Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Accepted
Concerns raised about CCUS effectiveness and unaddressed methane leakage from LNG supply chains
Recommendation
The Department recognised that there are some “contested views” concerning, for example, the effectiveness of CCUS in reducing emissions from gas–fired power stations.69 We received written evidence suggesting that there are higher levels of methane (a gas with significant greenhouse effects) leakage throughout the supply chain for liquified natural gas (LNG) than previously thought. Given that the UK’s LNG production is winding down, more LNG is likely to be imported from countries like the USA, lengthening the supply chain and worsening the risk of leakage. Methane leakage during production and transportation of LNG are ‘upstream emissions’ that will not be addressed by CCUS and might have a greater climate impact than the actual burning of the gas at a power station.70 The Department told us that there are contested views in this space and 63 Contracts signed for UK’s first carbon capture projects in Teesside – GOV.UK 64 Letter from Minister of State for Industry dated 11 December 2024; and Letter from DESNZ to PAC dated 21 January 2025. 65 Q 7 66 Q 24 67 Q 25 68 Q 27 69 Q 4 70 CCUS0018 16 that issues such as methane leakage will need to be looked at through the broader perspective of Carbon Budgets, rather than through the CCUS programme.71
Government Response Summary
The government will reappraise on an annual basis its approach to assessing the value for money of CCUS projects, considering the impact of up-to-date scientific understanding. This appraisal has been implemented since the start of the CCUS programme and was implemented most recently via Full Business Cases in Summer 2024.
Government Response
Accepted
HM Government
Accepted
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.