Progress and pitfalls on the path to zeroing out the UK’s carbon emissions

The UK’s energy transition is in full swing. Record-breaking renewable energy generation, falling clean technology costs, and the accelerating deployment of carbon capture, utilisation and storage (CCUS) solutions are reshaping the nation’s energy landscape.

Notable progress in reducing emissions is being made, but the window to achieve net zero by 2050 is closing fast, and critical hurdles remain.

The role of CCUS in the UK’s net-zero ambitions

CCUS is a crucial pillar of the UK’s strategy for decarbonisation, one that we won’t reach net zero without. The government has set an ambitious target of capturing and storing 20–30 million tonnes of CO2 annually by 2030.

The recent final investment decision (FID) for the Northern Endurance Partnership (NEP) and Net Zero Teesside Power (NZT Power) – key components of the East Coast Cluster in Teesside and Humber – is a sign of growing momentum in the sector.

These clusters aim to boost storage capacity and expand carbon capture networks across power generation, industrial sectors, waste-to-energy plants and hydrogen production. But ambition is one thing, deliver is quite another, and as it stands the speed of implementation is lagging behind expectations.

The slow start and its consequences

Despite the investments, the UK’s carbon capture capacity is projected to reach only 5 million tonnes per year by 2030 – far short of the government’s target, according to DNV’s latest UK Energy Transition Outlook. After 2030, a sharp acceleration is expected, with capacity potentially reaching 42 million tonnes per year by 2035 and peaking at 54 million tonnes per year in the mid-2040s. However, the impact of this slow start is already being felt.

Delays in achieving FID for initial CCUS projects, particularly within the track 1 clusters, have dampened confidence in the near-term. Securing financial support and moving these projects into detailed engineering design are crucial next steps. Without swift action, the UK risks losing investment and momentum to global competitors who are advancing their CCUS infrastructure at a faster pace.

The carbon pricing conundrum

Another challenge lies in the financial mechanisms underpinning CCUS adoption. The UK is not on track to meet its nationally determined contribution (NDC) of reducing emissions by 81% from 1990 levels, nor is it on course to hit its legally binding 2050 net-zero target.

A key issue is the misalignment of carbon pricing with CCUS costs. While the European carbon price is expected to rise from $75 per tonne today to $150 per tonne by 2030 and $250 per tonne by 2050, widespread CCUS deployment may not take off until the mid-2030s – when the cost of emitting CO2 surpasses the cost of capturing it. This delay could hinder large-scale adoption and stall emissions reductions across industries.

Carbon credits will play a pivotal role in bridging the gap. Both compliance markets, such as the UK emissions trading scheme (ETS), and voluntary carbon markets (VCM) will be essential in driving investment and ensuring CCUS plays its role in emissions reduction.

The credibility of these markets depends on integrity standards like those set by the Integrity Council for the Voluntary Carbon Market (ICVCM) and the UK government’s voluntary carbon principles.

Policy moves: CBAM and industrial decarbonisation

The UK is currently consulting on the implementation of a carbon border adjustment mechanism (CBAM), which would require importers to pay the same carbon price as domestic producers under the UK ETS. This policy aligns with the EU’s CBAM and would help prevent emissions leakage while fostering a more integrated European carbon pricing approach.

Additionally, government action is urgently needed to accelerate decarbonization in the buildings and transport sectors – areas where current policies remain inconsistent and lack clear implementation roadmaps.

The path to a thriving green economy

After years of promise, the UK’s CCUS sector is picking up speed – that much is obvious. But so too is one serious fact – the race to capture and store emissions is just beginning.

Challenges remain, but the opportunities are immense. A thriving green economy built on CCUS can drive job creation, enhance energy security, and position the UK as a global leader in clean technology.

Achieving this vision requires sustained policy support, targeted investment, and cross-sector collaboration. Urgency must be countered by adaptability and the sector must be ready to embrace innovative technologies while remaining flexible enough to seize emerging opportunities.