UK Carbon Capture Bets on Blue Hydrogen, Risking 2035 Power Decarbonisation Target

UK government incentives for carbon capture and storage are disproportionately channelled toward blue hydrogen projects, deepening long-term reliance on fossil gas rather than decarbonising the power sector. An analysis by the Institute for Energy Economics and Financial Analysis finds that Track 1 CCS projects will meet only 16% of the carbon capture required to decarbonise electricity supply by 2030.

The UK government has pledged £20 billion in public funding over 20 years for carbon capture and storage, targeting 22 million tonnes of CO2 captured per annum by 2030. Eight projects across the HyNet and East Coast Cluster have been selected under Track 1. However, IEEFA's analysis reveals that 81% of captured emissions from these projects will come from processes that require long-term fossil gas use, with 78% of carbon capture set to come from projects owned by oil and gas companies. The Net Zero Teesside Power project, co-developed by BP, is among those backed under the programme.

The structure of UK CCS support raises significant greenwashing concerns. Blue hydrogen — produced from fossil gas with carbon capture — is receiving the bulk of backing, while the decarbonisation of existing gas-fired power stations is severely underfunded. The Climate Change Committee's Sixth Carbon Budget requires 12.4 MtCO2 per annum of electricity sector carbon capture by 2030, yet current Track 1 projects will deliver only 16% of this. Critics argue that CCS is being used by the oil and gas industry to justify continued fossil fuel use rather than accelerate genuine transition.

IEEFA recommends that the UK government expand its CCS programme to prioritise power generation projects over blue hydrogen, noting that including all 20 Phase 1 shortlisted projects could increase achievement of the 2030 target to 93%. The addition of the Acorn and Viking clusters to the eligible pool presents an opportunity to rebalance support. Globally, the IEA has revised downward CCS's role in climate scenarios, projecting it will contribute less than 5% of required emissions reductions by 2030. No gas-fired power CCS project currently operates anywhere in the world.

Key figure — £20 billion — UK public funding committed for CCS over the next 20 years