The Carbon Capture and Storage Association trade group this year urged the Treasury to back the industry with £2bn-£3bn of funding a year from 2028. Ruth Herbert, chief executive, warns that developers need “visibility” over future support to invest in new projects. “We need to keep the pipeline maturing,” she adds.
Over the long run, politicians want the industry to stand more on its own two feet. In December, former energy secretary Claire Coutinho said she was aiming for a “commercial and competitive” market and storage rates of potentially 50mn tonnes per year in the 2030s.
That is likely to require changes to the UK’s emissions trading scheme. At present, polluters pay about £40 a tonne of CO₂ emissions — meaning there is little incentive to pay the far higher costs of capture, estimated by BloombergNEF at $109 per metric tonne from a UK gas-fired power station and $93 per tonne from a hydrogen production plant.
How far the industry can grow is unclear. Lorenzo Sani, at Carbon Tracker, questions whether touted cost falls will materialise. “It won’t happen in the same way as it did for wind and solar,” he says. “Everything needs to be customised and adapted to specific sites.” Carbon capture systems also require a lot of energy to run: Padeswood needs to build a new power plant on site.
Yet for some, the best course is to get going with carbon capture projects as the atmosphere becomes ever more polluted. “The bathtub is filling up and we can’t turn the tap off fast enough — just take the damn plug out,” says Claire Perry O’Neill, who helped set in motion the UK’s strategy while an energy minister between 2017 and 2019. She is now on the board at US oil company Occidental Petroleum, which is building a plant in Texas to suck carbon dioxide directly out of the air and bury it underground, a process known as direct air capture.
“We should be cracking on with it,” says Professor Andy Woods, carbon storage expert at the University of Cambridge. “The sooner we start developing more projects, the more we’re going to learn.”
Additional reporting by Simeon Kerr and Jim Pickard
