Planning boost for CCS and low carbon hydrogen projects

Nick McDonald and Matthew Fox of Pinsent Masons were commenting after the government published proposed revisions to the existing energy national policy statements (NPS), which apply to energy projects classed as ‘nationally significant infrastructure projects’ (NSIPs) subject to the Planning Act 2008 consenting regime.

For NSIPs, approval is considered and determined by the Secretary of State. There are currently six NPS – one overarching policy (EN-1) and five technology-specific policies – in respect of energy infrastructure that guide decision-making around applications for development consent for such projects. The government’s latest consultation (19-page / 231KB PDF) on proposed changes to the existing policies follows an initial consultation on reform carried out in autumn 2021.

McDonald and Fox said the updated proposals build on welcome messaging the government provided for emerging technologies like hydrogen and CCS in its initial consultation. They come after the government pledged £20 billion of public funds for carbon capture use and storage (CCUS) projects in the recent spring Budget and as it announced further progress towards the formation of two new CCUS clusters and financial support for low carbon hydrogen projects.

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McDonald said: “The revised NPSs retain the widely anticipated view that CCS is ‘front and centre’ in the government’s net zero strategy, particularly in relation to the decarbonisation of electricity and industry. Strong policy support is also expressed for low carbon hydrogen.”

“However, in respect of the consenting regime for CCS infrastructure, it is clear that the government considers that there should not be a one size fits all approach. It has recognised that the regime must not stifle innovation and growth. As such, there is no proposal to create a dedicated NPS specific to CCS infrastructure and no amendments are proposed to the Planning Act 2008 to mandate that more of these projects use the NSIP regime,” he said.

The Planning Act sets out categories of projects that automatically fall subject to the NSIP regime. There is no explicit reference made to CCS infrastructure, though such projects can fall within some of the existing categories specified under the Act – such as those relating  to the construction or extension of power stations or the construction or alteration of an LNG facility. However, where CCS infrastructure projects do not fall within any of the listed categories, developers can nevertheless seek a ‘section 35’ direction that enables their project to be considered under the NSIP regime.

There are pros and cons to obtaining a section 35 direction but benefits often include that the need case for the project is strengthened because of its consideration as an NSIP and that developers obtain a more certain timeline for decision-making.

McDonald said: “Under the draft revised NSPs, projects will continue to be able to choose to enter the NSIP regime through obtaining a section 35 direction; and where it was not the case with the current NPS, the draft continues to makes clear that EN-1 will be the ‘primary’ policy document for section 35 projects.”

Matthew Fox said further government amendments also make it clear to developers that their plans to install carbon capture plant alongside other energy infrastructure will be subject to the same permitting and licensing obligations that apply to the main development. He said, though, that proposals that would require developers to show “technically feasible plans for the CO2 capture plant” should be clarified to make it clear what this means in the planning sphere since developers will have to submit detailed information on technical matters under the permitting regime and it is important that the two regimes don’t duplicate each other.

Fox said there is also new text in the draft revised EN-1 relating to the use of solvents in the carbon capture process, which in particular encourages developers to “reflect the latest research in areas such as amine degradation where understanding is still developing”.

“This is a good example of developers having to deal with emerging technical issues on real world projects and in the consenting sphere,” Fox said. “However, the reference to latest research isn’t necessarily helpful, as by definition that’ll evolve over the course of a DCO project – or even just during the examination phase.”

The government has also re-emphasised that development consent applications for power CCS projects are unlikely to need to include transport and storage infrastructure within the scope of their application, though it has stressed that the cumulative impacts of the project – including in relation to onward transportation and storage – will need to be assessed. Fox said this will require “close working between project promoters”.

Fox said that, in respect of hydrogen infrastructure, the revisions strengthen the need case for hydrogen and, as for CCS infrastructure, retain the existing scope developers have to bring projects within the NSIPs regime by seeking a section 35 direction – without mandating that they do so.

The latest proposals also encourage the co-location of green hydrogen facilities with solar power plants. Fox said this would “help make the ‘associated development’ case for such infrastructure”. He said the government has also maintained the position that the proposed new EN-4, which concerns natural gas supply infrastructure and gas an oil pipelines, will not apply to hydrogen pipelines.