The government’s sudden decision to pull funding for carbon capture and storage (CCS) projects could prevent the UK from meeting CO2 commitments, said a report published today.
The Energy and Climate Change Committee (ECC) published the report entitled ‘The future of CCS in the UK’ following select committee hearings convened by MPs to explore the impact of the decision on investors and the supply chain.
Before it was scrapped late last year, the government’s Carbon Capture and Storage Commercialisation competition had offered £1 billion funding to support the design, construction and operation of the UK’s first commercial-scale CCS projects.
This is the latest in a series of snap decisions that have damaged confidence in the government’s energy policy.
Angus MacNeil, Scottish National Party MP
The UK government first promised support for CCS in 2007, aiming to deliver an operating CCS project at a coal-fired power station by 2014, but this ended with concerns over funding.
In its wake, the government then announced a replacement CCS ‘competition’ in 2012, with contracts awarded to Capture Power’s White Rose project in Yorkshire, and Shell and SSE’s Peterhead project in Aberdeenshire.
But in November last year - weeks before the final bids were due for submission - the government announced that the funding was no longer available, with both projects now likely to be cancelled.
Angus MacNeil, the Scottish National Party MP and chair of the committee, described the manner in which the government pulled the plug on the CCS commercialisation competition as “hugely disappointing”.
“If we don’t invest in the infrastructure needed for carbon capture and storage technology now, it could be much more expensive to meet our climate change targets in the future,” he said.
“This is the latest in a series of snap decisions that have damaged confidence in the government’s energy policy.”
A key issue raised by MacNeil is that gas-fired power stations – which the government has pledged to back in place of coal-burning power stations - are still too polluting to meet targets without the addition of CCS technology.
“If the government is committed to the climate change pledges made in Paris, it cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed,” he said.
To meet targets, the government needed to ensure that we could fit gas fired power stations with carbon capture and storage technology in the 2020s, which required developing the transportation and storage infrastructure now, he added.
The momentum that had built up over recent years has suddenly come to a halt and the industry and investors are losing confidence, the report also warned.
It also revealed that the government may have lost an opportunity to exploit existing oil and gas assets in the North Sea, with empty fields potentially able to store European industrial emissions for the next 100 years.
The MPs have called on the Department for Energy and Climate Change (DECC) to assess the financial and other benefits of using existing North Sea oil and gas infrastructure to facilitate carbon capture and storage on a commercial scale.
The National Audit Office (NAO) also announced last week it would examine the impact on taxpayers following the scrapping of the CCS funding.
The NAO will review the DECC's decision and how the department acted in light of recommendations made in 2012, following the cancellation of its previous foray into CCS.
It will also examine the impact the decision is likely to have on the Department’s objectives of decarbonisation and security of supply, and the costs incurred by government in running the latest competition.
A DECC spokesperson said: “We haven’t closed the door to CCS technology in the UK, but as part of our ongoing work to get Britain’s finances back on track, we have had to take difficult decisions to control government spending."