In a Nutshell

  • The UK has taken steps to integrate carbon removal into its climate policy and is one of the leaders in setting specific targets for greenhouse gas removals (GGR). The 2021 Net Zero Strategy sets the ambition to deploy at least 5 Mt CO2 per year of engineered removals by 2030, and an expectation for the volume to increase to around 23 Mt CO2 by 2035 and 75-81 Mt CO2 by 2050. The government’s aim is to enable a diverse portfolio of engineered GGRs, and both natural ecosystem-based and novel CDR are considered necessary in the Net Zero Strategy. 
  • The Climate Change Committee (CCC), which provides independent advice to the government on its legislated carbon budgets, considers CDR necessary to reach the UK’s climate goals. 
  • The government is developing markets for novel CDR methods through policy and innovation funding. The UK has dedicated £100m in funding to support various CDR methods and significant funds to CO2 transport and storage infrastructure. Biochar and enhanced weathering are among solutions being funded as part of the ‘GGR-D’ demonstrator programme. 
  • The government is developing policy on business models to support removals through a contract for difference (CfD) structure and a separate model to support Power BECCS through a dual CfD for electricity and removal. A public consultation on integrating GGR into the UK ETS opened on 23 May 2024 and closes on 15 August 2024. 

Role for carbon removal in national climate policy

The Net Zero Strategy sets out how the UK government plans to reach net zero with the help of ‘greenhouse gas removals’, otherwise known as carbon dioxide removal. It sets the ambition of deploying at least 5 Mt CO2 per year of ‘engineered removals’ by 2030, in line with the recommendation from the UK’s independent Climate Change Committee’s (CCC) 2021 progress report. The CCC projects 58 and 39 million tonnes of ‘engineered’ and ‘nature-based’ greenhouse gas removals per year, respectively, in the UK in 2050 in its Balanced Net Zero Pathway. 

 

The government has also implemented legally binding environment targets, including increasing tree and woodland cover to 16.5% of total land area in England by 2050. The England Trees Action Plan and England Peat Action Plan set out ambitions to achieve net zero emissions by 2050. The devolved administrations of Scotland, Wales and Northern Ireland are responsible for their own trees and peatlands. 

 

The UK has ambitions to build a significant carbon capture, utilisation and storage (CCUS) sector with plans in motion to develop CCUS ‘clusters’ as hubs with co-located emitters and CO2 transport & storage (T&S) infrastructure. The government has signalled that it is looking to enable CDR projects which make use of CCS technology, such as direct air capture and storage (DACCS) and bioenergy with CCS (BECCS), as part of the first CCUS clusters.

The government published its Biomass Strategy in August 2023, alongside a report on validity of BECCS as a GGR method, which found no insurmountable scientific barriers to GGR via BECCS when using appropriate sustainability criteria and sustainable supply chains.

Support for R&D and Innovation

Nature 

New post-Brexit environmental land management schemes (ELMs) will make progress towards agroforestry and landscape recovery aims and deliver a large proportion of tree planting funding. The Nature for Climate Fund (NCF) has been a vital source of support in these schemes and has provided £33m to ELMs as the main delivery vehicle for incentives for peatland restoration with a further bidding round in 2023. The schemes will replace support from the NCF when it is due to end in 2025. In January 2023, the government announced six new Sustainable Farming Incentive standards.

 

The UK government and devolved administrations created nature-based voluntary carbon markets to mobilise private investment through the Woodland Code and the Peatland Code which issue carbon units for forestry and peatland restoration. A new compliance mechanism under the Environment Act 2021 could catalyse further investment by requiring developers in England to compensate for the biodiversity impacts of new developments that they cannot improve on-site and deliver biodiversity net gain through the purchase of biodiversity units. 

Funding for novel solutions 

In 2020, the UK government and its research arm, UKRI, provided £100 million for research, development and demonstration of GGR across multiple programmes. This funding includes allocations for a central hub for carbon removal and five land-based CDR demonstrator projects including enhanced weathering and biochar. It also includes a competition on Direct Air Capture and other Greenhouse Gas Removal technologies. This programme aims to produce several operational pilot plants by 2025. Phase 1 of the £60 million programme delivered 22 feasibility studies across DACCS, Enhanced Weathering, Biochar and BECCS technologies. In phase 2 of the competition, £54.4m of government funding was awarded to 15 selected demonstration projects in 2022. 

 

Significantly higher funds have been committed towards the development of the CCUS industry and CO2 transport & storage infrastructure. The CCUS Vision, launched in December 2023, re-affirmed £20 billions of funding for CCUS, and outlined how the UK will transition from a market creation phase in the 2020s (aiming for 20-30 Mtpa by 2030) to a self-sustaining CCUS market from 2035. On 18 May 2023 the North Sea Transition Authority (NSTA) awarded a first round of 20 carbon storage licences at offshore sites. In December 2023, the NSTA launched a call for evidence to seek feedback on a carbon storage levy as a future mechanism to fund its stewardship of carbon storage licences, in line with the Treasury’s user pays principle.

Business models 

The UK government has recognised that novel CDR solutions require government support and stronger deployment incentives in order to scale. In July 2022, it published a consultation on engineered GGR business models that could support technologies such as DACCS, seawater CO2 removals, and certain BECCS applications on a technology-neutral basis.

In December 2023, the government published an update on the design of the GGR business model and the Power BECCS business model. The GGR business model will assume a ‘contract for difference’ (CfD) structure, building on precedents from low-carbon electricity and CCUS. The government has now set out a ’minded-to’ position on some aspects of the GGR business model including contract length, strike price, and reference price, with other design features still under consideration. The Power BECCS business model is being developed as a ‘dual CfD’ with incentives for both electricity and carbon removal. Government intends to align the Power BECCS and GGR Business Model designs as much as possible.  

 

December 2023 also saw the publication of ‘A Review of Engineered Greenhouse Gas Removal (GGR) Standards and Methodologies’. Based on the findings, the government indicated its intention to define its own methodologies for GGR projects supported under the business model, ensuring alignment with its MRV policy principles and creating consistency across existing government standards, e.g. on biomass and CO2 storage. However, recognising the time needed to develop these, government will likely define interim methodology quality thresholds to allow early projects to come forward. 

On the horizon

In July 2023 the government confirmed its position that the UK Emissions Trading Scheme (ETS) will be an appropriate long-term market for GGRs. The UK ETS Authority opened a further consultation on 23 May 2024 on GGR inclusion in the UK ETS, which considers principles for policy design when integrating GGRs into the UK ETS and several other elements. It closes on 15 August 2024.

The government is also planning to consult on specific interventions needed to develop high-integrity VCMs [voluntary carbon markets] as an additional route to market for GGRs, alongside the ETS.

A Land Use Framework for England is expected to set out how competing priorities for land will be managed, with implications for net zero delivery through nature restoration and domestic biomass production.

Government is partnering with the UK’s national standards body to develop a suite of high-integrity investment standards for nature markets and ecosystems, with work continuing for three years starting from 2023.

Contributors

Targets

  1. Net zero target: 2050
  2. Net Negative Target:

    No

  3. First interim target: 2030
  4. Type of interim target: Emissions reduction target
  5. GHGs covered: Carbon dioxide and other GHGs
  6. Separate target for emission reduction and removals: Yes
  7. Comprehensive CDR Target: no
  8. CDR Target for Conventional Removals: no
  9. CDR Target for Novel Removals: yes
  10. Historical emissions: No
  11. Annual reporting mechanism: Annual reporting

CDR Plans

  1. Plans for carbon removal (CDR): Yes (nature-based and CCS-based removals)
  2. Planning to use external carbon credits: Yes
  3. Conditions on use of carbon credits: s

Public consultations and upcoming policies

The outcome of the greenhouse gas removals business model consultation is expected in 2023.

Upcoming UK ETS Authority consultation on GGR inclusion in the UK ETS.

Upcoming Department for Energy Security and Net Zero consultation on government interventions to develop high-integrity voluntary carbon markets.