LONDON  June 20 – UK government policies supporting blue hydrogen and gas-power CCS significantly under-estimate upstream LNG gas emissions and risk derailing UK net zero targets, with emissions consuming 22%-63% of the UK’s Sixth Carbon Budget – finds a new Carbon Tracker report coming out on Thursday.

The report Kind of Blue calculates the carbon intensity of blue hydrogen and gas power with CCS, factoring in upstream emissions from natural gas extraction, processing, and transport. This is crucial for the UK and Europe, which are increasingly reliant on imported LNG, particularly from the USA, following the 2022 energy crisis.

Of particular concern to UK climate targets and the remaining carbon budget, there is great uncertainty on upstream emissions that are often under-reported. For example, independent studies suggest that the carbon intensity of LNG from the USA could be 80% to 150% higher than what is reported by the UK’s North Sea Transition Authority (NSTA).

Carbon Tracker Associate Analyst and report author Lorenzo Sani said: “Blue hydrogen and Gas-CCS projects should not be considered low-carbon unless, on top of achieving high carbon capture rates, they can guarantee to only utilise natural gas with low upstream emissions. Green hydrogen, produced from renewable electricity, remains the only truly low-emission pathway.”

Blue hydrogen and gas-CCS projects will increase gas demand. If all such projects proposed by the UK’s Net Zero strategy are built, by 2035 they could generate demand double the projected domestic UK gas production. This, in addition to the inevitable decline of North Sea production and the ongoing expansion of LNG import capacity, will lead to an increase in LNG imports which are associated with high carbon emissions, especially if sourced from the USA.

None of the major political parties have specific policies in their published manifestos to rationalise CCS use and address current gaps in the UK emissions regime. Both the Conservative and Labour party pledge support for CCUS in their manifestos with Labour hinting at the use of CCUS in the power sector.

High upstream emissions could more than triple the carbon intensity of blue hydrogen, exceeding UK and EU low-carbon fuel standards. Even with the best technology, blue hydrogen from imported LNG could emit up to 2.5 times more than the UK’s low carbon hydrogen standard (LCHS). Similarly, the reported climate benefits of gas-CCS compared to unabated power plants often ignore or underestimate upstream emissions, actual emissions reductions could be 30% to 60% lower than claimed.

However, the UK’s current Environmental Assessment framework is flawed, and does not adequately account for upstream emissions.  If all gas-based CCUS projects in the Net Zero strategy are built and run on imported LNG, by 2035, they could emit 210-600 million tons of CO2 equivalent over their lifetime.

Dr Andrew Boswell who is taking the UK Government to the High Court in July over the assessment of upstream emissions in recent planning approval of Gas-CCS Projects in Teesside said:  “UK Ministers promoted and subsidised these new natural gas developments whilst ignoring the very severe climate impacts.  With the Net Zero Teesside project, minister Claire Coutinho even agreed that upstream emissions had significant adverse climate impacts when approving it. This report shows that the decision was made using outdated Government assumptions that do not correctly forecast future emissions, and the minister was only seeing around half the real carbon footprint. An urgent review of CCUS and hydrogen policy is required.”

The report delves into two case studies – H2Teesside and NZT Power – claiming that their lifetime CO2 emissions could be two to three times larger than reported in their Environmental Impact Assessment (EIA), this is particularly critical as these projects are likely to utilise LNG imported from a recently announced new LNG terminal in the area[1]. The same issues have been found in the environmental reporting of other similar projects, such as SSE’s Peterhead CCS power plants.

Our analysis highlights a significant regulatory blind spot that risks allowing “low-carbon” projects to have much higher emissions than reported. Upstream emissions are the largest source of emissions for forthcoming blue hydrogen and gas-CCS projects, yet their importance is underestimated in current regulations and reporting frameworks.

Contrary to recent decisions by the Secretary of State[2], our findings indicate that blue hydrogen and gas-CCS projects could hinder the UK’s ability to meet national targets and negatively impact the UK Carbon Budgets unless they use natural gas with low upstream emissions. Thus, if conditions for low-carbon blue hydrogen and gas-CCS cannot be met, a stronger focus should be placed on green hydrogen from renewable sources and alternative flexibility technologies, such as long-duration energy storage, green hydrogen turbines and pumped hydro.

Summary of UK Policy Recommendations – deemed relevant for wider EU

  1. Adopt strong monitoring and reporting standards for imported fossil fuels.
  2. Update the project approval regime and low-carbon standards to properly reflect the risks of future gas imports associated with high emissions.
  3. Update the energy transition strategy to reduce reliance on blue hydrogen and gas-CCS, in favor of more renewables, green hydrogen and energy storage.

For further information on the policy implications of this report, please refer to pages 6-7 and pages 21-28 which sets out the implications for Environmental Impact Assessments (EIA) for individual projects and the UK’s wider Net Zero Strategy.

 

ENDS

This story is embargoed for Thursday 20 June, 00:01 GMT

Once the embargo lifts the report can be downloaded here:  https://carbontracker.org/reports/kind-of-blue/

For more information and to arrange interviews please contact:

Joel Benjamin              

jbenjamin@carbontracker.org  

+44 7429637423

 

Further Background:

In March 2024, Carbon Tracker’s report: Curb Your Enthusiasm: Bridging the gap between the UK’s CCUS targets and reality warned: The UK Government’s CCUS strategy risks locking consumers into a high-cost, fossil-based future, despite cleaner and cheaper alternatives being available.

UK government strategy on CCUS.

  1. The £20 billion funding was approved in the 2023 spring budget (here) and details can be found in the Powering Up Britain plan (here).
  2. The most recent collection of Government targets, ambition and strategy on CCUS is in the updated vision published in December (here)
  3. The CCC will release its advice for the 7th Carbon Budget in early 2025, and this will likely contain updated targets for CCUS.

DESNZ says:

“As we import more gas, we are also mindful that the level of greenhouse gas emissions from overseas extraction, liquefaction and shipping of LNG varies considerably and is, in many cases, higher than UKCS [sic. UK Continental Shelf) production]. NSTA research shows that the production and transportation emissions of CO2 associated with LNG imports are on average over quadruple the global emission intensity of UKCS gas production. Further research and analysis is needed to develop our understanding of the methane emissions intensity of different sources of gas supply. We will explore ways to minimise methane and CO2 emissions from LNG production to ensure the emissions intensity of GB gas supply is as low as possible.“[3]
https://assets.publishing.service.gov.uk/media/656fae319462260721c56977/gas-storage-and-flexibility-update.pdf

 

About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org

 

[1] WaveCrest Energy 2024 https://wavecrestenergy.com/tfrp/

[2] For example see the recent approval of NZT Power https://national-infrastructure-consenting.planninginspectorate.gov.uk/projects/EN010103/documents

[3] https://assets.publishing.service.gov.uk/media/656fae319462260721c56977/gas-storage-and-flexibility-update.pdf