National Audit Office report shows Tories sank £100bn in carbon capture plan before it was sunk by Chancellor

Shell's Goldeneye platform was to have been part of the carbon-capture plan.
Shell’s Goldeneye platform was to have been part of the carbon-capture plan.

The UK government spent around £100 million on a competition for developing ground-breaking carbon capture and storage technology before scrapping the plans, a report from the National Audit Office has revealed.

The scheme would have seen emissions from heavy industry stored permanently underground, with Peterhead widely expected to win the £1 billion contract, which would have brought 600 jobs to the area in a joint development by Shell and SSE.

It was scrapped at the eleventh hour by former Chancellor George Osborne – betraying the party’s explicit manifesto promise on the technology. 

Amyas Morse, head of the National Audit Office, said: “The department <of energy> has now tried twice to kick-start carbon capture and storage (CCS) in the UK, but there are still no examples of the technology working.

“There are undoubtedly challenges in getting CCS established, but the department faced an uphill battle as a result of the way it ran the latest competition.

“Not being clear with The Treasury about what the budget is from the start would hamper any project, and caused particular problems in this case where the upfront costs are likely to be high.”

“The department must learn lessons from this experience if it is to stand any chance of ensuring the first CCS plants are built in the near future.”

A spokesman for the Dept of Business and Energy, commented: “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.”

Scottish Energy Minister Paul Wheelhouse, said the NAO report revealed the initial cost of the UK government’s “lack of commitment” to the development of a technology which “has the potential to deliver important economic and environmental benefits for Scotland”.

He said: “Their damaging decision to pull the rug from under the Peterhead project angered many locally and nationally who could see just how short sighted it was.

“But the final cost to Scotland of UK ministers’ failure to provide leadership and commitment to CCS will be far higher if, as a country, we fail to capitalise on our expertise in this area and our existing infrastructure which could be used to deliver large-scale carbon capture and storage.”

Local SNP MSP for Banffshire and Buchan Coast, Stewart Stevenson, has said the latest revelations show how little the Tories care about investment in green energy technology and jobs in the North-East.

He said: “These latest revelations from the National Audit Office are extraordinary, and show how that the Tory betrayal of the North East has not just cost jobs but has cost a fortune to deliver nothing. 

“CCS technology has great potential to play a leading role in tackling climate change, yet the Tories are complicit in stifling investment to develop this technology.”


SNP to lead Commons debate this week on carbon capture

SNP MP Phil Boswell welcomed the National Audit Office report describing it as an ‘urgent wake-up call‘ to get the UK government’s Carbon Capture and Storage (CCS) programme back on track.

Boswell, who was a member of the CCS Advisory Group that reported directly to the UK government, is to lead a Westminster debate this week on UK decarbonisation and carbon capture and storage.

The MP said: ‘’This report makes for sorry reading. It shows confusion – lack of communication – UK government departments wasting taxpayer’s money and at the end of this shambles – a hugely important scheme simply collapsing. Another Whitehall farce.

‘’The truth is – CCS has been undermined at every stage by the UK government and it is simply too important for the future of energy supply to be mishandled the way this report has highlighted. It is a wake-up call to get CCS back on track.

‘’The Tories’ shameful decision to pull the rug out from under the long planned Carbon Capture and Storage Scheme at Peterhead was a complete betrayal of Scotland’s energy sector.

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed