C-Capture: Mass redundancies at Yorkshire carbon capture firm backed by Government, Drax and bp

Dozens of people have left their jobs at C-Capture, a spin-out company created in 2009 following research done at the University of Leeds, just three months after it announced it was seeking new buyers.

The firm has been working for years on commercialising a patented system of capturing carbon dioxide from industrial flue gases in a way it describes as safe, low cost and environmentally conscious.

Its investors including Drax, bp Ventures, Northern Gritstone and IP Group had collectively put more than £18m into the business as C-Capture sought to prove its technology could be deployed at a commercial scale.

The Government also has a near 20 per cent stake in the company after the state-owned British Business Bank participated in an £8m funding round in 2021 alongside private investors. C-Capture also received a £1.7m Government grant in 2022.

In October, Chancellor Rachel Reeves described the wider concept of carbon capture as a “game-changing technology” with the Government suggesting the industry could be worth £5bn a year to the UK economy and create 50,000 jobs by the 2030s.

C-Capture had been running a pilot plant at Drax Power Station to capture one tonne per day of carbon and the next stage had been due to be a commercial demonstration plant capable of capturing between 100 and 200 tonnes per day. The ultimate aim would have been a full-scale plant able to capture 10,000 tonnes per day.

The firm was hoping to secure millions in extra funding to reach the commercial demonstration plant stage - something that was expected to cost in excess of £50m.

But in November, C-Capture announced it was seeking new owners to find “a new route to commercialisation” which it said was a result of “much slower than expected development of a CO2 market in the UK, especially for next-generation technologies”. It said a “significant delay to likely revenues from carbon capture and storage using this break-through technology and increased financial commitment needed to maintain the capability required for industrial-scale new technology deployment are major contributing factors”.

All 44 staff were put on notice of redundancy in December and the vast majority had their last official working day yesterday, February 28, after attempts to find a new owner within that time were unsuccessful.

The company remains solvent as Drax provided funding to keep it running while efforts to find new owners continue and a small number of staff have been retained.

Sources said that bp Ventures and IP Group decided last summer not to provide further investment, with the same decision being made later in the year by Drax and Northern Gritstone.

Tom White, chief executive of C-Capture, told The Yorkshire Post that the company had managed to demonstrate in late 2024 that its technology could work “stably and efficiently” on the pilot plant at Drax.

He said: “Despite this, the exceptional team of scientists, engineers and business support staff who achieved this are being demobilised. The difficult decision was made not to proceed with a planned fundraise in 2025. This has put a firm pause on maturing the technology for deployment at scale, until new investors with the right strategy, resources and risk appetite to commercialise the technology come forward.”

Fears technology will be lost to the UK

Concerns have been raised that the promising carbon capture technology developed in Yorkshire could be lost to the UK.

An ex-employee of C-Capture, who did not wish to be named, told The Yorkshire Post said the company had met its operational targets on its pilot project and staff believed further investment would be committed by Drax as a result. They said they were “extremely angry” at the short timeframe set for making a sale of the business in its current guise.

They said it is possible the next buyers will be from overseas. “A UK technology could be lost,” they said.

A spokesperson for Drax said: “Whilst we have invested in C-Capture in the past alongside various other investors, further investment is not part of our strategic plans. We continue to support C-Capture and provided appropriate funding to ensure the company remains solvent as it goes through the process to find a new buyer.”

Tom White, chief executive of C-Capture, said the decision not to proceed with a planned 2025 fundraise for the business’s next phase “was heavily influenced by a slowdown in global investment markets and an increasing level of caution towards climate tech in the venture community”.

He added: “Investor confidence was further undermined by delays in carbon dioxide transportation and storage projects in the UK.”

But another source with knowledge of the company, who did not wish to be named, said operational targets had not met before investors decided to pull out following C-Capture previously failing to reach the targets over several years.

The source added: “They finally started to get continuous operation in something like December last year but the whole business is not based on getting that on one piece of kit, there is a stack of other things around it to consider.

“To take the business through to market it would have needed much more money. It is almost like a computer game - the original level was the first challenge of many that were going to get harder.

“In the original vision that would have seen all this work, the business would have gone from its chemistry potential to functional chemical engineering.

“C-Capture could have gone faster and delivered better. It is a start-up with challenging, complicated technology that was funded for a long time and ultimately didn’t achieve what it needed to for the funders to keep funding it. It is very sad that people are losing their jobs.”

The source said Drax’s decision to provide funding to keep the company solvent while it searches for a new buyer is unusual in start-up situations where no futher investments are planned and described the company’s decision to do so as “highly honourable”.

Call for new long-term funding approach for carbon capture firms

C-Capture CEO Tom White said a new funding approach from Government is needed to back promising carbon capture technologies and deliver on a "once-in-a generation economic growth opportunity for the UK".

Mr White said the situation demonstrates a new approach is needed to support promising carbon capture technologies.

“It is very important to the UK economy that new lower cost next-generation carbon capture technology is developed, matured and deployed in the next wave of projects by 2030,” he said.

“The world is in a race to produce net-zero industrial products like lime, cement, steel and glass at affordable prices. If only existing proven techniques are used, then there will be a very real danger of locking the UK into a high cost industrial decarbonisation journey over the next 20 to 30 years, which will undermine our global competitiveness.

“I fear that a once-in-a-generation economic growth opportunity for the UK is being missed.

“Commercialising next-generation carbon capture technologies in the UK would kick-start a domestic supply chain, first to build capture plants for ourselves, then to support the manufacture of modules in automotive-style fabrication plants for export. We could be the global leader of industrial decarbonisation.

“To seize this opportunity, to accelerate the commercialisation of climate tech like carbon capture, an entirely new long-term public/private financial product is required. One that spans venture, first-of-a- kind commercial scale demonstration project finance, project debt and continues into infrastructure investment.”

Drax said this week it intends to commit less development investment into carbon capture projects as it awaits greater certainty on Government regulation and investment returns.

BP has separately announced plans to cut investment on renewable projects by almost £4bn while increasing investment in oil and gas by £7.9bn.

It follows the return of Donald Trump as US president and his “drill, baby, drill” calls for energy giants to focus more on fossil fuels.

In autumn, Labour pledged almost £22bn of funding to help develop carbon capture clusters in Merseyside and Teesside over the next 25 years to help meet the country’s net zero goals.

Businesses in the Humber, including Drax, have called for the region to also be prioritised for carbon capture schemes after missing out in October’s announcement.

Earlier this month, MPs on the Public Accounts Committee warned that the financial commitment for “unproven” technology is high risk and will also have a “very significant effect” on consumer electricity bills with the majority of the cash due to come from taxpayer levies.

A Department for Energy Security and Net Zero spokesperson said: "Carbon capture, usage and storage is vital to boost our energy independence, and the Climate Change Committee describes it as a 'necessity not an option' for reaching our climate goals.

“Our £21.7 billion funding announced last year will see our industries remain competitive in the global economy, kickstart growth and lead the world in a ground-breaking clean energy technology.”

What the investors say

A spokesperson for Drax said: “Drax is an energy company and whilst we have invested in C-Capture in the past alongside various other investors, further investment is not part of our strategic plans. We continue to support C-Capture and provided appropriate funding to ensure the company remains solvent as it goes through the process to find a new buyer.”

A Northern Gritstone spokesperson said: “Northern Gritstone initially invested in C-Capture in September 2023 alongside other investment companies, including FTSE 250 power generation business Drax, BP Ventures and Kiko Ventures (IP Group).

“Carbon Capture and Storage is an incredibly important area in mitigating climate change and is an area of ongoing innovation. C-Capture has been developing its carbon capture technology for potential large-scale deployment since 2009 having attracted over that time in excess of £18 million of private sector funding.

“By its nature, carbon capture is a highly capital-intensive sector that requires ongoing sources of funding. Northern Gritstone is supportive of the C-Capture Board’s move to attract new funding through a new buyer and / or industrial partners who are in a position to accelerate the commercialisation of its technology.”

IP Group and bp Ventures did not wish to comment.