UK Bets On Contracts For Difference To Scale Carbon Removal – Carbon Herald

UK Bets On Contracts For Difference To Scale Carbon Removal – Carbon Herald

 

UK Greenhouse Gas Removal Strategy: A Framework for Achieving Sustainable Development Goal 13

The United Kingdom has launched its Greenhouse Gas Removals (GGR) Business Model, a strategic policy framework designed to accelerate the deployment of carbon removal technologies. This initiative is a critical component of the UK’s commitment to its net-zero targets and directly supports the objectives of Sustainable Development Goal 13 (Climate Action) by creating a viable pathway for atmospheric carbon dioxide reduction.

Core Policy Mechanisms and Alignment with SDGs

The business model establishes several financial mechanisms to de-risk investment and foster innovation, aligning with SDG 9 (Industry, Innovation, and Infrastructure) and SDG 7 (Affordable and Clean Energy).

  • Contract for Difference (CfD): A 15-year contract provides revenue stability for GGR projects. It guarantees a “strike price” for carbon removal, shielding developers from market volatility and encouraging long-term investment in climate solutions.
  • Capital Grants: To overcome significant upfront costs, the model offers grants covering up to 50% of eligible construction costs, directly promoting the development of resilient, green infrastructure as outlined in SDG 9.
  • Price Discovery Incentive: An additional 5% bonus on credit sales incentivizes developers to secure the highest possible market value, fostering a competitive and sustainable market for carbon removals.
  • Cost Pass-Through: Transport and storage costs for captured CO2 are reimbursed, removing a key logistical and financial barrier to large-scale deployment.

Technological Scope and Standardization

The policy advances innovation in key climate technologies, contributing to the targets of SDG 9.

  1. Eligible Technologies: Initially, the framework is open to Bioenergy with Carbon Capture and Storage (BECCS) and Direct Air Carbon Capture and Storage (DACCS) projects. The inclusion of BECCS also supports progress toward SDG 7 by integrating renewable energy with carbon removal.
  2. Quality Assurance: Interim methodologies from the British Standards Institution will ensure high-quality implementation until a comprehensive UK GGR Standard is finalized, building trust and credibility in the emerging sector.

Strategic Implications and Challenges for SDG Implementation

While the GGR model is considered a turning point for the UK’s climate strategy, its implementation presents both opportunities and challenges for achieving sustainable development outcomes.

Opportunities for Climate Action and Economic Growth

The long-term government support signaled by this policy is expected to accelerate investment, create green jobs, and foster economic growth in line with SDG 8 (Decent Work and Economic Growth). This framework represents a critical milestone achieved through multi-stakeholder collaboration between government, investors, and technical experts, embodying the principles of SDG 17 (Partnerships for the Goals).

Barriers to Inclusive Deployment

  • Complexity: The CfD mechanism’s complexity may pose a barrier for smaller companies, potentially limiting broad participation in the carbon removal market.
  • Standardization Delays: The timeline for finalizing technical standards could slow deployment and impact the UK’s competitiveness relative to regions with more agile regulatory frameworks, such as the EU.

Integration with UK Emissions Trading System (ETS)

To ensure policy coherence and enhance its climate impact, the UK plans to integrate technological carbon removals into its Emissions Trading System (ETS).

Strengthening Climate Policy for SDG 13

This integration is a significant step toward creating a unified carbon market that values both emissions reductions and removals.

  1. Timeline: The ETS Authority aims to include GGR by the end of 2028, with full integration targeted for 2029.
  2. Environmental Integrity: The gross cap on emissions allowances will be maintained, ensuring that removals supplement, rather than replace, decarbonization efforts across the economy.
  3. Market Innovation: The potential creation of differentiated “removal units” is under consideration, which could further refine the market’s ability to drive progress toward net-zero emissions.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

  • SDG 13: Climate Action

    The entire article focuses on the UK’s strategy to combat climate change by scaling up “Greenhouse Gas Removals (GGR)” technologies to meet “net-zero targets” and reduce atmospheric CO2, which is the core objective of SDG 13.

  • SDG 9: Industry, Innovation and Infrastructure

    The article discusses government support for developing and deploying new “carbon removal technologies” like BECCS and DACCS. This involves creating new infrastructure and fostering innovation in the industrial sector, directly aligning with SDG 9’s goal to build resilient infrastructure and promote sustainable industrialization.

  • SDG 7: Affordable and Clean Energy

    The policy specifically supports “Bioenergy with Carbon Capture and Storage (BECCS),” a technology that generates energy while capturing carbon. This relates to SDG 7’s aim to ensure access to clean and modern energy, as the policy promotes investment in clean energy technology and infrastructure.

  • SDG 17: Partnerships for the Goals

    The article highlights that the new policy framework is a result of “years of collaboration between government, investors, and technical experts.” This public-private partnership model is central to SDG 17, which emphasizes the need for collaboration to achieve sustainable development goals.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 13: Climate Action

  • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article is a prime example of this target in action. The UK government’s “Greenhouse Gas Removals (GGR) Business Model” is a national policy and a “cornerstone of its strategy” designed specifically to integrate climate action (carbon removal) into its economic and industrial planning to meet “climate commitments.”

SDG 9: Industry, Innovation and Infrastructure

  • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable… with greater adoption of clean and environmentally sound technologies. The policy’s goal to “scale carbon removal technologies” like BECCS and DACCS directly supports this target. The financial mechanisms, such as the “capital grant covering up to 50% of eligible construction costs,” are designed to facilitate the adoption of these clean technologies and the building of new, sustainable infrastructure.

SDG 7: Affordable and Clean Energy

  • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology. The article describes a national policy, but its focus on providing financial incentives like the “15-year Contract for Difference (CfD)” and capital grants for technologies like BECCS is a direct method of promoting investment in clean energy infrastructure, aligning with the essence of this target.

SDG 17: Partnerships for the Goals

  • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The article explicitly states that the policy framework is a “critical milestone’ that reflects years of collaboration between government, investors, and technical experts.” This describes the exact type of public-private partnership that Target 17.17 aims to promote for achieving sustainable goals.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

SDG 13: Climate Action

  • Implied Indicator: Total greenhouse gas emissions removed. The primary goal of the “Greenhouse Gas Removals (GGR) Business Model” is to scale up technologies that remove CO2. Measuring the total tonnage of CO2 removed by projects supported by this model would be a direct indicator of progress.
  • Implied Indicator: Existence and implementation of a national strategy for climate change mitigation. The article itself, describing the GGR business model as a “cornerstone of its strategy to… meet net-zero targets,” serves as evidence of this indicator. Its successful implementation would be a measure of progress.

SDG 9: Industry, Innovation and Infrastructure

  • Implied Indicator: Total investment in carbon removal technologies and infrastructure. The article details several financial mechanisms, including a “capital grant covering up to 50% of eligible construction costs” and a “15-year Contract for Difference (CfD).” The total public and private funds mobilized through these mechanisms would be a key indicator of investment in clean technology.
  • Implied Indicator: Number of carbon removal projects (BECCS and DACCS) deployed. The policy is designed to “support early-stage projects” and achieve “large-scale deployment.” Tracking the number and operational capacity of these projects would measure the adoption of these new technologies.

SDG 7: Affordable and Clean Energy

  • Implied Indicator: Installed capacity of clean energy generation from BECCS projects. Since BECCS is an eligible technology, measuring the energy generation capacity of the projects funded under this model would indicate progress towards clean energy infrastructure.

SDG 17: Partnerships for the Goals

  • Implied Indicator: Number of public-private partnerships for sustainable development. The article refers to the policy as a product of “collaboration between government, investors, and technical experts.” The number of projects funded through the GGR model, each representing a partnership, would serve as an indicator.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

SDGs Targets Indicators
SDG 13: Climate Action Target 13.2: Integrate climate change measures into national policies, strategies and planning.
  • Existence and implementation of the Greenhouse Gas Removals (GGR) Business Model as a national strategy.
  • Total greenhouse gas emissions removed by supported projects.
SDG 9: Industry, Innovation and Infrastructure Target 9.4: Upgrade infrastructure and industries with clean and environmentally sound technologies.
  • Total public and private investment mobilized for carbon removal technologies (BECCS, DACCS).
  • Number and operational capacity of large-scale carbon removal projects deployed.
SDG 7: Affordable and Clean Energy Target 7.a: Promote investment in energy infrastructure and clean energy technology.
  • Installed capacity of clean energy generation from BECCS projects funded by the policy.
SDG 17: Partnerships for the Goals Target 17.17: Encourage and promote effective public-private partnerships.
  • Number of GGR projects established through collaboration between government, investors, and technical experts.

Source: carbonherald.com