Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Accepted
Significant risks and unproven technology hinder successful CCUS implementation at commercial scale
Conclusion
Significant risks to the successful implementation of CCUS technology remain. There are still no CCUS plants operating at a commercial scale in the UK and the technology is unproven at the scale being planned.20 For example, written evidence we received stated that there are currently only two power stations worldwide using post–combustion carbon capture. Neither of these plants have achieved a 90% capture rate, which is the threshold set for CCUS by the previous government’s Industrial Decarbonisation Strategy.21 We also note that, while there has been no leakage from the two undersea carbon storage sites in Norwegian waters, the stored carbon dioxide has not behaved as expected.22 The Department told us that the Norwegian carbon stores were filled with carbon much more slowly than the Department is planning for the UK.23
Government Response Summary
The department has created business models that provide the minimum subsidy required, keeps the allocation of costs and risks under review to reduce subsidy, has established assurance and control mechanisms, created a new construction team and finance lead, and will carry out monthly reviews reported via the Sponsor Function Board.
Government Response
Accepted
HM Government
Accepted
1. PAC conclusion: The Department is taking a high–risk approach by backing first– of–a–kind, unproven technologies with large amounts of taxpayer and consumer funding. 1. PAC recommendation: The Department should, as the projects it is supporting progress, make sure it is assessing on a regular basis whether taxpayer and consumer exposure is in line with expectations. This should include an assessment of whether its approach for allocating costs and risks between government and the projects is performing as intended. 1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 38 1.2 The Department for Energy Security and Net Zero (the department) has created business models that provide the minimum subsidy required to support the projects, in order to realise the anticipated benefits and positive value for money. The department keeps the allocation of costs and risks between government and projects under review, with the aim of reducing subsidy over the long-term. 1.3 The department has also established the Cluster Sponsor Function, which has the objective of delivering the strategic benefits from the subsidy in the clusters. It will achieve this by monitoring progress through the cluster construction phase and beyond, identifying mitigating actions where required, and monitoring benefits, costs and cross-chain risks and implementing mitigating actions if required. 1.4 The department has taken steps to ensure that appropriate assurance and control mechanisms are established to optimise forecasting of spend profiles of projects in the government’s balance sheet and to minimise financial risks. As part of the Cluster Sponsor Function a new construction team has been created, with responsibility for monitoring construction progress and costs, proactively identifying emerging issues and initiating mitigating actions. This includes a dedicated finance lead, whose role is to manage finance processes (including budget management via the department’s finance processes, contingent liabilities, inputs into spending reviews and business planning exercise) for projects on the government’s balance sheet. 1.5 Reviews will be carried out monthly and will be reported via the Sponsor Function Board, which seeks to resolve issues as they arise to minimise the overall risk to the successful delivery of the project.