The UK Labour Party recently won a landslide election victory, marking the end of 14 years of Conservative government. This major political change has implications for carbon dioxide removal (CDR) in the UK.
Labour has made accelerating progress towards net zero a key pillar of its policy platform and aims to re-establish the UK as a global leader on climate change.
Under the previous government, the UK took significant steps to support the CDR industry:
- Pledged to invest up to £100 million into CDR research and development through the Direct Air Capture and Greenhouse Gas Removals Innovation Competition
- Planned to deploy 5 million tonnes per year of engineered CDR by 2030
- Announced a Contracts for Difference scheme for CDR like that used to scale up renewable energy
- Confirmed that CDR will be incorporated into the UK Emissions Trading Scheme (ETS) and began consulting on how to operationalize that
Given their pro-climate policy stance, the new government should continue these initiatives and go even further.
In the short term, the government will need to set rules for what CDR will qualify for inclusion in the UK ETS. The government must move quickly on this, supporting as many CDR pathways as possible, given the urgent need to scale the sector. The government should set rules that ensure high standards, but avoid granular detail that might inhibit innovation and slow down the rule-making process. The government should also set clear rules about how companies can use CDR credits, ensuring that where companies buy high quality, permanent CDR credits they can use them to make environmental claims.
There are signs that the new government may build on these existing measures, already announcing new initiatives that may benefit the CDR industry. Earlier this week, the government launched a £7.3 billion National Wealth Fund to make investments in green tech, with a focus on high risk, first-of-a-kind investments and £1 billion earmarked for carbon capture technologies. There is also a focus on building transport and storage infrastructure that may benefit CDR firms in the UK. These are a great start, but there is scope to go further and use other levers to support the sector.
For example, there are opportunities around public procurement and financing. The new government should look to follow the model of countries like the US, Canada and Denmark by directly financially supporting CDR and driving high standards through procurement decisions that support the development of the sector.
It is clear that CDR has a vital role to play in enabling the UK to meet its climate targets. With the right balance of rule-making, incentives and financial support for the sector, the new government has a real opportunity to help the UK CDR sector flourish and take a leading role in this industry. We look forward to working with them to maximize the potential of this sector in the UK.
