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The Budget’s Impact on UK’s Carbon sector: Opinion piece

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david murray talks about the budget's impact on UK's carbon sectorIn this guest piece David Murray (pictured left), Partner at leading global intellectual property firm Marks & Clerk, considers the emerging trends around patent filings in carbon capture technology and why this is important.

David has significant experience working with clients in capturing their IP, as well as providing strategic advice on how to grow and manage their IP portfolios.

He advises clients in many areas of technology, with particular expertise in the energy sector (oil & gas, renewables) and medical devices sector, as well as the construction, and consumer products sectors.

David joined the patent profession in 2004 after completing a Master of Engineering degree in Product Design Engineering at the University of Glasgow & Glasgow School of Art.

It goes without saying that budgets are important, regardless of whether they are for managing household finances in a domestic setting or for managing the country’s economy and come in a ministerial red box.

In March this year, there was a significant amount of discussion in advance of the UK Government’s Spring Budget announcement that the main aim of this year’s Budget was to focus on stability, or as was widely publicised the aim was to make the Budget “boring”.

From an energy and environment perspective, the Budget talked of a clean energy “reset” to clean up the UK’s domestic energy supply and boost long term energy security. Given the UK’s domestic economic environment and the wider geopolitical landscape, such a headline is unsurprising. However, beneath this headline it was notable that one of two energy sectors mentioned prominently was Carbon Capture, Usage and Storage (CCUS) – the other being Nuclear Energy.

Carbon Capture, Usage and Storage technology, directed to the systems and processes by which carbon dioxide emissions from industrial processes are captured, transported and then stored within a rock formation such as depleted oil and gas reservoirs, is one of a number of so-called “enabling technologies” within the energy and environment sector. Enabling technologies sit between those technologies which are directed to the supply of energy on the one hand and those which are directed to the end use of energy on the other hand and are seen as key to powering the UK’s energy transition and meeting Net Zero targets.

According to the Budget, £20 Billion is set to be invested by the Government to support the early development in Carbon capture technologies with the aim of putting the UK at a strategic advantage by being a global front runner in this area and to support 50,000 jobs.

Of course, it is important to make the distinction here between being a frontrunner in terms of development and innovation of a technology and being a frontrunner in terms of deployment and adoption of a technology. For example, while the wind energy sector in the UK has seen rapid expansion and has reported new records being set in terms of the share of electricity in the national grid originating from wind power generation, the technology landscape on the other hand is dominated by companies based in mainland Europe, notably Denmark, and elsewhere in the World.

This distinction is significant as it goes to the heart of the type of industry which is to be fostered in the UK, namely whether the focus is on innovation and high skilled jobs on the one hand or, on the other hand, implementation of existing technologies.

One metric for determining innovation within any given sector is to look at trends in the filing of intellectual property (IP) rights, more particularly patent filings. According to the European Patent Office (EPO) and International Energy Agency (IEA), the majority of patenting activity in low carbon energy (LCE) technologies relates to end-use technologies rather than energy supply or enabling technologies. However, filing activity for enabling technologies grew in the 20 years from 2000, with enabling technologies representing 34% of all LCE patent filings in 2019. The European Patent Office and International Energy Agency also highlighted that the number of international patent filings in the CCUS technology area grew significantly during that time (almost trebled) but is still much smaller than the number of filings in other enabling technologies such as batteries, hydrogen and fuel cells, smart grids and storage.

From a global perspective, as would be expected much of the focus in terms of global patenting activity focuses on the largest markets covered by the intellectual property offices known collectively as the “IP5”, i.e. those in the US, Europe, Japan, South Korea and China. In terms of relative share of patent filings amongst the IP5, which may be used as a metric for indicating specialisation of innovation centres, over the 10 year period reviewed by the EPO and IEA the EPO was 2nd behind the USPTO in terms of filings relating to CCUS technologies.

Within the 39 territories making up the European patent system, the UK was 4th behind the Netherlands, France, & Spain while Denmark fifth.

Why does this matter?

In their recently published 2023 Overview, the North Sea Transition Authority (NSTA) – who are the licensing and permitting authority for CCUS in the UK – estimate that the UK continental shelf has a potential for 78 Gt CO2 storage capacity, but identified a big gap between current projects and future demand if net zero targets are to be met.

At its heart, intellectual property rights protect improvements in technology and innovation – via patents – as well as the associated brand identities – via trade marks – and so will play a key role in accelerating the scaling up of CCUS if the UK Government’s aim to gain strategic advantage and become a global front runner in carbon capture systems is to be realised.

The role of IP rights, however, goes well beyond this.

For example, the UK Government’s investment amongst other things aims to attract private sector investment in order to support the early development of Carbon Capture, Usage and Storage technologies in the UK, with an understanding of the IP position – from both offensive/enforcement and defensive/freedom to commercialise perspectives – playing an important role in many investors’ assessment of risk in order to facilitate the entry of new technologies onto the market.

Other key themes of the energy transition, both in the UK and globally, are the need for collaboration and leveraging of the UK as an exporter of skills and services, both of which rely on a clear understanding of the role of IP within the UK and around the World.

In short, given the globally competitive nature of the energy sector and that innovation is seen as a key driver in supporting the energy transition, capturing the innovation likely to be generated needs to be considered alongside capturing the carbon itself if the industry is to not just create but maintain the 50,000 jobs the government hopes their investment will foster.


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