UK Government Faces Scrutiny Over Carbon Capture Investment Risks
Parliamentary committee warns of high risks and concerns regarding financial implications of £21.7 billion carbon capture funding.
The UK Government's commitment of £21.7 billion to support carbon capture utilization and storage (CCUS) technology has been identified as a high-risk investment by the Parliamentary Public Accounts Committee (PAC).
The committee has raised concerns regarding the potential financial burden on taxpayers and consumers amid ongoing high energy bills and a national cost-of-living crisis.
Approximately 25% of the funding allocated for the initial CCUS projects is anticipated to derive from taxation sources, while the remaining 75% will come from levies imposed on consumers, further straining households already affected by some of the highest energy costs globally.
The PAC has urged the Government to evaluate thoroughly whether this financial support for CCUS will provide tangible benefits to taxpayers if the initiative succeeds.
CCUS technology involves capturing carbon emissions generated by fossil fuel combustion for energy production and various industrial processes, including cement manufacturing, and subsequently storing these emissions permanently underground, often in decommissioned offshore oil fields.
This technology has been identified by organizations such as the International Energy Agency (IEA) and the UK Climate Change Committee as critical to achieving established greenhouse gas reduction targets.
Historically, efforts to implement CCUS projects have faced substantial challenges.
In March 2023, the prior UK government committed £20 billion for the preliminary deployment of CCUS technologies, followed by an announcement from the Labour government in October 2024 detailing an additional £21.7 billion investment for two designated carbon capture clusters in Teesside and Merseyside.
However, the PAC has expressed apprehension regarding the likelihood that CCUS will meet its anticipated carbon reduction goals within the established timelines.
The committee cautioned against an 'overreliance' on CCUS, recommending that the government simultaneously promote alternative emission-reduction strategies, particularly renewable energy solutions.
The report highlighted a decrease in the UK Government's CCUS ambitions, revising initial targets of capturing 20 to 30 million tonnes of carbon dioxide annually by 2030, thereby raising questions about how the country will achieve its broader emissions reduction objectives.
Moreover, the committee pointed out that deploying CCUS for liquid natural gas projects would not mitigate upstream emissions, characterized as potent greenhouse gases.
Concerns were further raised regarding the potential use of CCUS in conjunction with bioenergy, which proponents claim could lead to 'negative' emissions.
Critiques focused on the sustainability and authenticity of carbon reductions achieved by burning wood for energy before subsequently capturing and storing the emissions.
Sir Geoffrey Clifton-Brown, chairman of the PAC, remarked on the significant repercussions that the £21.7 billion investment could impose on electricity bills for both consumers and industrial entities.
He noted the lack of anticipated benefits for taxpayers if these CCUS projects prove successful and stressed the need for private sector stakeholders to understand the expectations for returns on investments.
The committee recommended that the Government implement ongoing assessments of taxpayer and consumer exposure to CCUS initiatives, introduce mechanisms to ensure public financial benefits from successful projects, and conduct thorough evaluations to determine the overall affordability of the entire program.
Moreover, it called for a clear justification for CCUS applications across relevant sectors and the establishment of new emissions capture targets, with a transparent strategy for addressing any resultant shortfalls.
The committee has raised concerns regarding the potential financial burden on taxpayers and consumers amid ongoing high energy bills and a national cost-of-living crisis.
Approximately 25% of the funding allocated for the initial CCUS projects is anticipated to derive from taxation sources, while the remaining 75% will come from levies imposed on consumers, further straining households already affected by some of the highest energy costs globally.
The PAC has urged the Government to evaluate thoroughly whether this financial support for CCUS will provide tangible benefits to taxpayers if the initiative succeeds.
CCUS technology involves capturing carbon emissions generated by fossil fuel combustion for energy production and various industrial processes, including cement manufacturing, and subsequently storing these emissions permanently underground, often in decommissioned offshore oil fields.
This technology has been identified by organizations such as the International Energy Agency (IEA) and the UK Climate Change Committee as critical to achieving established greenhouse gas reduction targets.
Historically, efforts to implement CCUS projects have faced substantial challenges.
In March 2023, the prior UK government committed £20 billion for the preliminary deployment of CCUS technologies, followed by an announcement from the Labour government in October 2024 detailing an additional £21.7 billion investment for two designated carbon capture clusters in Teesside and Merseyside.
However, the PAC has expressed apprehension regarding the likelihood that CCUS will meet its anticipated carbon reduction goals within the established timelines.
The committee cautioned against an 'overreliance' on CCUS, recommending that the government simultaneously promote alternative emission-reduction strategies, particularly renewable energy solutions.
The report highlighted a decrease in the UK Government's CCUS ambitions, revising initial targets of capturing 20 to 30 million tonnes of carbon dioxide annually by 2030, thereby raising questions about how the country will achieve its broader emissions reduction objectives.
Moreover, the committee pointed out that deploying CCUS for liquid natural gas projects would not mitigate upstream emissions, characterized as potent greenhouse gases.
Concerns were further raised regarding the potential use of CCUS in conjunction with bioenergy, which proponents claim could lead to 'negative' emissions.
Critiques focused on the sustainability and authenticity of carbon reductions achieved by burning wood for energy before subsequently capturing and storing the emissions.
Sir Geoffrey Clifton-Brown, chairman of the PAC, remarked on the significant repercussions that the £21.7 billion investment could impose on electricity bills for both consumers and industrial entities.
He noted the lack of anticipated benefits for taxpayers if these CCUS projects prove successful and stressed the need for private sector stakeholders to understand the expectations for returns on investments.
The committee recommended that the Government implement ongoing assessments of taxpayer and consumer exposure to CCUS initiatives, introduce mechanisms to ensure public financial benefits from successful projects, and conduct thorough evaluations to determine the overall affordability of the entire program.
Moreover, it called for a clear justification for CCUS applications across relevant sectors and the establishment of new emissions capture targets, with a transparent strategy for addressing any resultant shortfalls.
