British carbon capture and storage gets a second look post-Brexit
By establishing stringent safety, environmental, and operational standards alongside detailed licensing procedures, Whitehall sought to position CCS as a central pillar of its emissions reduction strategy.
The move built on the EU's 2009 CCS Directive but signalled a more proactive stance than that of many other member states, underscoring Britain's intent to attract private capital into a nascent but critical climate technology.
That regulatory architecture aimed to streamline project development, but a decade later, not much has happened.
The model established by the UK aimed to promote "clusters" with industrial emitters and CO2 transport and storage operators. This would work by guaranteeing cost recovery and return on the regulated invested capital for both the grid operators through the Regulated Asset Value (RAV), and the industrial emitters in the clusters through the Industrial Carbon Capture (ICC) or Carbon Contract for Difference (CCfD).
Though the strategy was left to gather dust for several years, in 2024 the government announced a commitment of £21.7 billion over 25 years to support the development of two of the clusters – HyNet centred around the Liverpool area and East Coast Cluster (ECC).
New projects, new investment
That spurred interest from international investors.
Italian energy company Eni, for instance, has started work on two long-term CCS projects in the UK, projects which have recently entered critical demonstration phases.
Eni's Liverpool Bay Transportation and Storage (LB T&S) Project reached financial close with the UK Authorities in April of this year and has now entered the construction phase. It is expected to be operational by 2028. It will reuse some existing infrastructure, the utilisation of depleted gas fields operated by Eni, and will also construct new facilities to enable the transportation of CO2 captured from emitters selected by the UK Government and its subsequent offshore storage.
Eni CEO Claudio Descalzi said that April's financial close shows the UK government 'reaffirms its leadership' on CCS thanks to 'the promotion of a regulatory framework that aims to strengthen the development of CCS and make it fully competitive in the market.' 'The HyNet Consortium will become one of the first low-carbon clusters in the world,' he added. 'CCS will play a crucial role in tackling the decarbonisation challenge by safely eliminating CO2 emissions from industries that currently do not have equally efficient and effective solutions.'
Eni has also obtained a second carbon dioxide storage appraisal license from the UK authorities for its depleted gas field, Hewett in the Bacton CCS Cluster, which covers an area located in the British Southern North Sea.
Hewett, with its significant total storage capacity of more than 300 million tonnes, represents an ideal site to permanently store CO2 from industries in the South-East of England, East Anglia and the Thames estuary area, near London.
Notably, the project could also attract CO2 flows from the European Union, offering a cost-effective solution to EU emitters thanks to its geographic proximity to North-West Europe.
In the initial phase, the injection capacity at Hewett will be able to reach 5 million tonnes of CO2 per year, increasing with an injection of approximately 10 million tonnes in the subsequent expansion phase. The overall storage potential of the fields is approximately 200 million tonnes of CO2, according to the company
Post-Brexit difficulties
Despite these recent advances, this isn't where the government wanted to be by now when it adopted its strategy over a decade ago. It was hoped that there would be functioning CCS sites by now. But Britain's vote to leave the European Union in 2016 complicated this.
The EU's CCS Directive had set the framework for how international investors, particularly those from continental Europe, would invest in these new projects. With the future of that regulatory cooperation suddenly in doubt, investors pulled back.
In December, the Carbon Capture and Storage Association (CCSA) published an analysis of the situation for the UK's cross-border CCS connections, detailing the problems that are being encountered.
The report concluded that, 'Currently, transporting CO2 across EU/EEA-UK borders for permanent storage is technically possible, but not feasible due to policy barriers, including that CO2 captured in the EU/EEA, but stored outside that jurisdiction would not be recognised under the EU emissions trading system (ETS) as having been stored.'
'Therefore, the responsible party would still be liable to surrender allowances for their captured and stored CO2, and effectively pay twice. This means that EU/EEA countries are unable to take advantage of the fact that the UK has significant CO2 storage potential in the North Sea and that the cost of storing CO2 in the UK would be lower than in other countries.'
Cost-effective storage
The research found that UK storage wells are among the most cost-effective and well-located in Europe, so enabling access to these means emitters in the EU would see considerable cost savings compared to the status quo.
In a position paper, Eni also stressed that the lack of regulatory harmony between the UK and the EU is holding CCS development back.
'It is crucial to explore ways to swiftly align the UK and EU regulatory frameworks to allow the storage of EU-generated CO2 in UK storage sites,' the company wrote. 'As of right now, policy remains the largest obstacle to transporting CO2 across the EU-UK border, which would otherwise be technically feasible and often the lowest cost solution.'
Specifically, Eni is calling for Brussels and London to establish a bilateral pact under the Trade and Cooperation Agreement (TCA) to enable the mutual recognition of each jurisdiction's CCS regulatory regime.
Mutual recognition
They also want to see an agreement of mutual recognition that permanent carbon storage in each other's jurisdiction exempts EU/UK industrial players from having to surrender ETS allowances under the respective emission trading schemes.
Eni said that, 'In this context, the recent agreement between the EU and UK to launch formal negotiations towards the linking of the EU and UK Emissions Trading Systems (ETSs) represents a step in the right direction to remove the existing regulatory barriers that currently prevent projects like Bacton CCS from also storing EU emissions.'
Those difficulties become apparent when comparing the situation to the Eni investments in CCS projects within the EU.
Eni is also developing the L-10-CCS project in the Netherlands, which has been identified as an EU project of common interest – something UK projects are no longer eligible for. In February 2025, the project secured €55 million in CEF (Connecting Europe Facilities) funding to cover part of the development costs. CO2 injection is expected to start by 2030 with a rate of five MTPA and a total storage capacity of approximately 100 million tonnes.
Investors are hopeful that the UK and EU can reach an agreement to establish a common regulatory framework for CCS, and linking the two emissions trading systems could be a win that can come relatively soon.
UK and EU officials have formed bilateral groups to discuss common standards, safety protocols, and liability issue,s looking toward the possibility of developing compatible regulatory regimes in the future.
Harmonising standards
Discussions include establishing mutual recognition of licenses, harmonising safety standards, and developing legal provisions for cross-border CO₂ transport and storage. Both sides are also exploring financial mechanisms, including grants and subsidies, to de-risk cross-border CCS projects.
Though the UK's initial legislative adoption of a CCS regulatory framework marked a significant step towards realising the potential of this technology, geopolitical shifts, economic challenges and technical complexities have slowed progress.
The departure from the EU has particularly hindered cross-border cooperation, essential for harnessing the North Sea's geological and industrial synergies. Investors are now eager to see real, tangible progress in this area to reinvigorate these efforts, which have been stalled for a decade.
[Edited By Brian Maguire | Euractiv's Advocacy Lab ]
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