BP to Sell Stakes in Major UK Carbon Capture Projects as Teesside Construction Begins

BP is preparing to sell stakes in two major UK carbon capture and storage projects in northern England, marking a significant development for one of the country’s most closely watched industrial decarbonization programs.

The company said it plans to sell a portion of its equity in Net Zero Teesside Power and the Northern Endurance Partnership, two projects that form part of the East Coast Cluster. BP has not disclosed the size of the stakes it intends to sell or identified potential buyers. The move comes after both projects reached financial close and entered the construction phase, shifting them from development planning into execution.

The timing is important. Carbon capture, usage, and storage, often referred to as CCUS, is one of the UK government’s priority technologies for cutting emissions from industrial regions where direct electrification can be difficult or costly. The Teesside and Humber industrial areas are among the UK’s most carbon-intensive regions, with heavy industry, power generation, chemicals, refining, and other facilities concentrated around existing ports and energy infrastructure.

For BP, the partial sale would allow the company to bring in additional partners while maintaining involvement in projects that are already supported by government policy and long-term infrastructure plans. For the wider UK market, it could test investor appetite for large-scale carbon capture assets at a point when the sector is moving from policy design to construction delivery.

What the Two Projects are Designed to Do

Net Zero Teesside Power is a joint venture between BP and Equinor. The project is planned as a gas-fired power station fitted with carbon capture technology. According to the project company, construction is underway, start-up is expected in 2028, and the plant is designed to generate up to 742 megawatts of flexible low-carbon power, equivalent to the average annual electricity needs of more than one million UK homes.

The plant is described by its developers as aiming to become the world’s first commercial-scale gas-fired power station with carbon capture and storage. Its role would be to provide dispatchable power, meaning electricity that can be produced when needed, while capturing a large share of the carbon dioxide that would otherwise be released from gas combustion.

The Northern Endurance Partnership, or NEP, is the transport and storage component of the system. It is developing the onshore and offshore infrastructure needed to move captured carbon dioxide from industrial and power projects in Teesside and the Humber to permanent storage under the North Sea. The first phase is designed to transport and store up to an initial 4 million tonnes of carbon dioxide per year, with start-up also expected in 2028.

NEP’s infrastructure includes a CO2 gathering network, onshore compression facilities, a 145-kilometre offshore pipeline, and subsea injection and monitoring infrastructure linked to the Endurance saline aquifer, located around 1,000 metres below the seabed.

Why the Sale Matters for the UK’s Net-Zero Strategy

The UK has made carbon capture a central part of its plan to reach net-zero by 2050, particularly for industrial clusters where emissions are difficult to eliminate. In December 2024, the UK government confirmed contracts for the first carbon capture projects in Teesside, following a funding commitment of up to £21.7 billion for CCUS over 25 years.

The East Coast Cluster is expected to provide shared infrastructure that can serve multiple emitters rather than relying on each industrial site to build its own full carbon transport and storage system. This shared model is important because it can reduce duplication, lower barriers for industrial companies, and create a route for future projects to connect to a common network.

The first phase of NEP will serve three initial Teesside projects: Net Zero Teesside Power, H2Teesside, and Teesside Hydrogen CO2 Capture. Over time, expansion across Teesside and the Humber could enable the transport and permanent storage of up to an average of around 23 million tonnes of CO2 per year from future selected projects, according to the East Coast Cluster.

For companies operating in energy-intensive sectors, the progress of these projects will be closely watched. Access to reliable CO2 transport and storage could affect investment decisions in hydrogen production, low-carbon power, chemicals, steel, cement, refining, and other hard-to-abate activities. It could also influence how industrial sites plan compliance with future carbon pricing, product standards, and customer demands for lower-carbon materials.

BP’s Strategic Shift and Investor Implications

BP’s planned sale also raises a broader question facing major energy companies: how to balance capital allocation among oil and gas, renewables, hydrogen, carbon capture, and other transition-related assets. Reuters reported that BP said the sale would open the door to new partners as construction starts at both sites, but the company did not disclose the size of the equity it may sell.

A partial divestment does not necessarily mean BP is exiting the projects. Instead, it may indicate that the company wants to reduce its capital exposure while keeping a strategic role in infrastructure that could become important to future low-carbon energy systems. Large CCUS projects are capital-intensive, technically complex, and dependent on coordinated policy, contracts, industrial demand, and long-term storage regulation.

For infrastructure investors, pension funds, sovereign funds, or strategic energy partners, the appeal could lie in the regulated or contract-backed nature of some CCUS assets. However, risks remain. Carbon capture projects must demonstrate reliable capture performance, secure storage integrity, cost control, and sufficient demand from industrial emitters. Public scrutiny also remains high, especially where CCS is linked to continued gas use.

Practical Implications for Industry

The start of construction is a major milestone because many carbon capture projects globally have struggled to move beyond planning. Financial close, government-backed business models, and signed contracts give the Teesside projects a stronger foundation than many earlier proposals.

For industrial companies, the key issue will be whether the network is delivered on schedule and whether connection terms are commercially viable. For policymakers, the projects will test whether public support can attract private capital while delivering measurable emissions reductions. For investors and technology providers, the sale process could provide an early signal of how the market values large-scale carbon transport and storage infrastructure.

If successful, Net Zero Teesside Power and the Northern Endurance Partnership could become reference projects for other industrial clusters in Europe and beyond. If delayed or over budget, they could reinforce concerns about the cost and complexity of deploying CCUS at scale.

Either way, BP’s decision to sell down part of its equity comes at a pivotal moment. The projects are no longer just policy ambitions or engineering concepts. They are entering the construction phase, and the next stage will show whether the UK can turn its carbon capture strategy into operational infrastructure.

Source: esgnews.com