The agreement marks a milestone for the project, and Heidelberg Materials and the UK Government will now enter final negotiations to make a final decision by April 2025.
Minister for Energy Efficiency and Green Finance Lord Callanan visited Heidelberg Materials' Padeswood cement works in north Wales to hear first-hand about plans to upgrade the existing plant to become the UK's first net zero cement works.
If the industry-leading project goes ahead, it would be the first facility of its kind in the UK and would set the UK's construction industry on the path to net zero.
Cement is a key component of concrete, the most widely used building material in the world, but its production is carbon intensive. A large proportion of these CO2 emissions come from the chemical process involved in making cement, so the only way to remove them is by capturing them before they enter the atmosphere.
Heidelberg Materials intends to build a carbon capture plant at Padeswood, which would capture almost all the CO2 produced during cement manufacture, equating to up to 800,000 tonnes annually, and enabling the production of evoZero carbon captured net zero cement from the site as early as 2028.
The Padeswood scheme is part of the HyNet North West decarbonisation cluster, which aims to create the world's first low-carbon industrial cluster through the development of a hydrogen and carbon capture and storage (CCS) project. Carbon captured at Padeswood would be transported via the HyNet underground pipeline and stored safely under the seabed in Liverpool Bay.
Lord Callanan said: "By moving into final negotiations with the project at Padeswood, we are working to deliver our ambition of capturing carbon before it reaches the atmosphere and storing it safely underground, helping us achieve net zero.
"We're backing the exciting potential of these technologies with £20 billion, and companies like Heidelberg Materials are helping lead the way with plans to use carbon capture to cut UK emissions even further."
Simon Willis, CEO at Heidelberg Materials UK, added: "We were delighted to welcome Lord Callanan to Padeswood and have the opportunity to showcase our plans for the site.
"Once operational, it will provide net zero building materials for major projects across the country, enabling us to help decarbonise the construction industry and meet our ambitions to become a net zero business while also securing the long-term future of hundreds of highly skilled jobs."
