Scrapping of CCS project will boost cost of meeting emissions targets, Audit Office warns

The government’s decision to scrap the UK’s carbon capture and storage (CCS) technology development competition could increase the cost of meeting the country’s carbon emissions targets by 2050 by £30bn, according to a report from the National Audit Office.

Drax
Drax Power Station in Yorkshire was part of the now-cancelled White Rose project

The competition was scrapped in former Chancellor George Osborne’s autumn Spending Review last December, in a move that surprised many in industry and was not mentioned by Osborne in his speech to the House of Commons. Work on the two competing projects, White Rose in Yorkshire and Peterhead in Scotland, both ceased before their final designs were submitted.

The National Audit Office (NAO) prepared the report as part of a briefing for the Environmental Audit Commission, a cross-party group of MPs, on the sustainability aspects of the Spending Review. It said that cancelling the competition would delay CCS deployment in the UK by a decade, and that the Treasury and DECC failed to quantify the cost of this delay, but that DECC did warn the Treasury about the impact on costs of meeting the 2050, although this was ignored as the Treasury believed that the competition was not cost-effctive and aimed to deliver CCS before it was needed. The NAO also warned that the decision was likely to reduce the confidence of investors in government technology schemes in future. The cancellation of the competition mean that there is “no viable way to achieve deep emissions reductions from the industrial sector in the near future,” the report concludes.

george osborne
George Osborne: ‘lack of foresight and coordination’ between Treasury and DECC

CCS Association chief executive Luke Warren said that the move will increase energy bills. The Energy Technologies Institute has shown that a 10-year delay to CCS could add £1bn to £2bn to consumers’ bills every year throughout the 2020s,” he said.

Scottish Carbon capture and Storage (SCCS), a research partnership involving the British Geological Survey and Aberdeen, Heriot-Watt and Strathclyde Universities, said that the cancellation revealed a ‘baffling’ lack of foresight and coordination between government departments. “Treasury decisions have a history of being made impatiently, where short-termism is unable to support fundamental change that requires many years of design evaluation, demonstration, confidence building and construction,” commented SCCS director Prof Stuart Haszeldine. “After the Paris CoP21 climate agreement for advanced economies to become zero-carbon by 2050, it is clear that CCS is unavoidable. 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.

“The cancellation of two well-developed CCS projects in 2015 has led to a collapse of industry interest in building projects in the UK. This will mean that, when projects are eventually built, the government will need to pay more to convince industry investors that the UK can be trusted to deliver on its contractual promises. That is bad value for consumers, for industry and for the climate.” Haszedine added. The cancellation sends particularly bad signals considering the looming exit of the UK from the European Union, he said: “Developing and maintaining global expertise in science and technology design, consultancy and construction is more pertinent than ever. Energy is one of the biggest global markets. CCS is one part of that market, where UK government support could boost innovation and invention to ensure that the UK becomes a natural exporter of CCS expertise and consultancy, not an importer.”