Expert Comment: Can the UK deliver the carbon storage needed to meet climate goals without taxpayer billions?

Meeting our climate targets requires rapidly reducing fossil fuel use. But we're far off track, and the science is clear: to reach net zero by 2050, we will also need to permanently store vast amounts of carbon dioxide (CO2) underground. This is especially crucial for some industries, such as cement manufacturing, where there is currently no scalable way to eliminate emissions entirely without carbon capture and storage (CCS) - a process that captures CO2 from industrial facilities and permanently stores it underground. Additionally, to compensate for remaining and historical emissions, we need carbon dioxide removal (CDR) technologies, which remove carbon dioxide from the atmosphere.

Ingrid Sundvor

However, a February 7th report from the House of Commons Public Accounts Committee questioned whether this funding is being well spent. Their concerns highlight a key issue: while the funding is important for first-of-a-kind projects, the billions of pounds from government will only cover about a quarter of the carbon storage needed – and just 2% of the UK's total emissions.

This raises a crucial question: how can we scale up carbon storage without indefinitely relying on taxpayer billions, especially during a cost-of-living crisis?

Current plans to rely primarily on markets to scale up storage from the 2030s are unlikely to attract sufficient private investment, potentially jeopardising our net zero targets and prolonging industry reliance on government subsidies. 

Ingrid Sundvor and Mirte Boot, Co-founders of the Carbon Balance Initiative and Research Associates at Oxford Net Zero

The Policy Gap: Why Current Plans Fall Short

In response to government interest in long-term solutions for carbon storage policy, we spearheaded the ‘Markets & Mandates’ research project, conducting extensive consultation with over 20 expert stakeholders across government, academia, industry, and civil society. Our analysis reveals significant risks with the current policy approach.

The government plans to transition from subsidies to market mechanisms like the UK ‘Emissions Trading Scheme’ in the 2030s, a market where companies must buy permits to emit carbon dioxide. However, carbon prices alone are unlikely to drive sufficient private investment in storage infrastructure. The result? A high risk of either missed climate targets or continued reliance on public funding.

A Smarter Way Forward: Carbon Storage Mandates

Instead, we propose a mixed policy approach that combines existing market mechanisms with a carbon storage mandate, specifically a Carbon Takeback Obligation (CTBO). This policy would require fossil fuel producers and suppliers to permanently store a rising percentage of their CO2 emissions. The analysis highlights how this could create a self-sustaining market for carbon storage while protecting public finances.

Making carbon storage a condition of continued fossil fuel operation provides a practical pathway to net zero. The fossil fuel industry has both the resources and technical expertise to deliver the storage capacity we need. 

Ingrid Sundvor and Mirte Boot, Co-founders of the Carbon Balance Initiative and Research Associates at Oxford Net Zero

Think of it as ‘extended producer responsibility’: just as manufacturers are increasingly responsible for recycling their products, fossil fuel producers would be responsible for permanently storing any CO2 their products release. This enables a reduction of taxpayer subsidies while costs are fairly distributed across the fossil fuel value chain.

This isn't just about shifting costs from taxpayers to industry. A well designed CTBO should create a clear, predictable policy framework that drives investment over the long term while upholding the 'polluter pays' principle, a cornerstone of UK environmental law.

Of course, policy design matters. Our research acknowledges challenges such as industrial competitiveness and carbon leakage risks (where industries move to other jurisdictions with weaker regulations). Storage mandates must be part of a broader transition strategy, not a license to continue business as usual.

Mirte Boot

• Commission a detailed Treasury & Department of Energy Security and Net Zero analysis of mandate implementation pathways to 2035.
• Integrate storage obligations into the Industrial Decarbonisation strategy.
• Establish clear timelines for phasing out public subsidies while ensuring UK industries remain competitive.

The climate crisis demands urgent action – and we have a clear opportunity to do it right. Our research shows that innovative policy thinking can help deliver necessary carbon storage capacity while protecting public finances and ensuring costs are distributed fairly.

The full report provides a detailed roadmap for policymakers, outlining how carbon storage mandates could create a self-sustaining storage market. 

As an NGO born out of Oxford Net Zero and working closely with academia, the Carbon Balance Initiative represents a new model for translating academic research into practical policy solutions. Through research and cross-sector engagement, it develops resilient climate policies that integrate perspectives from government, civil society, industry and academia.