The UK government has committed to back the development of low-carbon hydrogen and CCUS with a funding package of up to £21.7b ($28.4b) over 25 years.

The funding will be allocated across the country’s first two low-carbon clusters—HyNet and East Coast in northern England—which were prioritised by the previous government as “track one” projects.

The funding is expected to be allocated mainly via CfDs, although these contracts have yet to be signed, a government official said. Private sector investment across the two hubs is expected to reach £8b, according to the government.

“Today’s announcement will give industry the certainty it needs—committing to 25 years of funding in this groundbreaking technology—to help deliver jobs, kickstart growth, and repair this country once and for all,” said Kier Starmer, UK prime minister.

“HyNet will become one of the first low-carbon clusters in the world” Descalzi, Eni

The previous government, which lost power in July, had pledged £20b support for CCS over 20 years. It had also earmarked a second wave of track-two cluster projects to receive funding. The current government made no mention of track-two projects in its latest funding announcement.

The government provided few details on the initial allocation of funding, saying it had reached “economic agreement” with the developers of projects forming the HyNet and East Coast clusters. The funding is expected to be allocated mainly via CfDs though these contracts have yet to be signed, a government source said.

Both clusters include low-carbon hydrogen projects with CCS, with startup scheduled for before 2030. The East Coast Cluster is led by a joint venture between oil majors BP and TotalEnergies, and Norwegian state-owned energy firm Equinor. Projects in the cluster include two of the UK largest blue hydrogen plants: Equinor’s H2H Saltend and BP’s H2Teesside.

“The UK will continue to be a key market for Equinor, building on our history of significant energy provision along its east coast, which is transitioning from traditional oil and gas demand to renewables and low-carbon options like CCS and hydrogen,” said Alex Grant, SVP and head of country, UK for Equinor.

The HyNet cluster includes a large-scale blue hydrogen project under development by EET Hydrogen, a division of India-owned EET, as part of a major low-carbon overhaul of the Stanlow refinery.

Italian energy firm Eni is developing the Liverpool Bay CO₂ transport and storage project, which will take emissions from HyNet to offshore storage sites. The company said it had secured the government’s “commitment and funding for the granting of an economic licence” for the project.

“HyNet will become one of the first low-carbon clusters in the world and the project will decarbonise one of the key energy-intensive industrial districts as well as unlock significant economic growth in this region of the UK,” said Eni CEO Claudio Descalzi.

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Author: Stuart Penson