Publicly funded competition had already cost £100m when it was cancelled by the Treasury amid concerns over cost to consumers

This article is more than 3 years old

This article is more than 3 years old

A publicly funded scheme to reduce carbon emissions collapsed, after running up costs of £100m, following a disagreement between government departments, Whitehall’s spending watchdog has concluded.

Ministers launched a competition for developing technology to capture carbon emissions before Treasury officials cancelled the project, a report by the National Audit Office has found.



The carbon capture and storage (CCS) competition was the second attempt by the government to build technology that could absorb and dispose of carbon dioxide from power stations or heavy industry.



Auditors concluded that a failure by the Treasury to agree the long-term costs of the competition with the Department for Energy and Climate Change (DECC) contributed to its cancellation in 2015, when ministers had already spent £100m on the scheme.

The findings have concerned senior politicians. Meg Hillier, the chair of the public accounts committee, said the scheme was “hugely ambitious and expensive” but was in sight of a breakthrough when it was stopped.

“The then DECC failed to convince HM Treasury but ultimately the taxpayer lost out both financially and in the ending of this programme to reduce carbon emissions.

“Taxpayers will be alarmed that disagreement between departments means the taxpayers have little to show for the £100m the government spent on the competition,” she said.

It would cost the UK £30bn to meet targets to cut greenhouse gases by 2050 without CCS, auditors believe, and it is “currently inconceivable” that such technology would be developed without government support.



Globally, there are 16 examples of large-scale CCS schemes operating with 22 more being developed.



The then-DECC, now part of the Department for Business, Energy and Industrial Strategy (BEIS), began the programme in 2012 without agreeing with the Treasury on the amount of financial support available over the lifetime of the projects.



At the time it was cancelled, the competition had two preferred bidders - the White Rose consortium in North Yorkshire, which planned to build a new coal plant, and Shell’s scheme in Peterhead, Aberdeenshire, to fit new CCS technology to an existing gas plant.

Auditors found that the failure to agree on the amount of support contributed to the Treasury pulling its pledged £1bn in capital funding in late 2015, resulting in the competition’s cancellation.



In 2012, officials estimated it would cost consumers – who would subsidise electricity from the schemes – between £2bn and £6bn over 15 years. By 2015, this figure had risen to risen to as much as £8.9bn.



A BEIS spokesman said: “We haven’t closed the door to carbon capture and storage 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.”