Carbon capture axe casts shadow over UK energy plans

Decision to scrap technology funds will hike the cost of meeting UK 2050 climate target, warns spending watchdog amid Brexit uncertainty

Could an industrial strategy promote carbon capture? (Flickr/Andrew Stawarz)

By

The UK government has been urged to revive support for technology to capture carbon emissions from power plants and heavy industry, amid uncertainty over its commitment to climate goals.

It cancelled a £1 billion carbon capture and storage (CCS) competition last autumn, citing value for money concerns.

But a review by parliamentary watchdog the National Audit Office found that could hike the cost of meeting Britain’s 2050 emissions target by £30 billion (US$39bn).

“CCS is essential to meet our 2050 climate change targets,” said Mary Creagh MP, chair of the Environmental Audit Committee, which commissioned the report.

“It is critical that government establish a new strategy for supporting large scale deployment of CCS.”

Weekly briefing: Sign up for your essential climate politics update

The document draws on analysis by the energy and climate change department, which said other routes to achieving deep carbon cuts would be more expensive.

That narrative only accounted for capital grants, the NAO noted, not operating subsidies, which were due to cost another £8.5bn over 15 years.

In its defence for scrapping the programme, the Treasury said it was too early for CCS to be cost effective. A rising carbon price could make it more commercially viable in future, it argued.

Shadow energy minister Barry Gardiner called the decision “reckless” and CCS “a vital element of our low carbon future”.

Since the CCS axe – roundly criticised at the time for denting investor confidence – the political environment has irrevocably changed.

Reviving Hercules: Can carbon capture give British industry a future?

All sectors are grappling with the uncertainty posed by Britain leaving the EU. The International Monetary Fund on Tuesday cut its UK and global growth forecasts.

Many commentators were alarmed by prime minister Theresa May’s decision to merge the energy and business departments, losing climate change from the nameplate. They feared it amounted to a downgrade for climate concerns.

Others argued it was an opportunity for the new department’s secretary of state Greg Clark to integrate climate policy throughout the economy.

“I have welcomed Greg Clark’s appointment as a thoughtful politician who understands the urgency of climate change,” said Gardiner.

“He must now refocus government to deliver the investment required to deliver our clean energy future.”

UK reshuffle: PM merges climate and business departments

Clark’s brief includes “industrial strategy”, which suggests a licence to promote particular sectors. That was previously a taboo phrase, reflecting an ideological bent towards free markets over central planning.

His department “will be well-placed to deliver a more holistic and strategic approach to CCS,” said Luke Warren, head of trade body the CCS Association.

“Despite the cancellation of the CCS competition, industry in the UK stands ready to deliver.”

One thing that has not changed is the UK’s domestic Climate Change Act, which goes beyond what is required by Brussels.

On Tuesday, the House of Lords approved a carbon budget for 2028-2032, paving the way for it to enter into law.

‘The adoption of an ambitious 5th carbon budget is both a strong environmental legacy for the Cameron government and a promising start for the new May government,” said Damien Morris of consultancy Futureproof.

“It shows that post-Brexit Britain can still be a responsible and outward looking global citizen.”

Sketch: UK climate change sceptics botch Paris deal hit-job

Still, the government’s own emissions forecast shows it will fall 10% short of its mid-2020s target without further action.

“There is a gap between our stated ambitions on climate change and the policies and spending the government is bringing forward to get us there,” said Creagh.

One of the government’s favoured low carbon technologies, offshore wind power, depends on coordination with European neighbours.

Britain is working with nine other European countries to bring down costs of deployment in the North Sea

Experts briefing press in London on Tuesday were hopeful Britain would keep energy links with the continent in the renegotiated relationship.

Report: Offshore wind costs hit record low

“If leaving the EU were to scupper the North Sea grid, that would be very very bad for the UK energy ambitions,” said Hugo Chandler of consultancy New Resource Partners.

Government is due to flesh out its low carbon plans this autumn, addressing emissions from previously neglected sectors like transport.

Its high upfront costs for distant reward still make CCS “a hard sell,” said Jim Watson, director of the UK Energy Research Centre.

Central to most long range decarbonisation models, pumping carbon dioxide into underground reservoirs has proved commercially challenging.

“The risk of the UK withdrawing is we are relying on other countries to develop CCS instead and many are also wobbly on their plans,” he told Climate Home.

Read more on: Energy | EU |