The United Kingdom has launched a second round of licensing for offshore geological carbon dioxide (CO₂) storage, covering 14 areas off the coasts of Scotland and England. This extension brings the total potential storage capacity to approximately 2 Gt, following a first wave of 21 licences awarded in 2023. The competent authority, the North Sea Transition Authority (NSTA), announced that applications will be open until March 2026, with awards expected in early 2027.
Established players dominate development prospects
Leading energy companies already engaged in Track-1 clusters — such as BP, Equinor and Eni — are expected to feature prominently in this second phase. The Endurance and Liverpool Bay sites, at the core of the first contracts, are set to become the anchors of a north-south storage corridor. In parallel, operators including EnQuest, Harbour Energy and Shell are expanding their presence by repurposing depleted oil fields and existing infrastructure.
The offered capacity significantly exceeds the UK’s current targets of 20 to 30 Mt of CO₂ captured per year by 2030. Authorities acknowledge that these goals will not be met in the short term but view early licensing as a strategic lever to secure decarbonisation through to 2050.
Economic model dependent on substantial public support
The economics of carbon capture and storage (CCS) remain unbalanced. The UK Emissions Trading Scheme (UK ETS) carbon allowance price hovers around £56/t, while total CCS system costs are estimated between $130 and $150/t. Bridging this gap will require direct subsidies and regulated contractual mechanisms, including Contracts for Difference (CfD) or Regulated Asset Base (RAB)-type remuneration models.
Operational implementation will also depend on coordination between the NSTA and The Crown Estate, which must grant seabed leases. Conditions related to coexistence with other marine uses — notably offshore wind — remain a limiting factor for developers.
Strategic positioning with respect to continental Europe
London aims to position the UK North Sea as a CO₂ storage service hub for European emitters. This strategy competes with Norwegian (Northern Lights), Danish (Greensand) and Dutch (Porthos) initiatives. The UK benefits from significant geological capacity, estimated at more than 78 Gt, but must navigate evolving European regulations, including the Carbon Border Adjustment Mechanism (CBAM).
This move also carries domestic political weight. The second licensing round follows parliamentary criticism of delays in implementing Track-1 projects. It signals policy continuity and maintains focus on a transitioning offshore industry.
Expected effects on value chain and industry
For offshore service and engineering firms, this expansion offers a long-term contract pipeline, although still contingent on the finalisation of economic models. Declining oil activity finds a potential offset in CCS development, leveraging existing skills and infrastructure.
For industrial emitters, securing storage capacity improves the bankability of long-term projects, particularly in high-emission sectors such as cement, steel and chemicals. Future CO₂ offtake agreements could extend beyond 15 years, mitigating regulatory risks and uncertainty in emissions pricing.
