Key takeaways
UK accelerates offshore wind and hydrogen projects
Government targets faster deployment to meet net-zero goals.
Grid upgrades and storage solutions gain priority
Infrastructure investment supports renewable integration and reliability.
Policy clarity drives investor confidence in clean energy
Stable frameworks encourage long-term funding and innovation.
The current UK Government’s focus on growth is well known. This was one of the missions set out in the Government’s Plan for Change presented by the Prime Minister to Parliament on 5 December 2024. Another one of the five missions is that the government wants to “Make Britain a clean energy superpower”. This includes building a diverse energy sector based on renewables and nuclear and moving to a low carbon economy. Key elements of this strategy are hydrogen power, carbon capture use and storage (CCUS) and nuclear. We have prepared a series of three articles providing an update on how the Government is progressing with regulatory change in those areas. In part 1 we focus on CCUS.
CCUS, including greenhouse gas removals (GGRs), remains a cornerstone of the UK Government’s strategy to achieve net zero and bolster energy security. The sector has recently seen notable progress in both infrastructure development and the evolution of its legal and regulatory frameworks.
The UK Government formally backed the Acorn (Scotland) and Viking (Humber) carbon capture and storage projects in the 2025 Spending Review, advancing their development under the Track-2 process. These projects are expected to capture and store millions of tonnes of CO₂ annually by 2030, with final investment decisions anticipated during this Parliament. Following last year’s contract awards to the Northern Endurance Partnership and Net Zero Teesside, the Government launched a short market-sounding exercise to explore future connection opportunities to the East Coast Cluster in Teesside.
To support this momentum, the Government has committed £9.4 billion in capital funding for CCUS through to 2029, as part of a broader £21.7 billion package intended to unlock private investment and accelerate deployment. This funding is complemented by the Clean Energy Industries Sector Plan, which reaffirms support for CCUS supply chain development and sets a target of 50% UK local content in CCUS projects by 2030.
In 2025, Ofgem advanced the regulatory framework for CO₂ transport and storage with several key developments. On 19 June 2025, it published Regulatory Instructions and Guidance (RIGs), outlining how licensees should report compliance with licence conditions, including definitions, reporting packs, and financial performance templates. This was followed by a final decision on 17 September 2025 modifying the Special Conditions of licences held by Net Zero North Sea Storage Ltd and Liverpool Bay CCS Ltd, introducing updated commissioning protocols and governance for development expenditure. Liverpool Bay CCS Ltd received its licence on 22 April 2025, while Net Zero North Sea Storage Ltd was licensed slightly earlier, in December 2024. Ofgem also launched a consultation on licence modifications in July, with outcomes published in September.
On 25 September 2025 it was announced that two pioneering carbon capture projects in North Wales and North West England have signed contracts and are ready to begin construction. The projects, which are backed by the £9.4 billion in government investment mentioned above, include the UK’s first carbon capture-enabled cement plant at Padeswood, developed by Heidelberg Materials UK, and a full-scale waste-to-energy facility at Protos in Ellesmere Port, led by Encyclis. Together, it is intended that the two projects will remove 1.2 million tonnes of CO₂ annually and support 500 skilled jobs.
International cooperation has also advanced. In May 2025, the UK and EU reached an agreement to link their respective Emissions Trading Schemes, enabling cross-border CO₂ storage and reducing transport and storage costs by an estimated 28%. This linkage is expected to enhance the competitiveness of UK-based CCUS projects and support the development of a pan-European carbon market.
Commercial frameworks have progressed alongside the reforms. The Government published updated documentation for the Transport and Storage business model, including the full CCS Network Code and revised heads of terms. These documents define the contractual and operational arrangements for CO₂ infrastructure, covering network access, commissioning, and governance. In August 2025, the Government also released the first full-form contracts for GGRs, including standard terms and conditions and grant funding agreements. Additionally, the CCUS Future Network Strategy was launched in August 2025 as a call for evidence, outlining a long-term vision for transitioning towards a market-led CCUS sector by the 2030s. This strategic shift aims to reduce reliance on public funding and foster private investment through competitive market dynamics.
This article was co-authored by trainee Morgan MacWilliams.
