A report by the National Audit Office (NAO) released today (20 July 2016) states that HM Treasury’s decision last November to axe the Government’s carbon capture and storage (CCS) competition could increase the cost of meeting the UK’s carbon targets by 2050 by £30 billion.

Professor Stuart Haszeldine, Scottish Carbon Capture & Storage (SCCS) Director, said: “The Treasury’s axing of the UK’s CCS competition brought a great deal of criticism. It was a premature decision, made before the two preferred project bidders, White Rose and Peterhead, had even submitted their design studies. It also reflected a lack of understanding of the strategic value of CCS to the UK’s climate ambitions, as well as our perceived leadership on climate action globally.”

Haszeldine indicated that the outcome of the Paris COP21 agreement highlighted CCS is unavoidable but the Treasury cancelled its CCS competition just one week after. He said this “lack of foresight or joined-up thinking” between government departments was “baffling”.

He explained that NAO’s report is in line with previous analysis: CCS “has immense value across an entire economy.” He emphasised: “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 development of a UK-based CCS industry also has the potential to maintain and grow the UK’s workforces in process, chemical and manufacturing industries. Overall, CCS means meeting carbon targets and playing our part in protecting society and the environment from the worst impacts of global warming, continued Haszeldine. “This report is very critical of the Treasury’s lack of success at working across departments to join up expenditure on the one hand with clear benefits on the other; in this case, clear cost savings in the long-term as part of decarbonising the UK’s power, industry, heat and transport sectors.”

“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.”

He continued: “Now, with the UK’s decision to investigate leaving the European Union, 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.”

He believes the Treasury should be “more sophisticated in its assessment of value” when assessing long-term infrastructure needs like CCS, rather than focusing on “simplistic calculations of near-term profitability.”

He concluded that, in order for the UK to be a low-carbon economy, it is essential the government make long-term investments across multiple sectors.

Edited from press release by Harleigh Hobbs