The Public Accounts Committee (PAC) described carbon capture and storage (CCS) as “unproven, first-of-a-kind technology” whose use in reaching Net Zero is high-risk.
In a new report, the PAC noted that the government has not yet looked at the likely financial impact of CCUS on households, although three-quarters of the almost £22 billion expected to support the projects will come from levies on consumers. It called on the government to assess whether the programme would be affordable for taxpayers and consumers.
The PAC said that are no examples of CCUS technology operating at scale in the UK, and that experience of CCUS in the UK and overseas is that it captures less carbon than expected, and performance is “far from guaranteed”. The report says the experience of carbon ‘leaks’, “could undermine the rationale for pursuing certain schemes.
Although the report finds that the government has learnt from previous failed attempts, contracts for two new CCUS projects due to start up in 2028 do not include any provision for the Government to share the profits – although they would be the result of public support – or for consumers to benefit from lower energy bills should things go well.
In 2024, the government downgraded its ambitions from 20-30Mt of carbon dioxide annually by 2030 but no revised targets have yet been announced. The PAC’s report calls for new targets to be set out urgently, as the abandoned targets make it unclear how the government will meet its legally binding goals.
Olivia Powis, chief executive of the Carbon Capture and Storage Association, said: “…The government has recently committed to 81% emissions reduction by 2035, alongside Clean Power by 2030, and net zero by 2050. Meeting these goals requires CCUS. Without it, British industries will not be able to decarbonise their operations and products, and our power system will not have low carbon dispatchable power which is essential for delivering a secure energy system when the wind isn’t blowing, and the sun isn’t shining. If we are to reduce our reliance on expensive imported energy and products, and achieve long-term savings for consumers and benefits to UK PLC we must continue to move forward with these projects at pace.”
To help reduce reliance on imported sources of energy, the level of subsidy which the owners of Drax and Lynemouth power stations currently enjoy is to reduce by roughly half with effect from 01 April 2027.
Amongst other things, this reflects that
1) the cost of converting those power stations to burn wood pellets instead of coal will presumably have been fully depreciated by 31 March 2027 when their current RO and/or CfD subsidies expire; and
2) recognition of the carbon debt which the supply and burning of those pellets causes.
The CfD subsidy would not oblige Drax and Lynemouth to generate electricity during an energy crisis such as that of 2022/2023 when the strike price is below the market reference price – clearly exacerbating energy insecurity.
Financial close for prospective carbon capture facilities is unlikely before the initial / anchor projects of Track 1 clusters are proven to dispose of captured CO2 in geological formations at a rate anywhere near the 90% proposed (and required to meet legally binding UK Net Zero by 2050).
That capture rate (which proponents do not guarantee) would have to be achieved consistently during routine operation for a substantial period. Given the imperative of permanent disposal (not temporary capture) it would be prudent for that period to be at least a few years. The term of the new subsidy for Drax and Lynemouth may have expired before that period ends. At least one of those power stations may have closed by then anyway.
Thank you, Mr Hewitt, for you in-depth, but concise analysis of this complex matter.