Public Accounts Committee warns government has ‘major gap’ in its decarbonisation plans without more support for CCS
The UK may have missed out on the chance to become a world leader in Carbon Capture and Storage (CCS) technologies, after failing to develop a strategy to support the nascent sector since cancelling two multi-million pound development competitions, a Committee of MPs has warned.
Parliament’s Public Accounts Committee (PAC) today said despite spending £168m on two CCS competitions that were subsequently cancelled, the UK was “no closer to establishing CCS” and had now “missed opportunities to be at the forefront of a growing global industry”.
The government’s abrupt cancellation in 2015 of a £1bn competition aimed at developing a commercial scale CCS project was widely criticised as short-sighted and “shabby”. It followed a previous decision to end another similar CCS funding initiative in 2011.
With no existing government-backed CCS schemes currently in place, the PAC said in its report today there was now a “major gap” in the UK’s decarbonisation plans.
It urged Ministers to publish by the end of the year an analysis quantifying the impact across the whole UK economy of delays to CCS development.
It also called on BEIS to include strategies for supporting the development of CCS both in its forthcoming Industrial Strategy and Clean Growth Plan.
“It is now highly likely the UK will have to pay billions of pounds more to meet its decarbonisation targets,” the report states. “Without CCS, there is a gap in the government’s plans for achieving decarbonisation at least cost while ensuring a secure supply of electricity.”
The report, which comes after an evidence hearing on the government’s CCS plans held by the Committee last month, also criticises the Treasury for the manner of its 2015 spending review which led to the cancellation of the second CCS competition.
It said the spending review was evidence the Treasury “is having undue influence on the government’s energy policy”, and that in future departments should coordinate to ensure they have properly assessed the possible negative impact on investor confidence before making any sudden changes.
“Establishing CCS is now likely to cost taxpayers or billpayers more in the future because of the damage to investors’ confidence caused by aborting two competitions,” the report concludes.
The PAC is far from the first body to slam the government’s approach to CCS. The National Audit Office (NAO) has already heavily criticised the government’s 2015 decision to cancel the CCS competition on two separate occasions – firstly last year after concluding the decision could “reduce investors’ confidence even further when dealing with the government in future”, and for a second time in January this year when it said the decision had failed to achieve value for money for taxpayers.
The Department for Business, Energy and Industrial Strategy said it was unable to comment directly on the latest PAC report’s findings due to purdah rules ahead of June’s General Election.
However, after the latest NAO report in January the government said it was continuing to work with industry to develop the technology in the UK but stressed costs would have to fall for it to play a major role in the UK’s decarbonisation efforts.
“We haven’t closed the door to CCS technology in the UK, but decisions had to be taken to control government spending and protect consumer bills,” a BEIS statement said at the time. “This is why the government ended the funding for the CCS competition, and ensured tax payers were protected from significant costs when the competition closed.”
Experts have long argued the development of a CCS industry is likely to be critical to the UK’s ability to meet its long term emissions reductions goals, as it is likely to prove essential to cutting emissions from heavy industry.
Dr Luke Warren, chief executive of trade body the Carbon Capture and Storage Association (CCSA), welcomed the PAC’s findings today as “yet another clear voice highlighting the incredible importance of CCS for the UK”.
It follows a wide-ranging report from the international Energy Transitions Commission this week highlighting the importance of supporting CCS and related technologies in helping to decarbonise global energy sectors and heavy industries if the world is to keep temperature increases below 2C.
“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 [now called the Clean Growth Plan], setting out a fresh, ambitious approach to CCS that learns the lessons of the past,” Warren said.
With the report highlighting the benefits of CCS to multiple sectors of the economy – such as heavy industry, heat, transport and power – he added that CCS was integral to a new UK 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,” Warren said.
