Marking a year since the North Sea Transition Deal was agreed, the government has published a report, highlighting its progress and further priority areas moving forwards.
On 21 March, it published a report, North Sea Transition Deal: One Year On, where it set out how production emissions have been reduced by 11%, as well as noting progress on carbon capture and hydrogen. The purpose of the Deal had been to set out a clear path for the decarbonisation of the oil and gas sector, and also use its skills and expertise to drive forward key parts of the Ten Point Plan and Net Zero Strategy.
On carbon capture, usage and storage (CCUS), it drew on how the active participation of the oil and gas industry in developing it is a key element of the North Sea Transition Deal. It pledged to invest in CCUS to support net zero strategy commitments to establish at least two industrial clusters by the mid-2020s and four by 2030. HyNet North West and the East Coast Cluster have since been selected for Track-1 of the cluster sequencing progress, while greater detail on CCUS transport and storage (T&S) was provided in January 2022. A reporting structure has also been established as part of the Deal Delivery Group for Offshore Energies UK (OEUK) to report on progress being made on the ground.
It further noted how the Industrial Decarbonisation and Hydrogen Revenue Support scheme will fund low carbon hydrogen and industrial carbon capture business models, while government will announce the revenue envelope for CCUS-enabled hydrogen and industrial carbon capture in 2022. This will allow contracts to be awarded for up to 1GW of CCUS-enabled hydrogen and 3MtCO2 per year of industrial carbon capture from 2023.
As for hydrogen, the Deal committed government and industry to supporting the deployment of hydrogen production capacity in the UK. The Hydrogen Strategy has since been launched, along with funding in the shape of £100mn to support heavy industry switching to low carbon fuels and the £60mn Low Carbon Hydrogen Supply 2 Competition. A Hydrogen Regulators Forum has also been established, focusing on activity needed in the 2020s to identify, prioritise and implement any changes to the existing non-economic regulatory framework to support the growth of a hydrogen economy.
Further hydrogen developments include consultations being published on the proposed design of the £240mn Net Zero Hydrogen Fund; a hydrogen business model; and UK standard for low carbon hydrogen. Hydrogen production projects are being planned through the CCUS Clusters, while under the Industrial Decarbonisation and Hydrogen Revenue Support scheme, up to £100mn will be provided to award contracts of up to 250MW of electrolytic hydrogen production capacity in 2023, with more in 2024.
Looking ahead, it identified ten priority actions to pursue, including providing a stable investment regime for the sector and putting the new Climate Compatibility Checkpoint in place by the summer. It also pledged to establish a Supply Chain Roadmap, helping sector suppliers diversify into areas including CCUS and hydrogen; enabling carbon capture projects with the Transport and Storage Regulatory investment model finalised in 2022; and enabling low-carbon hydrogen projects. A Hydrogen Sector Development Action Plan will be released in 2022, setting out how government and industry will ensure the UK has the supply chains, skills and investment to maximise the economic benefits to the UK of developing a low-carbon hydrogen economy.