UK Committee says act now on CCS to save billions

Apr 28 2017

The UK Public Accounts Committee report warns that halting CCS deployment means taxpayers will have to pay billions more to meet targets.

Despite spending £168 million, the Department for Business, Energy and Industrial Strategy has failed to support the construction of the UK's first large-scale carbon capture and storage (CCS) projects, says the report.

After its first competition for support ended in 2011, the Department launched its second competition without being clear with HM Treasury on the support that would be available to successful CCS projects through bill payer-funded contracts for difference once they were up and running, or ensuring that its proposed risk allocation was viable for developers.

These design weaknesses contributed to the Treasury's decision, as part of the 2015 Spending Review, to bring the competition to an early end by withdrawing the £1 billion capital grant it had previously made available to contribute to the projects' construction costs.

This was the latest in a series of decisions that indicate the Treasury is having undue influence on the government's energy policy.

Halting CCS's deployment means that the UK will have to pay billions of pounds more to meet its decarbonisation targets, has missed opportunities to be at the forefront of a growing global industry, and has damaged investors' confidence in working with the government on CCS in the future.

"There is now a major gap in the government’s decarbonisation plans, and we urge the Department to set out as soon as possible how this gap will be filled."

The Carbon Capture and Storage Association (CCSA) welcomed the reort, saying that it made  a number of recommendations; in particular emphasising the need for the Department to set out a “clear, joined-up strategy for deploying CCS in the sectors where it is needed to achieve decarbonisation at least cost”.

Dr. Luke Warren, Chief Executive of the CCSA, commented, "The report out today represents yet another voice highlighting the incredible importance of CCS for the UK. Critically the Committee found that developing CCS could save the UK many 10s of billions of pounds, making the UK economy more competitive whilst supporting the low-carbon industrial regions of the future."

"It is clear that developing CCS is in the national interest, and whichever party is in power after the 8th June has a key early opportunity to act on the Committee’s findings and release the Emissions Reduction Plan, setting out a fresh, ambitious approach to CCS that learns the lessons of the past."

"The Committee has highlighted the benefits of CCS to multiple sectors of the UK’s economy, including heavy industry, heat, transport and power, demonstrating that CCS is integral to a new sustainable Industrial Strategy."

"We are ready to work with the new Government to develop this Strategy and ensure the UK can play its role in the significant global CCS market that is already emerging”.

Read the report

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