The UK’s cross cutting Net Zero Strategy – Greenhouse Gas Removals25 May 2022

WHAT ARE GGRs?

GGR is the name given to a group of methods to actively remove greenhouse gases, predominantly carbon, from the atmosphere. The range of GGR approaches fall broadly into two categories:

• nature-based approaches such as afforestation, reforestation, soil carbon enhancement and ecosystem restoration; or
• engineering-based approaches such as direct air carbon capture and storage (“DACCS”), bioenergy with carbon capture and storage (“BECCS”), marine carbon capture, biochar, mineralisation and enhanced weathering (“EW”).

Whilst BECCS combine biomass with carbon capture and storage, DACCS use chemicals (known as sorbents) to capture CO2 from the air.

There are numerous uncertainties and concerns regarding the use of GGRs, such as the ability to develop and deploy them at scale and the wider impact of such technologies on the environment, ecosystems, land and governance. One of the biggest concerns voiced against GGRs is that they have the potential to disincentivise emission reduction efforts and climate change mitigation. Nonetheless, it is also widely accepted among the supporters of GGRs that in prescribed, measurable, comparable and controlled conditions, they could play a major role in decarbonising energy-intensive industries, such as agriculture, transport, power and construction.

This article focusses on engineered removals and the potential they hold for creating a carbon removal offsetting market. Nature‑based solutions, such as afforestation and soil carbon sequestration, are discussed in our previous article in this series “The UK’s Cross-Cutting Net Zero Strategy: Natural Resources, Waste and F-gases chapter”.

WHY DOES THIS MATTER?

The irreversible impact of climate change is well understood and palpably obvious. The ever urgent need to reduce greenhouse gas (“GHG”) emissions from all sectors, particularly from hard-to-abate sectors such as aviation, shipping, agriculture and heavy industries, is undeniable. On this basis the Strategy makes clear that there is evidence which suggests that GGR technologies could provide an opportunity to help meet the UK’s nationally determined contribution (NDC)¹ by 2030 and Carbon Budgets 5 and 6.² It is generally recognised in the UK and internationally that 1.5 degrees and net zero cannot be met without GGRs.

GGRs: KEY COMMITMENTS AND PROGRESS TO DATE

The Strategy sets out a number of commitments made by government in order to develop the GGRs market and technologies:

Key commitment: Set the ambition of deploying at least 5 MtCO2 /year of engineered removals by 2030, in line with Climate Change Committee’s (“CCC”) progress report to parliament 2021 and National Infrastructure Commission assessments.³

Progress to date: The ambition has been set but many a barrier will now need to be overcome before it can be realised. CCC analysis indicates that engineered GGRs would be expected to deploy from 0 MtCO2 today to at least 5 MtCO2 by 2030, around 23 MtCO2 by 2035 and 75-81 MtCO2 by 2050. Higher and lower deployment will depend on sector-specific and wider economy developments.

Key commitment: Deliver £100m innovation funding for direct air carbon capture and storage (“DACCS”) and other GGRs.

Progress to date: Through the government’s Strategic Priorities Fund, UK Research and Innovation (“UKRI”) has pledged to invest £31.5m in five land-based GGR demonstrator projects and a central hub. The hub will lead on coordination across the programme, as well as conducting research on the environmental, economic, social, ethical and governance implications of GGR approaches. It is estimated that the programme’s pilot projects could remove between 100 and 1,000 tonnes of CO2 per year in 2025 and have the potential to scale up to millions of tonnes by the 2030s. BEIS is also running a series of competitions into DACCS R&D projects. Further details are available here and here on R&D projects that have already been funded and on future competitions.

Key commitment: Develop markets and incentives for investment in greenhouse gas removal methods, by consulting on preferred business models to incentivise early investment in GGRs, in 2022.

Progress to date: The consultation on potential GGR business models is yet to be published. When published, it is expected to set out details of preferred mechanisms to incentivise early investment and enable commercial demonstration of a range of GGR technologies from the mid to-late 2020s. The consultation will consider how GGR incentives interact with policies and business models currently under development for carbon capture, use and storage, hydrogen production, sustainable aviation fuels and other relevant sectors, along with wider carbon pricing policy. It will also consider how near-term policy incentives can most effectively leverage private investment and enable a transition towards a market-led framework as the sector matures. In the meantime, UK Government has published a Summary of Responses to the Call for Evidence in relation to GGRs (October 2021).⁴ Interestingly, the responses to the Call for Evidence already demonstrate the Contracts for Difference (“CfD”) scheme to be the front-runner policy for delivering GGRs. This is based on its success in scaling deployment and reducing the cost of renewable technologies such as offshore wind. Many respondents noted parallels between GGRs and offshore wind, most notably the challenge of securing investment in capital-intensive technologies where longer-term cash flows are uncertain or volatile. Feed-in Tariffs are also identified as potentially viable mechanism for supporting deployment of GGRs having proven to be very effective in boosting the renewable energy in various countries. Lastly, the UK Emissions Trading Scheme (UK ETS) is also being explored as a potential long-term market for greenhouse gas removals. It remains to be seen however how much emphasis is placed on the above options in the much-awaited consultation once it is published.

Key commitment: Working in partnership with the devolved administrations, we will aim to launch a call for evidence in the coming months exploring the role of the UK ETS as a potential long-term market for GGRs, as part of the upcoming consultation on the UK ETS.

Progress to date: On 25 March 2022, the UK Government jointly with devolved administrations, launched a consultation entitled “Developing the UK Emissions Trading Scheme”.⁵ Chapter 8 of the consultation specifically deals with GGRs. The consultation closes on 17 June 2022. It is thought that UK ETS could be the most effective mechanism for scaling up the GGRs market as it would allow polluters to pay for removals where they cannot fully decarbonise. It would also allow polluters to trade carbon removal offsets provided the highest principles of responsible carbon removal offsetting are adhered to such as the ones set out by the University of Oxford in “The Oxford Principles for Net Zero Aligned Carbon Offsetting”.⁶ The consultation sets out how there are several potential opportunities that including GGRs into the UK ETS could provide, the main one being that of sending the right market signal to businesses to invest in new low-carbon technologies and drive the price down of GGR technologies.

Key commitment: Explore options for regulatory oversight to provide robust monitoring, reporting and verification (“MRV”) of GGRs, following the recommendations of the BEIS-led MRV Task & Finish Group involving experts from industry and academia.

The effectiveness of GGRs and carbon removal offsets is highly dependent on the ‘durability’ and ‘permanence’ of those removals. To ensure that the removed carbon is stored long-term and not rereleased, a robust monitoring, reporting and verification system will need to be put in place to measure progress. In relation to emissions reduction, an MRV system provides a framework for effective measurement and understanding of the sources of emissions and trends in order to design appropriate mitigation strategies, assess the on-going effectiveness of such strategies and support their market credibility and public perception. How exactly this will work is subject to further consultations, research and discussions.

Progress to date: In 2021, the UK GGR MRV Task and Finish Group, comprised of cross-industry and government experts, recommended that an independent audit authority be set up to oversee the MRV. This would ensure that the amount and permanence of removals are quantified, robustly and transparently.⁷ Chapter 8 of the UK ETS consultation (see above) also invites views on how to develop an MRV system which monitors, reports and verifies negative emissions that will support the development and delivery of GGRs.

Key commitment: Seek an amendment to the Climate Change Act to enable engineered removals to contribute to UK carbon budgets.

Progress to date: Currently the Climate Change Act 2008 only recognises removals from land use, land use change and forestry (“LULUCF”) as counting towards UK’s carbon budgets. Engineered removals are not yet in scope. For this reason, the government plans to propose legislative amendments to the Climate Change Act 2008 in order to expand the definitions. No legislative amendments have yet to be published however.