Government pays dearly for cancelled tech contest

THE Government spent £100m on a competition for developing technology to capture carbon emissions before cancelling the project, a report shows.

The carbon capture and storage (CCS) competition was the second bid by the Government to support UK schemes that capture pollution from power stations or heavy industry and store it permanently underground.

A failure by the Energy Department to agree the longterm costs of the competition with the Treasury helped lead to its cancellation amid concerns over the price to consumers, the National Audit Office (NAO) said.

CCS potentially has an important role to play in tackling climate change. It is estimated it would cost the UK £30bn more to meet targets to cut greenhouse gases by 2050 without CCS.

A NAO report warned it was “currently inconceivable” that CCS projects would be developed without government support, but the second competition did not achieve value for money.

The then-Department of Energy & Climate Change, now part of the Department for Business, Energy & Industrial Strategy, began the programme in 2012 without agreeing with the Treasury on the amount of financial support to be made available over the lifetime of the projects.

This contributed to the Treasury pulling its pledged £1bn in capital funding in late 2015, resulting in the competition’s cancellation.

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 with the technology, and Shell’s scheme in Peterhead, Aberdeenshire, to fit CCS to an existing gas plant operated by SSE.

The NAO report said the department initially estimated it would cost consumers – who would subsidise electricity from the schemes – between £2bn and £6bn over 15 years, but by 2015, this estimate had risen to as much as £8.9bn.

The report found the Treasury was concerned over the costs to consumers, and felt the competition was aiming to deliver CCS before it was cost-efficient to do so.

The first competition to kick-start CCS was cancelled in 2011, after the Government had spent £68m on it.