I am extremely grateful for the opportunity to bring this Adjournment debate to the House and to make the case for greater Government support for the greenhouse gas removals sector. First, I thank the sector for engaging so openly with me about its businesses and concerns, the Minister for his continued co-operation on this issue and Dr Alan Whitehead for publishing his extremely important review.
Before entering this place, I spent almost a decade working in renewable energy, and before that on climate impact projects. I would certainly not claim to be an expert on greenhouse gas removals, but, through my work in the renewable energy sector, and now as chair of the all-party parliamentary group on climate technology and the co-chair of the net zero APPG, I have at least become a passionate advocate for the sector.
It has been encouraging to see a Secretary of State and Ministers who genuinely recognise the scale of the climate challenge. However, warm words must now become concrete action if Britain is not to miss yet another opportunity to become a world leader in one of the defining industries of the next century.
Climate change is here. It is happening now. We see it through rising temperatures and increasingly frequent heatwaves, flooding, drought and wildfires. The changing climate is already affecting our communities, businesses and public services. Much of the conversation has rightly focused on reducing our emissions, and let me be clear: decarbonisation must remain our first priority. Every tonne of carbon dioxide we avoid emitting now is better than having to remove it later. However, even if we achieve every single one of our net zero targets—and we absolutely must—we will still have a problem.
Net zero does not remove the carbon dioxide that is already sitting in our atmosphere, which is why this debate is not about carbon capture and storage, but about carbon removal. The Intergovernmental Panel on Climate Change has been absolutely clear that without greenhouse gas removals, keeping global warming within internationally agreed limits becomes effectively impossible.
Today, humanity removes only about 2 billion tonnes annually, 99.9% of which is done by trees and plants. Meanwhile, we continue adding more greenhouse gases to the atmosphere every single year. The scale of the challenge is enormous. Whenever I speak about this issue, someone invariably asks, “Why do we not just plant more trees?” I agree: trees are wonderful, and we should absolutely plant more of them. However, to keep global temperature increases below the 1.5% or 2% target, we would need to remove 10 billion tonnes of carbon dioxide from the atmosphere every single year, which would require us to plant roughly 50 million hectares of new forest annually. That is equivalent to covering the entirety of the UK with trees, twice, every single year. Even the most committed of environmentalists would accept that that approach has practical limitations.
In recognising the challenge of planting enough trees on the land, I wonder whether my hon. Friend has thought more about capturing carbon in the ocean. He and I share the Lyme Bay marine protected area in our constituencies. The Vision Group for Sidmouth was telling me that despite covering less than 1% of the ocean floor, seagrass beds are responsible for 15% of its total carbon capture. Does he agree that we can also look to the sea for the capture of carbon?
My hon. Friend and neighbour is absolutely right. There are many exciting nature-based solutions for which I have high hopes. In my role as chair of the all-party parliamentary group on climate technology, my focus today is mainly on the engineered solutions, but we need to consider all solutions to meet the challenge ahead.
I commend the hon. Member for securing the debate. I spoke to him today about this subject and I congratulate him on highlighting environmental issues. Does he agree that we must ensure that all areas of the United Kingdom, including Northern Ireland, receive a fair share of investment? Does he also agree that the Government must ensure that the GGR strategy supports our rural communities, utilising natural land-based solutions rather than just financing large industrial projects elsewhere? Above all, we must protect local jobs and ensure that common sense always prevails.
I believe that we should back any and all solutions that help us face the challenge, and Northern Ireland is as well placed as any part of the UK to offer innovative solutions.
Technology such as direct air capture and engineered removal methods will become an essential part of moving beyond net zero towards net negative emissions. Those technologies are nascent. The businesses that will develop them need to be founded today and to scale over the next decade. They need investment, certainty and confidence if they are to become globally competitive and properly supported.
The encouraging news is that Britain already possesses almost everything needed to succeed. We have world-class universities that produce cutting-edge research, exceptional engineers, innovative start-ups and university spin-outs, globally respected financial services and investors, and advanced manufacturing capability.
The UK’s GGR sector already contributes about £1.2 billion to the UK economy. It has the potential to contribute between £7 billion and £9 billion to GDP by 2050 while supporting more than 100,000 skilled jobs. The countries that build those technologies first will not simply reduce emissions at home; they will be central to global emission reductions for decades to come. Britain should aspire to become the global centre of carbon removal innovation, the home of future climate tech unicorns and a leading exporter of GGR technologies.
Does the hon. Gentleman agree that creating industrial clusters is the best route to bringing in some of the new companies that look to scale up and invest? I recently met UnionDAC, which is looking to invest in Teesside. That is partly because of the huge amount of investment that is coming to the east coast cluster carbon capture, utilisation and storage project, which is creating 3,000 construction jobs as we speak. Does he therefore agree that the Government must continue to maintain the momentum for those clusters and new ones in next year’s spending review to create skilled jobs across the UK?
There is a lot of truth in what the hon. Member has outlined. We see the most rapid transformation and progress where innovation and expertise are clustered.
British innovators are already developing world-leading GGR technologies. The problem is that many of them struggle to raise the long-term investment needed to move from successful demonstrations to commercial deployment. British companies have told me that they will be European or American by the end of next year if the UK does not do more to support them.
The Whitehead review made that point very clearly. It recognised that the United Kingdom possesses many of the ingredients required to become a global leader, but that early-stage GGR companies continue to face significant barriers to scaling up. Many of those businesses require substantial upfront capital before they generate meaningful revenue. Private investors understandably look for long-term certainty and a return on their investment. Without that certainty, investment simply flows elsewhere.
UK start-ups struggle to access patient capital at precisely the moment they need it most. Of all climate tech early start-ups that failed, 62% fail at series A, the start of the so-called valley of death. Britain has repeatedly invented world-leading technologies only to watch other countries commercialise them. We cannot allow that to happen again.
May I congratulate the hon. Member for West Dorset (Edward Morello) on securing a debate on this important topic? I thank him for all his engagement on this and many other issues, and for his leadership on the energy transition. In the rising noise in and outside this place against facts on the climate crisis in front of us today, it is genuinely a relief to have conversations with him about what we can do about the reality. On that, he makes a hugely important contribution to the House. In all my engagements with him, I come away having learned something new; I thank him for that.
I will start where the hon. Gentleman started: by recognising that we cannot put off our response to the climate crisis to tomorrow. We are now living through extremely hot weather caused in part by the action that we did not take to tackle the climate crisis. While this is one of the hottest summers that we have lived through, it is almost certainly one of the coldest summers that we will live through, so every single step we can take to tackle this crisis should be taken.
We absolutely need greenhouse gas removal technologies to reach net zero and to tackle the climate crisis. Such technologies give us a not just a huge opportunity to balance the residual emissions from hard-to-decarbonise sectors, but—as we have said throughout all of the work the Government are doing on the clean power mission and beyond—an exciting opportunity to grow our economy and secure new investment into the UK. When I say that, I mean all parts of the UK, including Northern Ireland, which the hon. Member for Strangford (Jim Shannon) rightly always challenges me on. This is not just the Government’s view; it is firmly the view of the Intergovernmental Panel on Climate Change and our own independent Climate Change Committee. That is why we are looking ahead and investing in these technologies.
Unless I am misunderstanding him, the Minister has committed to making a policy announcement this month. There are only a few more sitting days, and he will know that Mr Speaker does not take lightly policy announcements being made outside the House; this House is where those announcements should be made for scrutiny by Back-Bench MPs. No doubt the Minister’s staff will be scribbling that down.
Question put and agreed to.
House adjourned.
7:26 pm
House adjourned.
If we get this right, GGRs could become one of Britain’s great industrial success stories. If we get it wrong, we will again become purchasers of technologies developed elsewhere. The Government can create the long-term policy framework that gives markets confidence.
The publication of the GGR business model alongside the Whitehead review was an important milestone. The commitment to integrating GGR into the UK emissions trading scheme is another positive step, but companies developing GGRs are making decisions today about where to build their first commercial facilities. Those decisions will determine where future supply chains develop, where highly skilled jobs are created and where intellectual property remains.
What the sector is calling out for are low or no cost policy changes that would make a real difference until the response to the Whitehead review finally stops gathering dust on the Minister’s desk. Solutions could be amending the sustainable aviation fuel mandate, improving access to finance from public finance bodies, voluntary carbon market changes, expanding UK GGR standards to wider methods or endorsing interim standards, a new UK buyers’ club, a regulations audit, departmental sandboxes and standards for the emissions performance standard. We must give the market the certainty it is asking for and the investors the confidence to unlock that potential.
That brings me to what I believe is the single most important proposal that the Government should consider. The answer lies in creating a British carbon bank, a Government-seeded revolving fund that will crowd in private finance. A British carbon bank would provide long-term advanced market commitments for verified GGRs. That would de-risk the purchase for the offtaker as the credits are certified, provide the capital that the GGR project needs to start capturing greenhouse gases and generating carbon credit, and improve investor confidence because there is a guaranteed purchaser. Rather than the Government attempting to fund every project themselves, a British carbon bank would create guaranteed demand for high-quality removals over many years, allowing businesses to secure investment and scale their technologies with confidence.
The Whitehead review recognises exactly this challenge. It concluded that demand certainty will be fundamental if GGRs are to develop at the pace required. Without reliable long-term demand, many technologies will simply struggle to reach commercial scale.
One particularly interesting example is Terraset, a US charity. Rather than relying solely on traditional grant funding, Terraset uses philanthropic finance to early pre-purchase commitments to vetted projects, giving those projects the capital to actually remove greenhouse gases. Those advanced commitments provide early demand, giving companies confidence to develop technologies while demonstrating to investors that a future market exists. These projects deliver verified carbon credits to Terraset, which it then sells to buyers. Any revenue generated is then returned to the fund and gets deployed into new projects. For every $1 it deploys, it unlocks $5 in private finance and achieves a 15% mark-up for credits under this de-risk model. As a result of this profit margin, it is now attracting interest from institutional investors, including pension funds.
A British carbon bank would take that principle and apply it at a national scale. It would provide a clear signal that Britain intends to become the best place in the world to develop, deploy and commercialise greenhouse gas removal. One strength of a British carbon bank model is that it addresses the greatest barrier currently facing the sector: risk. The bank would purchase future carbon removals in advance, holding those credits until they have been independently verified and certified. There is, of course, a risk for the Government that some projects may ultimately fail to deliver the promised removals or not achieve certification. However, that risk can be significantly reduced through robust due diligence and careful product selection, as organisations such as Terraset have already demonstrated successfully.
Importantly, the model also overcomes the current “chicken and egg” problem in the market. Today, many buyers are reluctant to pre-purchase carbon removals because they bear all the delivery risk. By contrast, a British carbon bank would offer only certified verified credits to the market, making them far more attractive to businesses seeking high-integrity carbon removals while simultaneously providing developers with the up-front certainty they need to secure investment and scale their technologies. The market will determine which solutions ultimately prove effective, whether nature-based approaches, direct air capture or entirely new technologies that are yet to emerge. With a relatively small Government investment, we could seed this market, crowding in five or 10 times more in private finance.
Terraset supported Graphyte, which needed early-stage capital to move from planning into commercial deployment. Private buyers recognised the value of the project, but were not yet ready to commit at the scale or speed required. Through its revolving fund, Terraset made an advance commitment of just over $100,000, providing the confidence and working capital that enabled the project to proceed. Once Graphyte had delivered independently verified carbon removals, those credits were purchased by a commercial buyer, with the proceeds going back into the revolving fund to support the next generation of projects.
I believe that a British carbon bank could replicate this revolving model at scale, helping promising British companies bridge the gap between innovation and commercial success. Net zero is today’s problem, and net negative is tomorrow’s, but if we do not start thinking about it now, we will not be ready to meet that challenge. We should be ambitious. We should not settle for participating in the market—we should aim to lead it.
Will the Minister confirm precisely when the Government intend to publish their full response to the Whitehead review, and whether that will be before the House rises for the summer recess? Will he confirm whether the Government are giving serious consideration to the proposal for a British carbon bank or revolving fund to provide the long-term market certainty the sector has consistently called for? If the Government are not yet in a position to introduce longer-term reforms, what interim measures will they take to ensure that promising new UK GGR businesses are supported and not lost overseas while policies are being developed? Finally, will the Minister commit to continuing to work closely with the sector over the coming months, listening to businesses, investors and researchers, so that the UK can seize the opportunity to become a global leader in greenhouse gas removals rather than watching others move ahead?
Carbon does not recognise borders or respect international treaties; it is a global challenge that demands world-leading solutions. I believe that those solutions should be developed here in the UK.
Last year, in our carbon budget and growth delivery plan, we set out how the UK will continue to reduce emissions in a way that lowers bills and secures good jobs, including developing and deploying GGRs at scale. We forecast 0.7 megatonnes of engineered GGRs deployed in 2030, with that figure increasing exponentially to 21.8 megatonnes by 2035. We are laying the groundwork now to support the massive growth that we expect to see in the 2030s, because, as exciting as these technologies are, they are new, and it will take a comprehensive and holistic policy framework to get us to where we need to be.
I will set out six steps, many of which will respond to the points made by the hon. Gentleman. The first is providing support to incentivise private investment through a contractual revenue support mechanism. That is the GGR business model, designed to stimulate private investment in GGRs by providing revenue support under a contract for difference mechanism. It aims to capitalise on growing demand for high integrity GGRs in the voluntary carbon market and, in the longer term, in the UK emissions trading scheme, designed to enable the deployment of GGR projects at scale in the UK while ensuring at all times value for money for taxpayers.
We are employing similar approaches to support energy from waste, with carbon capture and storage through the waste industrial carbon capture business model and large-scale bioenergy with carbon capture and storage, or BECCS, through our power BECCS business model. We are also exploring the case for financing GGR technologies not reliant on CO2 transport and storage infrastructure, such as enhanced rock weathering and CO2 mineralisation in building materials, as we recognise that there are a number of benefits to a diverse portfolio of GGR technologies. No decisions have been made on the particular intervention or mechanism.
I want to reference the point that the hon. Gentleman has raised with me before and he raised today as well on the British carbon bank, or the idea of some kind of revolving fund. It is a serious idea that we will look at carefully, because we recognise that there is a real benefit to having that portfolio in place. We have already invested money, as I will come on to, but looking at interventions like that is important. We will continue to engage with him and the wider sector on how that could work.
Secondly, we are introducing a new standard to ensure that investors and the public have confidence in these technologies. To complement the business models, we have commissioned the British Standards Institution to develop methodologies under an official UK GGR standard, and that is expected to be published next year. This is about making sure that carbon removals are genuine and verifiable, and having a standard in place so that we can objectively assess the viability and suitability of projects applying to the business model.
The BSI development process generates high-integrity standards and benchmarks, bringing together industry specialists, academics and policymakers from across relevant sectors to produce a consensus-based final product. It is an example of a strong point made by the hon. Gentleman: everything we need to make this work is already here in Britain. The academics, the industry specialists, the skills and the capabilities are all here, and we just need to look at how we capitalise on those resources as quickly as possible.
Thirdly, we know that carbon capture, usage and storage infrastructure is critical for enabling some of these technologies, and we have been committed to deploying CCUS at scale. I agree with my hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer) about the need to capitalise on investment that we have already made, and to continue down that path by investing in these projects. In October 2024, just a few months after we took office, we made a significant funding commitment of up to £21.7 billion over 25 years to kick-start the CCUS industry here in Britain. GGR projects have been able to apply to the expansion of the HyNet and East Coast clusters through the HyNet Track-1 expansion process, the Teesside selection process and the non-pipeline transport pathfinder process—all very catchy names. I can already confirm that the HyNet Track-1 expansion includes two GGR projects that are in the negotiation phase of that process.
Fourthly, we are investing in innovation. For many of these technologies, there is research that still needs to be undertaken and there are breakthroughs that are waiting to be made. We have already invested over £80 million through the direct air capture and greenhouse gas removal innovation programme and the UK Research and Innovation funded greenhouse gas removal demonstrator programme and its co-ordinating hub.
The carbon budget and growth delivery plan committed to launching a series of cleantech innovation challenges that target mission-critical innovation. These will set specific, measurable, time-bound goals for innovation, co-owned with industry, which will mobilise public and private sector investment and focus policy efforts on creating the necessary market pull for new technologies and, in the process, de-risking those investments into new innovations.
That leads me to the fifth point about how we stimulate market demand. We want to engineer GGR projects to generate high-quality carbon credits that can be sold on high-integrity negative emissions markets, and so we will maximise the opportunity for the voluntary carbon markets to channel private finance into those GGR projects. At COP29, we launched six principles for voluntary carbon and nature market integrity to guide organisations into taking voluntary action towards nature-positive and net zero goals.
When we consulted on those principles with stakeholders, they highlighted that, in order to unlock the full potential of the voluntary carbon market, there is a need for greater clarity on the definition of high-quality carbon credits and how credits could be used in corporate net zero claims. Alongside the Governments of Singapore and Kenya, we are leading development of the Coalition to Grow Carbon Markets to strengthen corporate demand for high-integrity carbon credits, and anyone and everyone is welcome to join that coalition.
Our long-term ambition is for a competitive negative emissions market, underpinned by demand in the carbon market and the UK emissions trading scheme. We have signalled our intention to include GGRs in the UK ETS. Last summer, the ETS authority published a response to the consultation on the inclusion of GGRs in the ETS, setting out further details on how we will do this.
Finally, we are considering the findings of the independent review into GGRs that we commissioned last year under my noble Friend and all-round GGR and general energy expert and nerd, Lord Whitehead, who did fantastic work. I can assure the hon. Member for West Dorset and the House that that review is certainly not gathering dust on my desk; I have been flicking through it far too much for it to be gathering dust. I can say to the hon. Gentleman that the review includes many interesting and useful conclusions. We are taking time to go through them in detail, but we aim to publish the response this month. I am sorry that that is not quite an exact date, but I hope it is close enough.
I hope that the steps that I have outlined today will reassure the House that this Government take the future of GGRs extremely seriously. We know that these technologies will be essential to reducing our emissions while growing the economy on the road to net zero by 2050, and that is why we are acting now. I want to conclude by coming back to the point where the hon. Gentleman started. It is absolutely critical that we rebuild, where we can, the consensus on acting on the most existential crisis that this planet faces. The climate crisis is not some future threat that we can have a theoretical debate about now and worry about later; it is a very real and pressing threat, and GGRs will play a really important part in addressing it. The Government are determined to make that happen, and there is an economic opportunity if we get this right as well. I absolutely commit to working with the wider industry, with the hon. Gentleman and with everyone else who has an interest in this fascinating subject in order to make this work.