Capturing Carbon and a Global Opportunity Carbon capture and storage is “a necessity, not an option” for the UK’s ambition to transition to net zero by 2050 The UK is well placed to lead in CCUS globally o A worldwide reputation as an international centre of • Extensive experience from the oil, gas and • Substantial CO2 storage potential and industrial infrastructure e.g. gas network The UK is a first mover; we will support the establishment of at least two low carbon CCUS clusters by the mid- 2020s and a further two by 2030 through which we aim to 2CCUS Investor Capturing Carbon and a Global Opportunity

■ Most active and deepest capital ■ 2nd in G20 for ease of doing business ■ 0% dividend withholding tax rate, as part of wider competitive tax regime Agreement post EU exit allows zero tariff market access with the EU ■ Further UK Free Trade Agreements enable exports to the rest of the world ■ Super-Deduction - A new 130% first- year capital allowance for qualifying The UK has one of the world’s most attractive 3CCUS Investor Capturing Carbon and a Global Opportunity

■ Global UK is in the top 5 the largest potential CO2 storage ■ Project Funding for hydrogen production projects will be announced later this year and CCUS Investor Capturing Carbon and a Global Opportunity

Industrial clustersUK Gov. funding Critical activities and milestones on a path to developing the UK CCUS sector Track-1 Cluster Sequencing process Track-1 negotiations with transport and storage companies and emitters Second Cluster Sequencing development, launch, negotiations and construction Announcement of shortlisted CO2 emitters that will proceed to negotiations Launch £140m Industrial Decarbonisation & Hydrogen Revenue Support scheme Publication of T&S, ICC and power CCUS Investor Capturing Carbon and a Global Opportunity

CCUS is crucial to decarbonisation in the UK CCUS Investor Capturing Carbon and a Global Opportunity 6 The role of CCUS in the UK’s transition to net zero We will ensure a second lease of life for the North Sea in low-carbon technologies Delivering on our £1bn commitment to 4 CCUS clusters by 2030, with the first two sites selected in the North East and North West currently proceeding through By 2050, emissions associated with industry could need to fall by around 90% compared to 2018. Industrial CCUS will be fundamental to this The North Sea Transition Authority (NSTA) are the regulator for the storage of CO2 on the UK Continental Shelf. When it receives an application for a storage permit, the NSTA is required by law to ensure (amongst other requirements) that the storage complex and surrounding area have been sufficiently characterised and assessed to ensure there is no significant risk of leakage. Power CCUS can provide non-weather dependent, dispatchable low carbon generation. This will be vital alongside system flexibility and energy storage to support a fully decarbonised The North Sea Transition Deal will commit to deliver investment of up to £14-16bn by 2030 in new energy technologies, of which £2-3bn is allocated to CCUS, £2-3bn to electrification and

The UK’s world class skills and infrastructure are gearing up to the transition capabilities from existing UK industries international centre of engineering excellence and world leading in the oil, gas, and petrochemicals sector infrastructure projects and investing in shared offshore infrastructure ■ Deep knowledge of subsurface 7CCUS Investor Capturing Carbon and a Global Opportunity

Government and industry working together Collaborating to deliver CCUS in the UK What we are delivering What we look to industry to deliver ■ Set ambitious capture targets to support our long term ambition to get to net zero by 2050 ■ Set up the Cluster Sequencing process to establish CCUS deployment in the UK to decarbonise industrial clusters ■ Launched funding streams to support CCUS deployment ■ Establish two operational industrial clusters by the ■ The sector will invest £2-3bn to build the Transport & Storage infrastructure to help capture 20-30MtCO2 per year of carbon ■ Incentivising scale up and promoting reliability through developing investable business models to provide long term revenue certainty and addressing ‘cross chain’ risk, and creating a regulated asset base ■ Initial drafting of CCUS Network Code, guided by government and driven by industry, enabling the development of network ■ Support the development of the CCUS Network Code ■ Support the government to develop business models ■ Developing our green jobs and skills offer and reforming the skills system to ensure the development of key capabilities ■ Identify and support the rapid growth of competitive new capabilities to meet future energy needs ■ Create skilled, long-term jobs and a diverse workforce, demonstrating how they will fill any skills gaps Supply chains ■ Published supply chain roadmap setting out how government and industry can work together to harness the power of a strong, industrialised supply chain ■ Working through the Energy Supply Chains Taskforce and CCUS Council to identify UK supply chain strengths ■ Build up robust transparent supply chains, with emphasis on local skills and capacity development ■ Share information on supply chain development CCUS Investor Capturing Carbon and a Global Opportunity 8

Establishing a long term CCUS market CCUS Investor Capturing Carbon and a Global Opportunity 9 What we have done What we are doing What we committed to Cluster as Track-1 clusters with ■ Selecting the projects that will ■ Work with industry to achieve one net zero industrial cluster by ■ Announced Cluster Sequencing eligible projects (power ■ Engaging with industry on the ■ Support Track-1 clusters to be Deploying CCUS in the UK through industrial clusters

What we have done What we are doing What we committed to ■ Announced £1bn CIF to support the ■ Committed up to £40m of the CIF to support design work for offshore storage and onshore infrastructure through Industrial Decarbonisation Challenge, which is providing up to  The final design of the CIF will develop alongside the Cluster Sequencing process, the design of the business models and the finalisation of related  £1bn CIF to support the capital costs of strategic CCUS infrastructure, helping to create ‘SuperPlaces’ in areas such as the North East, the Humber, North West, Southern England, Scotland and  Set up the £140m IDHRS scheme to fund our new hydrogen and industrial carbon capture business models  We will announce a funding envelope in 2022 that will enable us to award the first contracts to CCUS-enabled hydrogen and industrial carbon capture  £140m to accelerate hydrogen projects and industry adoption of carbon  Consulted on the design of the NZHF and split the funding in 4 strands  We are aiming to open the first funding window for Strands 1 and 2 in Spring 2022, with a potential of a further funding window in 2023/24. We intend to open strand 3 in summer 2022  Up to £240m, delivered between 2022 - 2025, to support new H2 production in Providing capital and revenue funding to support CCUS deployment Establishing a long term CCUS market CCUS Investor Capturing Carbon and a Global Opportunity 10

What we have done What we are doing What we committed to ■ Developed the DPA which builds on the UK’s expertise in Contracts for Difference for renewable energy. The DPA aims to provide long term revenue certainty and a stable investment environment for developers ■ Publishing DPA full contract in Spring 2022 and consulting to further understand industry perspectives. Engaging industry later in 2022 with a call for evidence for future policy ■ A competitive allocation process in the 2020s for the next phase of Power CCUS deployment. Support at least one Power CCUS project for delivery decarbonised power system by 2035 ■ Developed the TRI business model which supports stable investment by providing investors with a clear sight of the long-term revenue model for accommodate different potential network designs and growth profiles  Working towards confirming a regulator and establishing a licensing regime. Developing economic licences, T&S industry.
Developing the TRI Model further to mitigate remote, specified risks and revenue risk; and establish a return commensurate with risk taken by ■ Ambition to deploy at least 5MtCO2 per year from ‘engineered’ GGRs by 2030 to support the trajectory to Net ■ Publication of government response on business model design, alongside indicative Heads of Terms of the  Developing detailed model design to provide producers with revenue support and help overcome operating cost gap between hydrogen and fossil  Finalise the business model in 2022  Announce funding envelope in 2022 to support delivery of up to 1GW of UK Government is incentivising scale up and promoting reliability through developing investable business models and creating a stable regulatory base Creating a stable regulated market CCUS Investor Capturing Carbon and a Global Opportunity 11

UK Government is incentivising scale up and promoting reliability through developing investable business models and creating a stable regulatory base Creating a stable regulated market CCUS Investor Capturing Carbon and a Global Opportunity 12 What we have done What we are doing What we committed to ■ The ICC contract provides a model to unlock investment by providing long- term revenue certainty for industrial users to achieve deep decarbonisation and is being adapted to support waste ■ Publishing next business model update and full ICC contract in Spring 2022 and consulting to further understand industry perspectives ■ Developing business models to ■ Ambition to capture 20-30 MtCO2, including 6MtCO2 of industrial emissions, per year by 2030 and ■ An Expression of Interest for Power BECCS, closed in early 2022 which will provide visibility on market ■ Reports published on monitoring, commercial frameworks for power framework consultation published as well as the biomass policy statement ■ Developing first of a kind Power competition for DACCS and other support newly emerging efficiency ■ Developing robust sustainability criteria for BECCS to ensure delivery business models in spring 2022 ■ Ambition to deploy at least 5MtCO2 per year from ‘engineered’ GGRs by 2030 to support the trajectory to Net

We are committed to the development of a CCUS supply chain including through realising CCUS Investor Capturing Carbon and a Global Opportunity 13 What we have done What we are doing What we committed to ■ Published the CCUS Supply Chain ■ Launched the UK Energy Supply Chain Taskforce - a joint enterprise working to maximise opportunities and mitigate challenges in the development ■ UK Export Finance, the UK’s export credit agency, has enhanced its support to attract investment into ■ Working with industry to map the capabilities of the UK CCUS supply chain to identify specific equipment, technologies and services where UK can become a global leader. Engaging with key stakeholders to facilitate new opportunities overseas for the companies are in the best position to contracts across the globe. Offering a suite of products to support the innovation to export pathway for CCUS ■ Working with industry to harness the power of a strong, industrialised UK CCUS supply chain, whilst ensuring investible, cost effective and focused ■ UK Export Finance is increasing its International Export Finance Executive network from 15 to 30 Country Heads to build a pipeline of opportunities for supply chains and secure investment ■ Deploying a targeted UK offer utilising the full suite of Government finance and support to secure a ‘first mover’ ■ Identified existing infrastructure that could be transitioned to support CCUS ■ Working with stakeholders to understand the requirements needed to transition and repurpose existing infrastructure and capabilities where infrastructure and utilising the transferable capabilities developed in related sectors over the past five

Developing key capabilities and supporting the strong transferable skills the UK already has Building our skills and research and innovation CCUS Investor Capturing Carbon and a Global Opportunity 14 What we have done What we are doing What we committed to Skills ■ Launched Green Jobs Taskforce, which published an independent report with recommendations that informed ■ Reforming the skills system through Local Skills Improvement Plans. We are working with industry to support the deployment of CCUS that could help ■ Green Jobs Delivery Group will be a government, industry and other key stakeholders support the development and delivery of green jobs and skills ■ The North Sea Transition Deal has a commitment to deliver an integrated People and Skills Plan to ensure the highly transferable workforce is being tapped into throughout the energy ■ Between 2004-2019 we provided over ■ The Industrial Decarbonisation Challenge Fund provides up to £170m, matched by £261m from industry, supports low-carbon technology ■ In addition to the £70m DACCS and GGR competition, we are providing up to £25m of research and development funding to help develop and pilot next Generation Carbon Capture are two of the top ten priorities of the £1bn Net

CCUS Investor Capturing Carbon and a Global Opportunity 15 The UK’s world class transferable skills and infrastructure  BEIS (2019) Energy Innovation Needs Assessment – Carbon Capture, Usage and Storage. To note, GVA considers market value estimates.  UK Oil and Gas Authority (2020). UKCS integration.  Engineering UK (2019) Key Facts & Figures  UK Government (2020) UK Energy in Brief 2020  H2FC SUPERGEN (2020) Opportunities For Hydrogen And Fuel Cell Technologies To Contribute To Clean  Statista (2020) Chemical Industry in the UK  Oil and Gas UK (2021) Workforce Insight Report The UK - A reliable, stable place for business, leading the world for capital  Oil and Gas Authority (2021) Carbon Capture and Storage.  BEIS (2019) Energy Innovation Needs Assessment – Carbon Capture, Usage and Storage. To note, GVA considers market value estimates. CCUS is crucial to decarbonisation in the UK and Why invest in UK CCUS  BEIS (2022) British energy security strategy  Industrial Clusters Mission Infographic (2019)  BEIS (2018) CCUS deployment pathway action plan.  GCCSI (2018) The Carbon Capture and Storage Readiness Index  Oil and Gas Authority (2021) Carbon Capture and Storage.
 Cluster Sequencing eligible projects (power CCUS, hydrogen and ICC)

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