Government's £22bn investment in 'unproven' carbon capture technology is 'risky', MPs say

Last year, the Government pledged £4bn to the BP and Equinor CCUS project Net Zero Teesside, based where the old Redcar steelworks blast furnace stood in Teesworks.

This aims to trap harmful by-product gases, compress them, and store them in huge underground tanks beneath the North Sea. The fledgling technology is touted as an alternative to releasing carbon into the atmosphere.

Rachel Reeves also pledged funding for CCUS in the Humber Estuary in her Labour Party Conference speech.

Business groups say they are ready to invest more than £15 billion in decarbonisation projects in the region, following government investment in carbon capture.

However, now the PAC has warned that there is a high risk that CCUS will not deliver on the timescales or level of carbon reductions needed to meet climate targets.

Around a quarter of the £21.7bn over 25 years for the first projects will come from taxation, while three quarters will come from levies on consumers, who already face some of the highest energy bills in the world, the MPs warned.

The Department for Energy Security and Net Zero (DESNZ) has not established mechanisms to make sure taxpayers and consumers will benefit financially if the programme is a success, or looked at the likely financial impact of developing the technology on households.

The Government must avoid “over reliance” on the programme at the expense of other routes to bringing the UK’s emissions down to net zero by 2050, such as renewable energy, a report from the committee said.

The MPs also said there was a “high degree of uncertainty as to whether these risky investments in unproven technologies present best value for money for taxpayers and consumers”, compared to other ways of cutting carbon, except in a minimum of cases with little alternatives such as cement.

Chairman of the committee Sir Geoffrey Clifton-Brown said: “This £21.7bn policy is going to have a very significant effect on consumers and industry’s electricity bills.

“Whether this is acceptable remains to be seen.”

And he said: “All early progress will be underwritten by taxpayers, who currently do not stand to benefit if these projects are successful.

“Any private sector funding for such a project would expect to see significant returns when it becomes a success.

“We were surprised that the Government had not even considered this aspect.”

Tees Valley Mayor Ben Houchen hit back, saying: "Spades are going in the ground in a matter of months to build a power plant just a stone's throw from where the Redcar steelworks once sat.

"This project will not only create thousands of new jobs, but safeguard thousands more in the chemical and processing sector.

“The industries of the future in Teesside are about three things: creating jobs, creating energy security, and putting more money in people’s pockets.

"Our region is perfectly placed to lead the next Industrial Revolution and I will work tirelessly to make sure local people feel the benefits.”

A DESNZ spokesperson said: "Carbon capture, usage and storage is vital to boost our energy independence, and the Climate Change Committee describes it as a 'necessity not an option' for reaching our climate goals.

"There is no route to protecting jobs in our industrial heartlands and securing the future of heavy industry in the UK without it.

“This funding will see our industries remain competitive in the global economy, kickstart growth and lead the world in a ground-breaking clean energy technology.”