George Osborne is set to be investigated by the spending watchdog over his recent decision to do away with a carbon capture scheme that was set cost somewhere around £1bn. The scheme, which will no longer go ahead, was designed to test new carbon capture technology and has already cost the taxpayer around £60m.
The Guardian newspaper reports that it has seen a letter stating that the National Audit Office would be examining the expenses related to the scheme and that were “incurred in running and prematurely halting a CCS auction”. The Guardian’s energy editor, Terry Macalister, writes that the National Audit Office will also be looking into “how the Department of Energy and Climate Change plans to secure the country’s future energy needs”.
Sir Amyas Morse is the auditor general at the National Audit Office, he writes:
“In the coming weeks we will begin work looking at particular areas: the costs that government has incurred in running the competition; and the department’s understanding of how the decision to cancel the competition impacts on its aims to maintain security of supply and reduce emissions,”
The investigation was originally asked for by the shadow energy minister, Linda Nandy. She now says that she feels that the public may finally understand George Osborne’s decision to axe this project, which he announced in last year’s autumn statement.
“The chancellor’s sudden decision to abandon support for this cutting-edge technology after 10 years of promises hasn’t just damaged investor confidence at a time when we desperately need investment in our energy sector. It also means that millions and millions of pounds of taxpayers’ money has been simply wasted,” she said.
“The costs to families and businesses of his short-sighted decision could yet be bigger still because without CCS it will be more expensive to cut emissions. This NAO probe should uncover the full cost to the taxpayer of George Osborne’s broken promise.”
The government has also admitted that around £222m of taxpayer’s money has already been spent on CSS (Carbon, Capture and Storage) technology but that they are still uncertain of how great a role this technology will play.
CCS is aimed at catching CO2 before it escapes into the atmosphere and can contribute to the effects of global warming. The auctions that were held for CSS were intended to allow the winner to construct a prototype which would then provide commercial schemes to follow suit.
Shell and Drax were both among the companies that were attempting to develop prototypes aimed at winning the contract. However Drax cut this project due to the change in government policy.
The DECC commented saying that:
“We did not take this decision lightly and it remains the case that CCS has a potential role in the long-term decarbonisation of the UK. We want to make our energy supply as clean as possible, but we will do so in a way that keeps bills as low as possible,”
An energy and climate change minister said that around £31m and £28m of taxpayer money had been spent on projects by Draxler and in Peterhead.
They did not offer any clarification as to where this money had been spent or what it had been spent on. She also said that the projects had not been cut indefinitely and that CCS was still a part of the government’s future plans.
“The government continues to view CCS as having a potential role in the long-term decarbonisation of the UK’s power and industrial sectors,” she added.
The cutting of the CSS auction was defended by the prime minister, David Cameron, in front of a parliamentary committee earlier this month. He said that “the economics are not working at the moment”.
The Committee on Climate Change, an independent body which advises the government, wrote on Thursday to Amber Rudd, the energy and climate change secretary, saying the costs of meeting Britain’s agreed carbon targets would double without CCS.
Labour has amended an energy bill currently making its way through the House of Commons requiring Rudd to bring forward a new CCS strategy within the next 12 months.
When the previous auction for CCS was abandoned in 2011 it prompted an NAO inquiry, which concluded in March 2012. It said: “The department must learn the lessons of the failure of this project if further time is not to be lost, and value for money achieved on future projects.”