Carbon Capture, Usage and Storage

Public Accounts Committee Closed Inquiry
Opened: 31 Oct 2024 Closed: 3 Apr 2025 Parliament page
Carbon Capture, Utilisation and Storage (CCUS) technology involves the capturing of CO2 emissions and their permanent storage underground. In 2021, the Government set out an ambition in its Net Zero Strategy for four CCUS clusters capturing 20 to 30 million tonnes of carbon per annum by 2030. The Department for … Read more
11 Recommendations
15 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 7 events
6 May
2025
Report published
7 Feb
2025
Report published
27 Jan
2025
Correspondence
20 Jan
2025
Correspondence
19 Dec
2024
Correspondence
12 Dec
2024
Oral evidence
12 Dec
2024
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
12 Dec 2024
View on parliament.uk
Ashley Ibbett · Department for Business, Energy and Industrial Strategy Jeremy Pocklington CB · Ministry of Defence Paro Konar · Department for Energy Security and Net Zero Steve Field · HM Treasury
Title HC No. Published Items Response
8th Report - Carbon Capture, Usage and Storage HC 351 7 Feb 2025 26 Responded
Recommendations & Conclusions
26 results
2 Conclusion Accepted
8th Report - Carbon Capture, Usage…
Introduce mechanisms for taxpayers and consumers to benefit financially from future CCUS project success
While the Department is taking steps to incentivise efficient delivery of the CCUS projects, it has not established mechanisms to make sure that taxpayers and consumers will benefit financially should the programme be successful. The Department has developed a range … Read more
Government Response
The government agrees, stating that existing business models already include mechanisms like a 'gainshare' in the Net Zero Teesside Dispatchable Power Agreement to ensure financial benefit for taxpayers and consumers. The Department will continue to evolve these models, working with the National Wealth Fund and Great British Energy.
HM Treasury
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3 Conclusion Accepted
8th Report - Carbon Capture, Usage…
Assess the full CCUS programme's affordability for taxpayers and consumers amid cost of living pressures
The Department and HM Treasury have yet to assess the full financial impact of the CCUS programme on taxpayers and consumers. The costs of the CCUS programme are significant: in November 2024 the government announced £21.7 billion of funding over … Read more
Government Response
The government agrees and states that it already assesses the affordability of CCUS support as part of key policy processes and Spending Reviews. It highlights that rigorous assessments, in line with Treasury Green Book principles, have already been undertaken for the initial phases of the East Coast and HyNet clusters, considering impacts on taxpayers and billpayers.
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4 Conclusion Accepted
8th Report - Carbon Capture, Usage…
Department and Treasury lack clarity on accounting for CCUS project underperformance and scientific advances
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. The Department had a clear set of five factors … Read more
Government Response
The government agrees and is taking several actions regarding BECCS, including developing new sustainability criteria for future support, planning a consultation on a common biomass sustainability framework, commissioning BSI to develop GGR methodologies by mid-2025, and launching an independent review into GGRs.
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5 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Set out rationale for supporting CCUS in each sector, considering cost-effective alternatives
To date, the Department has done little to ensure that government support for CCUS is directed to the sectors or locations where it will be essential for achieving net zero. CCUS is currently seen as the only way to decarbonise … Read more
Government Response
The government agrees, stating the recommendation has been implemented as the Department already sets out its rationale for supporting CCUS in various sectoral strategies and compares costs with alternative approaches to achieve net zero. It ensures resources are allocated to sectors with few alternatives and where CCUS is cost-effective.
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6 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Set out urgent new carbon capture targets and clarify how to address net zero shortfall
The Department has downgraded its ambitions for the CCUS programme, stating that the original 2030 ambitions are no longer achievable. The current CCUS programme is the government’s third attempt to introduce the technology. Compared with previous attempts, the government is … Read more
Government Response
The government agrees and outlines its plan to monitor and report on net carbon captured by CCUS projects once operations begin, detailing obligations for Transport & Storage Companies and capture projects to report capture rates, storage performance, and leakage to relevant regulators. It has also established a Cluster Sponsor Function for performance oversight.
HM Treasury
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1 Conclusion Accepted
8th Report - Carbon Capture, Usage…
Committee receives evidence on Department's carbon capture, usage and storage programme
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (the Department) on its carbon capture, usage and storage programme.1
Government Response
The government states it has already created business models to provide minimum subsidy, established a Cluster Sponsor Function to monitor progress and risks, and set up assurance and control mechanisms, including a new construction team with monthly reviews.
HM Treasury
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7 Conclusion Not Addressed
8th Report - Carbon Capture, Usage…
Department and Treasury agree CCUS funding limits but recognise substantial contingent liabilities
A major factor in the failure of the second CCUS competition was the lack of agreement between the Department and HM Treasury on funding limits.15 The Department told us that this time it had agreed an affordability envelope with HM … Read more
Government Response
The government's response provides a general introduction to the CCUS programme, previous attempts to launch CCUS, the current approach, funding announcements and signed contracts with the first two projects. It does not directly address the conclusion about the Department and HM Treasury agreeing on funding limits.
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8 Conclusion Accepted
8th Report - Carbon Capture, Usage…
Significant risks and unproven technology hinder successful CCUS implementation at commercial scale
Significant risks to the successful implementation of CCUS technology remain. There are still no CCUS plants operating at a commercial scale in the UK and the technology is unproven at the scale being planned.20 For example, written evidence we received … Read more
Government Response
The department has created business models that provide the minimum subsidy required, keeps the allocation of costs and risks under review to reduce subsidy, has established assurance and control mechanisms, created a new construction team and finance lead, and will carry out monthly reviews reported via the Sponsor Function Board.
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9 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Untested business models and contracts expose taxpayers to huge CCUS programme costs
Given the scale of the funding announced for the first five projects and the size of the contingent liabilities that the Department has recognised for its underwriting of the programme, the potential costs to taxpayers and consumers are huge. The … Read more
Government Response
The department has created business models that provide the minimum subsidy required, keeps the allocation of costs and risks under review to reduce subsidy, has established assurance and control mechanisms, created a new construction team and finance lead, and will carry out monthly reviews reported via the Sponsor Function Board.
HM Treasury
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10 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
Department established specific business models for Track 1 CCUS projects to allocate risks effectively
The Department established business models on which to base its support for each of the projects in the programme’s Track 1.28 These models set out how costs and risks are distributed between the government and the project.29 The Department told … Read more
Government Response
The Department for Energy Security and Net Zero has created business models that provide the minimum subsidy required to support the projects, keeps the allocation of costs and risks under review with the aim of reducing subsidy over the long-term.
HM Treasury
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11 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
Department aims to shift financial risk from government to self-sustaining CCUS market by 2035
Looking to the future, the Department told us it wants to move the balance of risk away from the government as the market for CCUS evolves.33 The Department’s current assessment is that, because projects are first–of–a– kind, there is an … Read more
Government Response
The Department for Energy Security and Net Zero has created business models that provide the minimum subsidy required to support the projects, keeps the allocation of costs and risks under review with the aim of reducing subsidy over the long-term.
HM Treasury
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12 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Department lacks clear plan for government to share in successful CCUS project profits
We asked the Department whether its business models allow for the government to take a share of any profit a project makes if the programme is successful.37 But the Department could not provide a compelling answer.38 Now that the Department … Read more
Government Response
The department will continue to evolve business models including mechanisms to ensure taxpayers and consumers benefit financially from the success of CCUS projects, including gainshare, and will work with the National Wealth Fund and Great British Energy to support delivery and drive value for money, with a target implementation date of December 2026.
HM Treasury
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13 Conclusion Not Addressed
8th Report - Carbon Capture, Usage…
Government announced £21.7 billion funding for the first five Track 1 CCUS projects
In early October 2024, the government announced £21.7 billion of funding, over 25 years, to support the first five projects in Track 1 of its CCUS programme.43 In early December 2024, the Department signed contracts with two projects in the … Read more
Government Response
The government's response provides a general introduction to the CCUS programme, previous attempts to launch CCUS, the current approach, funding announcements and signed contracts with the first two projects. It does not directly address the conclusion about the funding announcement for Track 1 projects.
HM Treasury
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14 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
Uncertainty remains regarding precise consumer/taxpayer funding balance for the £22 billion CCUS programme
The Department told us it expects around three quarters of the allocation of financial support of almost £22 billion will be from levies on consumers (such as those using power generated by the Net Zero Teesside project).46 The remaining 25% … Read more
Government Response
The department continuously assesses the affordability and value for money of government support for CCUS as part of key policy and decision-making processes, working with HM Treasury to assess benefits, taxpayer affordability, and energy bill impacts.
HM Treasury
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15 Conclusion Not Addressed
8th Report - Carbon Capture, Usage…
Department and Treasury acknowledge further funding required for later CCUS programme stages
The Department and HM Treasury have acknowledged that further funding will be required for the programme’s later stages, such as Track 1 expansion and Track 2 (which includes two more clusters).51 The Department told us that it is in “detailed … Read more
Government Response
The government responds to a different recommendation (3) than the conclusion being made (15).
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16 Recommendation Accepted
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NESO report indicates power CCUS reduces energy costs but requires more upfront financial support
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 … Read more
Government Response
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.
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17 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
Climate Change Committee deems CCUS essential for UK net zero targets, with ambitious 2030 goals
The Department began developing its current approach to CCUS in 2018, following two previous failures.58 The Climate Change Committee, which advises government on how best to meet its decarbonisation goals, considers CCUS to be essential for the UK to meet … Read more
Government Response
The government provides background information on CCUS technologies and the UK's approach to achieving net zero, but doesn't directly address the specific ambitions for the CCUS programme mentioned in the conclusion.
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18 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
Department made slow progress and scaled back initial carbon capture ambitions
However, the Department has made slow progress in getting the first tranche of projects running. It had initially hoped to sign contracts with the first carbon capture projects in the second quarter of 2022, but this has been repeatedly pushed … Read more
Government Response
The government provides background information on CCUS technologies and the UK's approach to achieving net zero, but doesn't directly address the specific delays and scaling down of ambitions mentioned in the conclusion.
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19 Conclusion Acknowledged
8th Report - Carbon Capture, Usage…
2030 carbon capture and storage targets deemed unachievable by the Department
In the latter part of 2024, the Department successfully concluded negotiations with two of the Track 1 projects. In December 2024, the Department announced it had signed contracts with the first two projects at East Coast Cluster: Net Zero Teesside … Read more
Government Response
The government provides background information on CCUS technologies and the UK's approach to achieving net zero, but doesn't directly address the specific negotiation successes and the revised target mentioned in the conclusion.
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20 Conclusion Not Addressed
8th Report - Carbon Capture, Usage…
Value for money assessments do not fully mitigate unsuitable carbon capture project risks
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 … Read more
Government Response
The government responds to a different recommendation (4a) than the conclusion being made (20).
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21 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Concerns raised about CCUS effectiveness and unaddressed methane leakage from LNG supply chains
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 … Read more
Government Response
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.
HM Treasury
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22 Recommendation Accepted
8th Report - Carbon Capture, Usage…
No BECCS projects in Track 1 despite importance for unachievable 2030 greenhouse gas removal targets
The original 2030 targets for the CCUS programme, which the government has now told us are unachievable, included a goal for the UK to achieve 5 mtpa of engineered greenhouse gas removals. The bulk of this was expected to be … Read more
Government Response
The government agreed that any future support for BECCS will be accompanied by monitoring arrangements that provide real assurance that industry is meeting sustainability criteria, which will build on existing sustainability criteria for biomass, with target implementation in Summer 2025. The department plans to consult later this year on the development of a common biomass sustainability framework. An independent review will consider how Greenhouse Gas Removals (GGRs) can assist the UK in meeting the government’s net zero targets and ensuring security of supply, out to 2050.
HM Treasury
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23 Recommendation Accepted
8th Report - Carbon Capture, Usage…
CCUS remains only viable decarbonisation method for specific industrial process emissions
At present, CCUS technology is the only way to decarbonise industries that generate emissions from physical or chemical processes, rather than from the combustion of fuels. For example, 60 to 70% of emissions from the cement industry come from chemical … Read more
Government Response
The government agreed to set out its rationale for supporting CCUS in each sector where it could be applied, including considering whether alternative approaches could be more cost effective, referencing various sectoral strategies and analysis. Separately, an independent review will consider how Greenhouse Gas Removals (GGRs) can assist the UK in meeting the government’s net zero targets and ensuring security of supply, out to 2050.
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24 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Alternative pathways exist for power sector decarbonisation without relying on CCUS technology
In other sectors, there are viable methods to decarbonise that do not require CCUS. For example, the Department told us that CCUS could play a particularly important role in power generation.80 However, there are other ways that the UK could … Read more
Government Response
The government agreed to set out its rationale for supporting CCUS in each sector where it could be applied, including considering whether alternative approaches could be more cost effective, referencing various sectoral strategies and analysis. Separately, an independent review will consider how Greenhouse Gas Removals (GGRs) can assist the UK in meeting the government’s net zero targets and ensuring security of supply, out to 2050.
HM Treasury
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25 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Department's CCUS strategy prioritises cost-efficient geographical clusters for diverse industrial sectors
The Department’s approach to date has been focused on rolling out CCUS to geographical clusters. The Department told us that its cluster–based approach makes sense in terms of cost–efficiency as fewer and shorter pipelines need to be built and because … Read more
Government Response
The department has already set out the relative role of CCUS in decarbonising sectors in various sectoral strategies and regularly updates its analysis as part of the carbon budget delivery cycle, ensuring that CCUS resources are allocated where few alternatives exist and where it is cost effective.
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26 Recommendation Accepted
8th Report - Carbon Capture, Usage…
Industries needing CCUS are not always clustered; support for dispersed sites undecided
However, there is no guarantee that the industries most in need of CCUS will be located in a geographical cluster.85 A cement plant was short–listed for Track 1 in March 2023, but as yet government has not agreed terms with … Read more
Government Response
The department has already set out the relative role of CCUS in decarbonising sectors in various sectoral strategies and regularly updates its analysis as part of the carbon budget delivery cycle, ensuring that CCUS resources are allocated where few alternatives exist and where it is cost effective.
HM Treasury
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Government Response AI assessment · 26 of 11 classified
Accepted 16
Acknowledged 6
Not Addressed 4
Total 11 recs + 15 conclusions
Correspondence 3 letters
27 Jan 2025 To committee Letter from the Permanent Secretary of the Department for Energy Security and Net Zero relating to a response on contingent liabilities on Carbon Capture projects, 21 January 2025
Parliament page
20 Jan 2025 To committee Letter from the Permanent Secretary of the Department for Energy Security and Net Zero relating to contingent liabilities on Carbon Capture projects, 14 January 2025
Parliament page
19 Dec 2024 From committee Letter to the Permanent Secretary of the Department of Energy, Security and Net Zero relating to contingent liabilities on Carbon Capture projects - following the Committee's inquiry on 12 December 2024, 19 December2024
Parliament page