Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Assess the full CCUS programme's affordability for taxpayers and consumers amid cost of living pressures
Conclusion
The Department and HM Treasury have yet to assess the full financial impact of the CCUS programme on taxpayers and consumers. The costs of the CCUS programme are significant: in November 2024 the government announced £21.7 billion of funding over 25 years to cover only the first five CCUS projects. There are three more projects that are still under negotiation as part of Track 1, an unquantified number of additional projects that are expected to join the HyNet and East Coast clusters as part of Track 1 expansion, and all the projects that will join the Track 2 clusters at Peterhead and Humberside. The Department has not indicated the likely cost of these projects. The Department and HM Treasury expect that around 75% of the cost of supporting these early projects will be met by levies on consumers who are already facing significant financial pressures, with the remainder funded by the Exchequer. Drawing on a recent report from the National Energy System Operator (NESO), the Department has concluded that supporting the deployment of CCUS in gas–fired power stations offers lower costs compared to alternatives. But NESO also concluded that this approach would require more upfront financial support. The Department has not looked at the likely financial impact on bills of the full CCUS programme at a time when households are already facing high energy prices. recommendation The Department and HM Treasury should assess whether the full CCUS programme will be affordable for taxpayers and consumers, given wider pressures on energy bills and costs of living. 5
Government Response Summary
The government agrees and states that it already assesses the affordability of CCUS support as part of key policy processes and Spending Reviews. It highlights that rigorous assessments, in line with Treasury Green Book principles, have already been undertaken for the initial phases of the East Coast and HyNet clusters, considering impacts on taxpayers and billpayers.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. government support for CCUS as part of key policy and decision-making processes to keep the UK on the least cost pathway to net zero, including Carbon Budget Delivery Plans and through regular government Spending Reviews. As with all major programmes, the CCUS Programme works with HM Treasury to assess the benefits of deploying CCUS along with taxpayer affordability, energy bill and cost of living impacts of CCUS Programme. As part of the business case for supporting the initial phase of the East Coast Cluster and Hynet cluster, the department undertook a rigorous assessment of the affordability and value for money of both clusters in line with the principles set out in the Treasury Green Book. This was a detailed analysis that drew on commercial data relating to the projects as well as other sources of evidence, including market data and evidence relating to Optimism Bias, to estimate of the costs and benefits of the projects over their lifetime. The business case considered the costs and benefits to society as a whole as well as the impacts on specific groups such as billpayers and taxpayers.