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The government must learn from previous mistakes if a carbon capture and storage (CCS) plant is ever to be built in the UK, the public spending watchdog has warned after it was revealed that £168m of taxpayers’ money had been spent on two failed competitions.
Head of the National Audit Office Amyas Morse said the department overseeing future CCS competitions would need to be clearer with the Treasury if there was to be any chance of getting plants built in the UK in the coming years.
The report found that £68m had been spent on an initial funding competition that ran from 2007 to 2011, while £100m was spent on the most recent competition that was pulled in 2015.
The second competition saw Capture Power, a joint venture between Alstom Power, Drax and BOC, compete with Shell for a £1bn funding grant from the government to build the country’s first CCS plant in either Yorkshire or Peterhead.
However, both schemes were subsequently shelved following the decision by the government to scrap the contest ahead of the government’s Spending Review in November 2015.
The NAO criticised the competition, saying the Department of Energy and Climate Change, which was in charge of the competition at the time, began the process without agreeing with the Treasury the level of funding available to the project over its lifetime.
The report found that this led to the Treasury ultimately cancelling the competition due to concerns about the future costs to energy consumers.
The watchdog also questioned whether the two projects shortlisted for the competition would have ever been able to meet the department’s requirements for the development of the respective plants.
Meg Hillier MP, who chairs the public accounts committee that oversees the NAO’s work, said: “This hugely ambitious and expensive government programme has faced a number of problems, but was on the verge of an important milestone when it was slashed.
“The government will have to work hard to restore investor confidence in carbon capture and storage, or come up with cost-effective alternatives to meet the UK’s decarbonisation target.”
The government said that it was currently working with industry to support the development of CCS in the UK and would be setting out its approach to the development of new plants in due course.
A Department for Business, Energy and Industrial Strategy spokesman said: “We haven’t closed the door to CCS technology in the UK, but decisions had to be taken to control government spending and protect consumer bills.
“This is why the government ended the funding for the CCS competition, and ensured taxpayers were protected from significant costs when the competition closed.”