Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Accepted
Department lacks clear plan for government to share in successful CCUS project profits
Recommendation
We asked the Department whether its business models allow for the government to take a share of any profit a project makes if the programme is successful.37 But the Department could not provide a compelling answer.38 Now that the Department has signed its first two contracts for carbon capture and storage, this will produce an “incredibly better investment” scenario for the private sector in the second tranche, which should encourage the Department to think about, for example, profit shares and equity stakes.39 HM Treasury hopes that the government agreeing support for projects in the programme’s Track 1 will provide industry with confidence over the government’s long term commitment to CCUS.40 The Department told us that it would be “looking very carefully at the economics of the developers and the investors, including what benefit they accrue from the projects…”.41 The Department assured us “that [was] exactly the sort of thing [it] is considering in an open–minded way.” 42 Assessing the programme’s affordability
Government Response Summary
The department will continue to evolve business models including mechanisms to ensure taxpayers and consumers benefit financially from the success of CCUS projects, including gainshare, and will work with the National Wealth Fund and Great British Energy to support delivery and drive value for money, with a target implementation date of December 2026.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2026 2.5 In achieving this balance, the department notes that the business models do have mechanisms to ‘make sure that taxpayers and consumers will benefit financially’ from the 39 success of projects. For example, a ‘gainshare’ mechanism has been included as part of the Dispatchable Power Agreement agreed with Net Zero Teesside which ensures that any excess profits are shared with consumers, thus reducing consumer-funded subsidies. 2.6 The department will continue to evolve the business models as the sectors develop, including mechanisms to ensure taxpayers and consumers benefit financially from the success of the projects. This will include working with the National Wealth Fund and Great British Energy to understand how they can support delivery of CCUS and drive value for money.