Industrial decarbonisation projects awarded £171m

The government has granted £33 million to the Cadent-backed HyNet North West project as part of a wider £171 million allocation for its industrial decarbonisation strategy, which has also been published today (17 March).

The Department for Business, Energy and Industrial Strategy (BEIS) said the Industrial Decarbonisation Challenge funding has been earmarked for engineering and design work on nine projects in Scotland, South Wales, the North West, the Humber region and Teesside.

The £33 million awarded from the UK Research and Innovation fund to HyNet North West will be topped up with £39 million from the members of the consortium backing the project, which includes Cadent.

HyNet North West aims to convert natural gas into low carbon hydrogen at Essar Energy’s Stanlow refinery in Cheshire.

The carbon dioxide released through the process will be captured and piped offshore to exhausted gas fields in Liverpool Bay, where it will be stored.

The project also involves the construction of a new pipeline network across the north west of England and North Wales, which will transport the hydrogen produced at the refinery to power stations and supply buses, trains and heavy goods vehicles.

It is seeking to reduce carbon dioxide emissions by 1 million tonnes per year from 2025, when the Stanlow refinery is due to start operating, increasing to up to 10 million tonnes annually from 2030 onwards.

Cadent said the funding unveiled today will allow HyNet North West to issue a final investment decision in 2023 for the project’s initial phase.

The announcement also includes more than £52 million for the Net Zero Teesside and Northern Endurance Partnership projects.

The funding will support what BEIS claimed will be a “world-first” flexible gas power plant fitted with CCUS (carbon capture, usage and storage) and the creation of an offshore CO2 transportation and storage system.

The projects could capture around 2 million tonnes of carbon dioxide annually from 2026, decarbonise 750MW of power and reduce the Teesside region’s industrial emissions by a third, according to the department.

In the Humber region, BEIS has announced £21 million for the Zero Carbon Humber Partnership to deliver H2H Saltend, which the department said will be one of the world’s first at-scale low-carbon hydrogen production plants.

The project includes CO2 and hydrogen pipelines linking the plant on the north bank of the Humber with industrial sites and power stations across the region.

Meanwhile, £12 million has been awarded to create a carbon capture and hydrogen hub to help efforts to decarbonise the industrial complex at the port of Immingham, in North East Lincolnshire.

The two Humberside projects aim to capture 25 million tonnes of carbon every year in a region which BEIS says creates 40 per cent of the UK’s industrial emissions.

And in South Wales, where industry’s output of nearly 9 million tonnes of carbon dioxide per annum makes up 12 per cent of the UK total from the sector, nearly £20 million has been awarded to create a net zero industrial zone from Pembrokeshire to the English border by 2040, exploring options to support the deployment of hydrogen and development of CCUS.

The funding announced today is designed to kickstart the industrial decarbonisation strategy’s goals to reduce industrial emissions by two-thirds by 2035, compared to 2018 levels and at least 90 per cent by 2050.

BEIS said it expects that at least 3 megatons of CO₂ will be captured within industry per year by 2030, compared to “minimal” levels at present.

The government also said that it will be publishing a call for evidence on the development of the UK emissions trading system, the standalone regime for pricing carbon that has been set up post-Brexit.

The consultation exercise will focus on the evolution of the free allowance regime within the ETS and how it can better incentivise emissions reduction while protecting energy intensive and trade exposed industries from the risk of carbon leakage to other countries.

Responding to the HyNet announcement, Cadent chief executive Steve Fraser said: “When we first unveiled the plan for HyNet North West just three-and-a-half years ago, we knew quickly we were onto something big. This is a once-in-a-generation moment to effect real change.

“Replacing fossil gas with hydrogen will achieve incredible carbon savings, create thousands of jobs and position the North West as a world-leader in this technology. Cadent and the whole HyNet consortium is determined to make that happen.”