The government has been warned its backing of carbon capture, usage and storage (CCUS) to meet net zero is a “high-risk” and there needs to be a full assessment as to whether the CCUS programme will be affordable.
The Public Accounts Committee (PAC) recently concluded an inquiry, through which it found that there is a possibility CCUS will not capture as much carbon as expected, as well as that the production of liquid natural gas – set to be used to run several CCUS projects – leaks more greenhouse gases into the atmosphere than previous thought.
It therefore wants to see government consider the impact of up-to-date scientific understanding on CCUS, to ensure it has the right expectations for its level of performance.
It did acknowledge government has learnt from previous failed attempts to support and launch CCUS, while noting that three quarters of the £22 billion that is set to support two projects due to launch in 2028 will come from levies on consumers. These consumers are already facing some of the highest energy bills in the world and there has not yet been due consideration of the likely financial impact of CCUS on households.
Furthermore, the contracts for these projects have no provision for the government to share the profits or for consumers to benefit from lower energy bills, should things go well. It therefore wants to see government introduce mechanisms to ensure taxpayers and consumers are able to benefit financially from the success of all CCUS projects they support, considering if the CCUS programme is successful, it will be a result of early public support.
Finally, it noted government downgraded its CCUS ambitions recently. Having previously targeted 20-30 million tonnes per year of CO2 being stored by 2030, it has now acknowledge this is no longer achievable and no revised targets have been announced as of yet. This creates a shortfall in the pathway to net zero, meaning new targets must be set “as a matter of urgency”.
Sir Geoffrey Clifton-Brown, Committee Chair, noted government learning from past failures by working with clusters of projects that can support each other to grow its CCUS programme, but stressed it needs to ensure it has “not sown the seeds of its own failure with this approach by making sure that it can direct support to sectors or locations outside of these clusters”. Clifton-Brown added it still remains to be seen whether the “significant effect” the policy will have on consumer and industry’s electricity bills is acceptable.
Clifton-Brown continued: “As we are currently in the foothills of CCUS’ development into a fully functioning industry, the Government must remain alive to recent scientific evidence to adapt its approach. All early progress will be underwritten by taxpayers, who currently do not stand to benefit if these projects are successful. Any private sector funding for such a project would expect to see significant returns when it becomes a success. We were surprised that the Government had not even considered this aspect.”
