The NAO also warned that about £100m of taxpayer funding and £80m of private investment put into developing the projects was at “significant risk” of being wasted as the people involved in them moved on and knowledge was lost.
The depleted North Sea oil well that would have been used to store the carbon from one of the projects may now be decommissioned, making it unavailable and forcing developers to find a new site at added cost if CCS is revived at a later date, the NAO said.
It also warned that the late-stage and unexpected cancellation of the competition, which was launched in 2012 following the scrapping of another CCS competition the previous year, increased the risk that “investors will be deterred from dealing with the government or require a higher return to do so, which would increase the cost of a future CCS policy”.
The NAO also reveals that the DECC sought additional funding for a new programme to develop CCS technology for heavy industry such as steel and chemicals plants, where it is the only option available to cut emissions.
This was also rejected, leaving “no viable way to achieve deep emissions reductions from the industrial sector in the near future” and so exposing industry to ongoing variation in costs of emissions schemes, it said.
A Government spokesman said: “We are committed to meeting our climate change targets in a way that is affordable and provides secure energy to our families and businesses. We haven’t closed the door to CCS in the UK, but we are clear that it needs to come down in cost and are considering the role that it could play in long-term decarbonisation.”