Public and private finance joins up to develop carbon capture

The UK National Wealth Fund has invested alongside producers to mitigate the carbon impact of concrete production in the Peak District.

The National Wealth Fund (NWF) was created by the UK government last year to help industries decarbonise and accelerate Britain’s transformation into a clean-energy superpower. It has committed to invest at least £5.8 billion by 2030 in hydrogen, carbon capture, ports and supply chains, gigafactories and electric-vehicle supply chains, and steel.

The fund’s latest major investment is in carbon capture, an increasingly popular method of decarbonisation, committing £28.6 million to the Peak Cluster project in Derbyshire and Staffordshire.

A further £31 million will be provided by private partners, including cement and lime producers Holcim, Tarmac, Breedon and SigmaRoc, as well as Progressive Energy and Summit Energy Evolution (part of the Sumitomo Corporation).

The investment will go towards the building of a pipeline to capture CO2 emissions from cement and lime factories for storage deep below the Irish Sea, decarbonising a vital industry and potentially creating thousands of jobs.

Homegrown supply of sustainable cement and lime

The Peak Cluster project is the world’s largest cement decarbonisation project and has the potential to stop three million tonnes of CO2 from entering the atmosphere every year. It will secure a homegrown supply of sustainable cement and lime, critical for building homes and infrastructure.

Cement is the key ingredient in concrete, the world’s most widely used material, and cement production at present is responsible for 7.5% of global CO2 emissions. The sector is regarded as one of the most difficult to decarbonise, as cement and lime cause high emissions in the manufacturing process, which cannot be reduced through transitioning to low-carbon fuels.

Capturing the carbon dioxide emitted from concrete production is regarded as the only viable way the cement and lime industry can operate in a low-carbon economy.

By investing alongside industry, supporting early development risk reduction and providing the critical financing for the Peak Cluster through its development process, the NWF will remove some of the barriers for private investment to further develop the project.

‘Capital must be committed now’

“Substantial private investment, deployed at risk, will be needed to develop and deliver carbon capture projects across the UK,” said John Flint, CEO of the NWF. “Capital must be committed now, especially in hard-to-abate sectors such as cement and lime, to ensure a pipeline of projects is ready for deployment and the UK is able to meet its ambitious carbon-capture targets.”

The NWF has played a key role in structuring the transaction to crowd in private sector co-investment while taking early development risk to catalyse future investment, Flint said, amplifying government policy and ultimately removing the barriers for private investors to support this project.

Through its support for the Peak Cluster, it is also building the market and stimulating largescale future investments as the project progresses and facilitating Spirit Energy’s development of Morecambe Net Zero, the UK’s largest CO2 store, for which a carbon-capture pipeline is essential.

As around 40% of the UK’s cement and lime is produced by companies in the Peak Cluster, the project will make significant inroads into permanently cutting cement industry emissions.