45.CCUS has been recognised as a priority technology for UK’s energy transition for over 15 years. The country is exceptionally well-placed to lead the technology’s development, with an expansive geological storage resource and directly-relevant capabilities in our indigenous oil and gas industry. Successive Governments have sought to establish a first demonstration project, but have so far failed in this endeavour, and late cancellations have grown scepticism of the UK’s commitment amongst investors. The current Government has made good progress in reinvigorating CCUS interest with a new Action Plan that focuses on industrial applications. This offers potential to develop the technology at substantially lower costs than under the formerly favoured power-sector model, and to provide diversification options that could help guard against future deindustrialisation. During our inquiry we consistently heard praise for the efforts of the Minister, Claire Perry, who is credited with championing the CCUS renaissance during her relatively long-standing tenure as Energy Minister.
46.Despite these positive developments, formal targets for CCUS remain ambiguous, with no clarity on the ‘scale’ of deployment that Government plans to bring forwards, nor a definitive answer on the apparent precondition that this essential technology must become cheaper before it is widely deployed. The Minister clearly rejected the notion of cost targets in her evidence to us, which begs the question of why this caveat has been written into policy. Given the stop-start history of CCUS in the UK, it would be disastrous if the new direction we have outlined, and which the Government is now setting, is abandoned by a future Government.
47.We are further concerned that not all branches of Government can see the advantages of CCUS as clearly as the Minister. The National Infrastructure Assessment’s cost-benefit analysis excluded industrial applications of the technology, and the Treasury has been singled out for its lack of awareness of CCUS’ benefits, despite calls from local industries that see it as critical to their future (although early deployment will need policy support to protect UK competitiveness). The two former CCUS competitions were both cancelled at the Treasury’s request because of fears surrounding project costs, after substantial industry investment. It is imperative that any future decisions on how and when to fund this technology are taken with a full and thorough understanding of the critical role it is expected to play, not only in decarbonisation across the whole economy, but in extending the life of and modernising UK industry.
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Published: 25 April 2019