Treasury cut to carbon capture will cost UK £30bn, says watchdog

The government’s cancellation of a pioneering £1bn competition to capture and store carbon emissions may have pushed up the bill for meeting the UK’s climate targets by £30bn, according to a report from the UK’s official spending watchdog.

The National Audit Office (NAO) report, published on Wednesday, says the move has delayed by a decade the deployment of carbon capture and storage (CCS) technology in the UK, which takes emissions from power stations and industry and buries them so they do not contribute to global warming.

The Treasury was warned by officials about the cost implications and that the last-minute cancellation could cause damage to the government’s reputation with industry and the international community.

But the government, amid cuts to spending, decided the competition was aiming to deliver CCS before it was necessary and cost-efficient to do so..
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Both the UK government’s official advisers, the Committee on Climate Change (CCC), and the UN’s climate panel have warned that the cost of tackling climate change will be doubled without CCS, as more expensive alternatives are needed instead. The UK is well placed to develop CCS, with access to depleted oil and gas fields in the North Sea to store CO2. But these now risk being shut down before CCS is developed, the NAO report said.

The CCS competition axed in November was the second cancelled by government, with the first starting in 2007 and ending in 2011. The NAO said there is now “no viable way to achieve deep emissions reductions from the industrial sector in the near future”.

In June, the government’s climate advisers warned that the UK has no policies in place to meet more than half of the carbon-emission cuts required by law by 2030, saying CCS was a crucial missing component.

The NAO report was commissioned by a cross-party committee of MPs, the Environmental Audit Committee. Its chair, Mary Creagh, said: “CCS is essential to meet our 2050 climate change targets. It is critical that government establish a new strategy for supporting large-scale deployment.”

The Department of Energy and Climate Change (Decc), now being disbanded, calculated that the CCS competition would deliver £4.5bn in benefits for the £1bn spent. About £100m of taxpayers money and £80m from private investors had been spent before the abrupt cancellation.

A government spokeswoman said: “We are committed to meeting our climate change targets in a way that is affordable and provides secure energy to our families and businesses. We haven’t closed the door to CCS in the UK, but we are clear that it needs to come down in cost and are considering the role that it could play in long-term decarbonisation.”

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