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£1bn commitment to decarbonisation

Priscilla Hall, Head of our London Office who leads the firms Construction and Green Energy teams, comments on the announcement by the Government to provide £1bn funding towards UK decarbonisation as part of its Industrial Decarbonisation Strategy.


The Industrial Decarbonisation Strategy has been described as the blueprint to clean up the UK’s carbon contribution, transitioning energy away from fossil fuels with an emphasis on heavy industry whilst creating new jobs to help levelling up the UK economy. Currently heavy industry such as iron, cement and steel account for the release of 40 million tonnes of C02 each year, a third of all business emissions. The strategy will support regional projects around the UK with a focus on green hydrogen and carbon capture and storage.

Six clusters across England, Wales and Scotland have been chosen and will receive £170m which is being matched by industry to the tune of £261m to support these projects. The challenge is to increase competitiveness within industry, promote green growth, secure 1.5 million jobs and be able to take advantage of future export opportunities. The six clusters which will receive funding from the Industrial Carbonisation Fund are.

  • Teesside – £52 million, Net Zero Teesside & Northern Endurance Partnership. The aim is to decarbonise the industrial cluster by the mid to late 2020s, with a gas power plant capable of blending CCUS with renewable energy, whilst transporting CO2 offshore
  • Merseyside – £33 million, HyNet Project. A hydrogen energy and carbon capture, usage and storage project including repurposing of old oil and gas facilities as new carbon transport and storage.
  • Humber – £21 million, The Zero Carbon Humber Partnership Project. The goal is to develop the world’s first at-scale low carbon hydrogen production plant ‘H2H Saltend’, which would power stations and industrial sites across the Humber.
  • Humber – £12 million, Humber Zero. The creation of a carbon capture and hydrogen hub which gives affordable and low carbon energy supply and energy storage to industry and the national grid.
  • Aberdeenshire – £31 million, Net Zero Infrastructure. This will be supporting Scotland’s existing Net Zero Infrastructure project giving funding to both on and offshore engineering studies, with Eastern Scotland having a number of industrial sites that can access carbon storage resources underneath the North Sea.
  • Pembrokeshire – £20 million, Hydrogen. The investment will go towards distributing hydrogen throughout the Welsh English border, whilst developing carbon capture, use and storage.

In addition to the six clusters, a continued focus on decarbonising the public sector was announced, with a second tranche of funding being made available for the Public Sector Decarbonisation Scheme. The second phase will see £75 million of grant funding. It will open to applications on 7 April, closing once enough high-quality applications have been presented. All projects chosen, need to be completed by the end of March 2022.

Biomass has been included as an appropriate technology in the second phase. Biomass based applications will need to fully consider the effect on air quality, planning rules and sustainability of the fuel source when proposing to decarbonise their heating through biomass.

In addition to the inclusion of biomass, there will be an increased focus on heat decarbonisation, taking a whole building approach, incorporating various factors including sustainability, cost effectiveness, safety, aesthetics and others. It is worth noting that heating systems which are fossil fuelled or coming close to the end of its life have also been added to the criteria, potentially indicating new priorities.

As in phase one, Salix Finance will administer the scheme with details who can apply, grant size, carbon cost thresholds and the application process which can be found via Phase 2 Public Sector Decarbonisation Scheme | Salix Finance.

Phase one, which closed in January this year provided funding to 429 projects, with an average value of over £2.1 million per project, with education institutions, NHS, local authorities and other government bodies benefiting.

We would encourage all public sector organisations to have a look at the opportunity and to act fast. Those who apply first have a greater chance of success if the application meets requirements as funding will be based on a first come first served basis.


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