The UK government has unveiled its Greenhouse Gas Removals (GGR) Business Model, a long-awaited framework designed to scale carbon removal technologies and strengthen the country’s path to net zero. Released in August, the policy outlines contract structures, financial incentives, and grant support aimed at drawing investment and accelerating early-stage projects such as the HyNet Track-1 expansion.
Central to the framework is a 15-year Contract for Difference (CfD). This mechanism secures predictable revenues for developers by bridging the gap between a pre-agreed strike price and the market value of carbon credits. When the market price rises above the strike price, developers must pay the surplus back to the government, creating a two-way flow of payments.
To reduce financial hurdles, the government is also offering capital grants that can cover up to 50% of eligible construction costs. In addition, developers can benefit from a 5% sales bonus through the Price Discovery Incentive, while CO₂ transport and storage expenses will be reimbursed via a pass-through system.
Although framed as technology-neutral, the scheme currently applies only to Bioenergy with Carbon Capture and Storage (BECCS) and Direct Air Carbon Capture and Storage (DACCS). Minimum quality requirements will be based on interim methodologies from the British Standards Institution until a full UK GGR Standard is introduced.
Analysts say the new approach represents a turning point for carbon removals in the UK, demonstrating long-term government backing. At the same time, some warn that the CfD’s complexity may pose challenges for smaller developers. Comparisons with the EU’s more flexible certification-led approach also highlight potential competitive differences.
While carbon removals are expected to play only a limited role in the UK’s 2050 net-zero pathway, they are considered essential to reducing long-term CO₂ concentrations. Policymakers and industry representatives have described the release as a ‘critical milestone’, reflecting years of coordination between government, investors, and technical experts.
The model will eventually link with the UK Emissions Trading Scheme (ETS). In July, the ETS Authority confirmed plans to include technological carbon removals by 2028, with full integration targeted for 2029. The Authority emphasised that the overall cap on allowances will remain unchanged, ensuring that removals enhance decarbonisation efforts rather than dilute them. It is also assessing whether to create distinct removal units alongside existing UK allowances.