From 26 February 2026, sites installing new CHP engines with more than 1 MWth input will need to submit a Decarbonisation Readiness Report.
This report is a four-part, questionnaire-style assessment designed to show whether a site could, in future, meet the Government’s requirements for decarbonisation readiness. It does not necessarily mean operators must act immediately, but it does mean they need to understand their options and have a clear plan in place.
What does decarbonisation readiness mean?
Operators must demonstrate that their combustion power plant is ready for one of two decarbonisation routes:
Hydrogen readiness - The plant must be capable of being converted to operate on hydrogen as its primary fuel source.
Carbon capture and storage readiness - The plant must be ready to operate as part of a qualifying complete Carbon Capture and Storage (CCS) system. This means it must be able to continuously capture at least 90% of carbon emissions, with appropriate capture, transport and/or storage arrangements leading to permanent storage.
What does this mean for horticultural businesses?
Many horticultural sites use carbon dioxide from natural gas combustion to supplement growing environments and support plant performance. While alternative sources of carbon dioxide are available, applying CCS to natural gas combustion rather than using the carbon dioxide on site can be both uneconomical and counter-productive.
For many operators, hydrogen readiness may therefore be the more practical route to consider. Modern CHP engines are often designed to be hydrogen ready, either as standard or with relatively minor modifications.
However, switching from natural gas to hydrogen would also mean that sites using exhaust gases for carbon dioxide enrichment would need to source carbon dioxide from elsewhere. Even so, the overall system may be less wasteful than capturing and storing carbon dioxide that could otherwise have been used in the growing process.
For operators that do not use exhaust gases for on-site carbon dioxide supplementation, there may also be additional savings for running on hydrogen, depending on the future cost vs natural gas, compared with the cost of installing and operating CCS systems.
What does the report need to cover?
The purpose of the Decarbonisation Readiness Report is to help operators evaluate the feasibility of each route and make an informed decision.
The report is split into four key sections:
- Space test - This considers whether there is enough physical space on or around the site to accommodate the equipment and infrastructure needed for the chosen decarbonisation route.
- Technical feasibility - This assesses whether the selected option is technically achievable for the plant and site.
- Economic feasibility - This looks at whether the proposed route is financially viable, taking into account the likely costs, benefits and practical implications.
- Access or transport and storage test - For hydrogen readiness, this includes a hydrogen access test. For CCS readiness, this includes a carbon transport and storage test.
Operators can also use the report to justify why one or both routes may not be appropriate for their site, provided this is clearly explained within the relevant sections.
Do operators need to take action immediately?
Not necessarily. The report does not require operators to implement the outcomes straight away.
However, it does require them to show that they have properly considered the available options and, where appropriate, have a plan in place setting out what will be implemented and when.
This makes early consideration important, especially for sites planning new CHP installations for 2026 and beyond.
How NFU Energy can help
NFU Energy can support operators with Decarbonisation Readiness Reporting, either as a standalone service or as part of our MCPD permit applications and variations support. Our team can help you understand which route may be most appropriate for your site, assess the feasibility requirements, and prepare the necessary reporting to support your compliance obligations.
If you are planning a new CHP installation or need to vary an existing permit, now is the time to consider how decarbonisation readiness may affect your project.