Eni has reached an agreement in principle with the UK Government over the regulatory framework which will govern its HyNet carbon capture and storage (CCS) project in the UK.
Eni (MIL:ENI) confirmed on Tuesday it had signed a ‘heads of terms’ agreement with the Department of Energy Security and Net Zero (DESNZ), setting out key terms and conditions for “economic, regulatory and governance” models for the transport and storage of CO2 at the scheme in the northwest of England.
The announcement coincided with the Carbon Capture and Storage Association’s (CCSA) annual conference in Westminster, where Secretary of State Claire Coutinho also announced a plan by government to publish its vision for the CCUS sector later in the year.
Alongside the East Coast Cluster, HyNet was selected as one of the two Track-1 CCUS clusters to receive funding from the UK government in November 2021.
Eni leads the CCS portion of consortium, which intends to store up to 4.5 million tonnes of C02 per year before the end of the decade, rising to a potential 10 million tonnes from 2030 onwards. Additional linked facilities would also supply up to 4GW green and blue hydrogen to consumers around the region.
The Italian energy major said principles outlined in the new heads of terms would allow the completion of “definitive agreements” supporting the scheme in the coming months.
© HyNetEni secured a CO2 appraisal and storage license for Liverpool Bay in October 2021, as well as a further permit to examine storage potential at the Hewett field as part of the UK’s first carbon storage licensing round this summer.
The latter would enable development of a second UK CCS hub supporting decarbonisation at the Bacton Energy Hub and Thames Estuary on the east coast.
It said development of the HyNet cluster would help to preserve “thousands” of local jobs by supporting the decarbonisation of cement, energy, chemicals and by attracting investment into new industries.
Eni CEO Claudio Descalzi, commented: “CCS will play a critical role in energy transition, cutting safely emissions from industries that currently don’t have the technology to do so another way.
“Today’s agreement is a significant step towards establishing a significant new industry for the country. The Heads of Terms outline a regulated model that can help the CCS industry achieve scale and provide the certainty needed for private sector investment.
“This kind of close cooperation with the public sector will be critical to developing the kind of groundbreaking projects we need to address the climate challenge”.
It follows warnings from industry earlier this year that other key elements of the HyNet cluster could face years of waiting unless government accelerated its discussions on hydrogen business models too.
However carbon capture advocates have been more positive, with CCSA UK director Olivia Powis suggesting this month that there has been “no signal” the government’s £20bn of planned funding for CCS would be at risk following a general election.
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