Researchers from Oxford Net Zero and Carbon Balance highlight the risks associated with the current UK carbon capture and storage (CCS) policy framework. They also examine how implementing a carbon storage mandate for fossil fuel producers could support the UK in achieving its climate goals while safeguarding public finances.
A landmark report tackles a pressing issue in UK climate policy: how to build the critical carbon storage infrastructure needed to meet net zero goals while safeguarding public finances. Produced by researchers at Oxford Net Zero (University of Oxford) and the Carbon Balance Initiative, the report answers a direct government request to evaluate long-term policy mechanisms for deploying carbon storage, including the Carbon Takeback Obligation (CTBO).
Achieving the UK’s legally binding net zero target demands a swift and substantial reduction in fossil fuel consumption, alongside the permanent geological storage of residual CO2 emissions by 2050. Developing a robust and financially sustainable carbon capture and storage (CCS) sector is therefore crucial for hitting these climate objectives.
In 2024, the UK government committed £21.7 billion ($27 billion) to kick-start CCS development, with ambitions to store 50 megatonnes of CO2 annually by the mid-2030s—equivalent to today’s emissions from all UK power stations. However, achieving these goals will require significant additional investment, far exceeding the current level of public funding.
Challenges in Relying on the UK Emissions Trading Scheme
The research was developed through extensive consultation with over 20 senior stakeholders across government, academia, industry, and civil society, in collaboration with the Carbon Capture and Storage Association (CCSA). It found that current plans to rely primarily on the UK Emissions Trading Scheme to scale CCS from the 2030s are unlikely to attract sufficient private investment in carbon storage, potentially jeopardizing our net zero targets and prolonging the CCS industry reliance on government subsidies beyond current funding commitments.
The authors explore an alternative policy scenario: requiring fossil fuel suppliers to permanently store a rising percentage of their CO2 emissions – such as through a Carbon Takeback Obligation. This approach could create a self-sustaining storage market while gradually reducing dependence on public funding. The authors find that storage mandates could be particularly effective if combined with complementary demand management measures such as carbon pricing.
Government Spending and the Role of Policy Design
“The new Labour government faces tough choices about public spending across many sectors,” said Mirte Boot, UK Director of Carbon Balance and report author. “Our research shows that, with the right policy design, the government could create a clear investment case for CCS and GGR without pushing the costs for CO2 clean-up onto taxpayers,” added Ingrid Sundvor, report author and Executive Director of Carbon Balance.
The authors caution that careful policy design and further research are needed, particularly to address the potential impacts and implementation challenges of any storage mandate on UK industrial competitiveness, energy security, consumer costs, and the risk of carbon leakage. The authors emphasize any carbon storage mandate would need to align with a trajectory of fossil fuel phase-out and a broader energy transition.
“The fossil fuel industry has the resources to deliver the storage capacity we need,” said Professor Myles Allen, report author and Oxford Net Zero Principal Investigator. “Making this a condition of their continued operation provides a practical pathway to net zero. Further policy development on this is urgently needed.”
Professor Stuart Haszeldine from the University of Edinburgh, who reviewed the report, added “The world heated ever-faster in 2024 – we are losing the climate fight. Commercial carbon storage has started, but models show it will need to develop 100 times faster to protect net zero. But without change, these grant-funded projects may be the last. The Government must look at a supply-side obligation that integrates the cost of CO2 storage into wholesale fossil fuel prices.”
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3 Comments
“The world heated ever-faster in 2024 – we are losing the climate fight.
An examination of the historical temperature records, (e.g. Mann, 2025: http://www.columbia.edu/~mhs119/Temperature/ ) suggests that the temperature increase has been essentially linear since at least about 1964, with the possibility of a decline starting in the second half of 2024.
“The world heated ever-faster in 2024 …”
2023 and 2024 were El Nino years, which typically are much warmer globally than other years. It was an anomalous event in that the warming peak was higher and wider (longer lasting) than other recent El Nino years, even strong ones. This suggests something else contributing to the warming besides the warm ocean water. That is very likely to be stratospheric water vapor injected by the eruption of Hunga-Tonga in January 2022, It will take some time to sort things out, but I think that Professor Haszeldine is being disingenuous in implying that the most recent abrupt warming was the result of increased CO2 and that the solution to the ‘problem’ is reduced CO2 emissions.
“A landmark report tackles a pressing issue in UK climate policy: how to build the critical carbon storage infrastructure needed to meet net zero goals while safeguarding public finances.”
The unstated (and probably unexamined) assumption is that the public won’t end up paying for the proposed CCS program. The assumption is naive at best! Unless the stockholders agree to pay for the program out of company profits (stockholder’s pockets), the costs will simply be passed on to the consumers through increased costs at the pump. In one aspect, this results in greater equity because those who use the most fuel will pay the most in indirect ‘taxes.’ However, it will fall most heavily on the shoulders of those least able to pay for it — the poor — whereas, graduated taxes typically are greatest for those with the most discretionary income.
This isn’t science, it is politics.