- This report explores two distinct subsidy schemes with different market characteristics, one being a business model for Industrial Carbon Capture and the other a business model for Waste Industrial Carbon Capture. DESNZ, however, referred these together because they share the same enabling legislation, payment structure and both support the deployment of similar carbon capture technology.
- This Scheme is designed to incentivise industrial and waste management facilities to deploy and operate CCUS technology, they have an estimated combined budget of £8.3 billion.
- Our key takeaways from the Subsidy Advice Unit (SAU) report are:
- Assessments need to consider in detail how negotiations with beneficiaries can lead to the minimum necessary revenue support. For example, here, this should have taken into account key drivers of the subsidy size, rate of return on capital (the capex payment) and strike price (the opex payment).
- Assessments must explicitly consider how the impact to competition can change over the lifetime of the Scheme.
- Where beneficiaries are active in the relevant sectors, such as energy from waste (a form of power generation) here, thorough consideration of Principle A and specifically the energy and environment principles should be made.
- It is useful for assessments to consider the impacts of other complementary government interventions within any wider programmes which aims to remedy the market failures identified.
- Assessments should provide evidence to show that absent the subsidy the project would not be able to access required private financing.
Department for Energy Security and Net Zero, Industrial Carbon Capture Business Model and Waste Industrial Carbon Capture Business Model Schemes
Posted in Subsidy Advice Report Tracker.