Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
NESO report indicates power CCUS reduces energy costs but requires more upfront financial support
Recommendation
The Department referred us to recent work from National Energy System Operator [NESO] on decarbonising the power system.53 It told us that NESO’s report, which concluded that CCUS was one of two pathways to a low–cost energy system, highlighted that the lowest cost system will include the use of dispatchable low–carbon power generation such as power CCUS.54 CCUS did not feature in the other pathway.55 The Department told us that NESO’s analysis showed that low carbon dispatchable power, such as power CCUS, could lead to lower cost for the power sector than a system just based on renewables.56 But NESO’s report also concluded that CCUS–enabled gas would require more upfront financial support.57 49 C&AG’s Report, para 14 50 Q 21 51 C&AG’s Report, para 3.16 52 Q 58 53 Q 21 54 Q 21 55 Q 21 56 Q 43 57 National Energy System Operator, Clean Power 2030: Advice on achieving clean power for Great Britain by 2030, November 2024. 14 2 Adapting the programme over time Downgrading ambitions
Government Response Summary
The Department and HM Treasury will assess whether the full CCUS programme will be affordable for taxpayers and consumers, with a target implementation date of Summer 2025.
Government Response
Accepted
HM Government
Accepted
3. PAC conclusion: The Department and HM Treasury have yet to assess the full financial impact of the CCUS programme on taxpayers and consumers. 3. PAC 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. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2025 3.2 The department continuously assesses the affordability and value for money of 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. 3.3 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. 3.4 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. 3.5 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.