Decision to scrap CCS competition could add £30bn to UK carbon targets

The Government's cancellation of the Carbon Capture and Storage (CCS) competition could cost the UK an additional £30bn to meet its 2050 carbon targets, and is also likely to delay deployment of the technology until 2030, according to a report today (20 July) released by the National Audit Office (NAO).

The report suggested that the Treasury failed to optimise the opportunity to encourage departments to work across Government on environmental issues

The report suggested that the Treasury failed to optimise the opportunity to encourage departments to work across Government on environmental issues

The research commissioned by the Environment Audit Committee (EAC) revealed that the cost of meeting the UK’s long-term carbon budgets will rise significantly without large-scale deployment of CCS, as a more expensive mix of low-carbon technologies would be required without it.

EAC Chair Mary Creagh MP said: “The last minute cancellation of support for carbon capture and storage may have delayed the roll out of this crucial technology for a decade or more. CCS is essential to meet our 2050 climate change targets. It is critical that government establish a new strategy for supporting large-scale deployment of CCS, as without it, the eventual bill for cutting our carbon emissions could be up to £30 billion more.”

Government criticism

The NAO investigation identified a number of key criticisms of the Government’s 2015 Spending Review. According to the report, the Treasury failed to optimise the opportunity to encourage departments to work on environmental issues, although improvements in the ministerial coordination of green issues had been made in the 2010 Spending Review.

Moreover, the report suggests that the Treasury failed to heed warnings from the now defunct DECC department that scrappage of the CCS competition would increase Government spending by £30bn. Concerns have also been raised that departments with lead responsibility for the environment will have their budgets diminished, and that the Government will fail to reach its carbon budget for the mid-2020s by a gap of around 10%.

“There is a gap between our stated ambitions on climate change and the policies and spending the Government is bringing forward to get us there,” Creagh continued. “According to the Government’s own calculations we are on track to miss our carbon budgets in the 2020s by 10%, yet the Spending Review took us no closer to closing that gap."

‘Lack of foresight’

The report reflects continued political and environmental opposition to the Government’s decision to scrap the £1bn CCS competition back in November 2015.

On the same day as the 5th Carbon Budget’s approval, the Climate Change Committee (CCC) urged the Government to adopt a strategic approach which could support commercialisation of CCS projects at a lower overall cost to the consumer and taxpayers. 

In a letter to the Department for Energy and Climate Change (DECC) Secretary earlier this month, CCC Chairman Lord Deben reiterated that a new approach for the technology is urgently required.

Today’s report only served to further criticism aimed at Government from industry figures suggesting that the cancellation of the CCS competition reflected a lack of understanding of the strategic value of the technology to the UK’s long-terms climate ambitions.

Commenting on the NAO’s research, Scottish Carbon and Capture Storage (SCCS) director Professor Stuart Haszeldine said: “After the Paris COP21 climate agreement for advanced economies to become zero-carbon by 2050, it is clear that CCS is unavoidable. Yet, remarkably, that deal was struck just one week after the Treasury’s cancellation decision. The lack of foresight or joined-up thinking across Government departments was baffling. 

“Today’s report by the National Audit Office reaches the same conclusions that previous analyses have shown – namely, that CCS has immense value across an entire economy. It is not about expensive electricity, it is about the sustainable use of fossil fuel wealth. It means the provision of low-cost, carbon-free heat, and a cleaner atmosphere worldwide."

Dr Haszeldine’s views were echoed by the Institution of Mechanical Engineers head of energy and environment Dr Jenifer Baxter, who said that without CCS technology, the UK could lock itself into relying on unabated fossil fuel power for future generations.

Dr Baxter said: “The UK Government needs to urgently clarify the direction UK energy policies will take and work with regulators to provide developers with the certainty needed to invest in order to meet our electricity demands as well as the UK’s ambitious carbon reduction targets.”

George Ogleby


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