Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Not Addressed
Value for money assessments do not fully mitigate unsuitable carbon capture project risks
Conclusion
When selecting which clusters to proceed with and which projects to select within each cluster, the Department assessed value for money against five criteria: deliverability; economic benefits; costs; carbon savings; and learning. Once the shortlist of Track 1 projects had been reached, the Department conducted a full value for money assessment, following Green Book guidance.66 In terms of assessing the first–of–a–kind risks, the Department told us that it completed a technical assessment on all the projects and that these were subject to several Gateway Review stages.67 While we understand that the Department has designed its business models with the intention that payments are only made once projects are operational and meeting certain parameters, this does not mitigate the risk that the project should not have been supported in the first place68
Government Response Summary
The government responds to a different recommendation (4a) than the conclusion being made (20).
Government Response
Not Addressed
HM Government
Not Addressed
4. PAC conclusion: The Department and HM Treasury lack clarity on how they would take account of project underperformance and advances in scientific understanding as part of their ongoing assessment of the programme’s future. 4a. PAC recommendation: The Department and HM Treasury should reappraise on an annual basis its approach to assessing the value for money of CCUS projects which it intends to support. As part of this assessment, they should consider the impact of up–to–date scientific understanding of CCUS…. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 Appraisal of value for money via business case has been implemented since the start of the CCUS programme and was implemented most recently via Full Business Cases in Summer 2024. 4.3 For projects under contract, the business models contain mechanisms to manage the risk of project underperformance, minimising the risk of lower than anticipated project outcomes. The business models and contract performance are robustly monitored via an assurance function and via Cluster Sponsor governance. 4.4 For projects not yet committed to and the shape of the future programme, informed by wider strategies and analysis such as Carbon Budget Delivery Plans or the Clean Power Action Plan, the value for money approach is primarily reviewed as part of the Business Case process and ahead of final investment decisions being taken. This process is ongoing, dictated by the project pipeline, rather than a fixed annual schedule. 4.5 The department, through its scientists and engineers, including the Chief Science Advisor, continually draw upon a range of sources, such as the Intergovernmental Panel on Climate Change (IPCC) and Climate Change Committee, and ensure this updated scientific evidence on the need for CCUS is used to underpin Business Cases. The department also ensures that business models are periodically refined and updated to improve value for money.