UK signs contracts for carbon capture projects

### London Greenlights Flagship CCS Contracts

The UK government has signed contracts for two commercial-scale carbon capture and storage (CCS) projects, targeting emissions reduction in energy-intensive industries and creating 500 skilled jobs. Announced on Thursday, the agreements involve Heidelberg Materials’ Padeswood cement works in north Wales and Encyclis’s Protos waste-to-energy plant in Ellesmere Port, northwest England.

These projects aim to capture 1.2 million metric tons of carbon dioxide annually, with emissions transported via pipeline for permanent storage under the seabed through Eni’s Liverpool Bay storage project.

#### Cement and Waste-to-Energy in Focus

The government underscores the necessity of deploying CCS at scale to meet the UK’s net-zero emissions target by 2050. Cement and waste-to-energy plants are challenging to decarbonise, where alternatives like electrification or fuel switching cannot fully eliminate carbon emissions.

Heidelberg Materials plans to establish the world’s first carbon capture facility for fully decarbonised cement production, with construction slated to commence later this year and the first net-zero cement expected by 2029. “Our constructive partnership with the UK government has allowed us to reach this major milestone, which is fantastic news, not just for us, but for the industry as a whole,” stated Simon Willis, CEO of Heidelberg Materials UK.

Encyclis’s Protos project will combine CCS with waste-to-energy, addressing the sector’s emissions concerns by capturing and storing carbon from waste combustion.

#### Financing CCS at Scale

Although the contract values remain undisclosed, these projects fall under Britain’s £9.4 billion allocation for CCS technology announced in June. This funding aims to accelerate deployment in industrial clusters, mitigate investment risks, and attract private capital to projects hindered by high upfront costs and uncertain revenue streams.

CCS technology has existed for decades but often faces economic challenges. The UK’s contracts aim to bridge this gap by providing revenue certainty for developers and integrating projects into regional decarbonisation plans.

The Liverpool Bay storage hub, managed by Italy’s Eni, plays a crucial role in creating shared transport and storage infrastructure, lowering barriers for multiple emitters to connect to the system and reducing duplication and costs.

#### Strategic and Political Stakes

For London, supporting CCS projects holds industrial and political significance. These initiatives are anticipated to bolster regional employment and maintain the competitiveness of UK manufacturers under stringent global climate regulations. The government projects that up to 50,000 jobs could be supported across the broader CCS value chain by 2030 if deployment expands.

The UK is positioning itself as a CCS leader amidst Europe’s race to establish cross-border carbon storage networks. The EU targets capturing 50 million tons of CO2 annually by 2030, while Norway’s Longship project is already under construction. As Britain is no longer part of the EU, it signals an intent to compete for industrial investment and global relevance in climate technologies.

#### Implications for Executives and Investors

For executives in hard-to-abate sectors, the UK’s contracts set a precedent for government intervention in bridging the CCS cost gap. Industrial clusters with shared transport and storage are emerging as a model to reduce costs and provide certainty for private developers.

Investors will monitor whether the UK’s support leads to scalable returns and replicable business cases. Policymakers must establish stable, long-term frameworks to prevent CCS from remaining limited to pilot projects instead of achieving the scale necessary to impact emissions trajectories meaningfully.

#### Global Significance

The UK’s decision coincides with the International Energy Agency’s assertion that global CCS capacity must expand over thirty-fold by 2030 to align with net-zero scenarios. For governments balancing industrial competitiveness with climate obligations, the UK’s contracts are being scrutinised as a test case for whether public spending can unlock sustainable private-sector investment in CCS.

If successful, the Padeswood and Protos projects could serve as templates for other countries aiming to protect heavy industry while reducing carbon emissions. For global business leaders, the message is clear: CCS is transitioning from concept to contracted delivery, and the economics of participation may shift rapidly as policy frameworks mature.

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