THE UK may have missed out on a chance to become a world leader in carbon capture and storage (CCS) after it failed to develop a strategy for the sector following the cancellation of two multimillion pound competitions, according to a committee of MPs.

Westminster’s powerful Public Accounts Committee (PAC) said yesterday that the government’s abrupt 2015 cancellation of a £1 billion contest aimed at developing a commercial-scale CCS project was short-sighted and “shabby”. It came after a previous decision to end a similar funding initiative in 2011.

The PAC said despite spending £168 million on two competitions that were subsequently aborted, the UK was “no closer to establishing CCS” and had now “missed opportunities to be at the forefront of a growing global industry”.

It warned that the government now had a “major gap” in its decarbonisation plans without more support for CCS.

“Despite spending £168m, the Department for Business, Energy and Industrial Strategy (BEIS) has failed to support the construction of the UK’s first large-scale carbon capture and storage projects,” said the PAC.

“After its first competition for support ended in 2011, the department launched its second competition without being clear with HM Treasury on the support that would be available to successful CCS projects through bill payer-funded contracts for difference once they were up and running, or ensuring that its proposed risk allocation was viable for developers.

“These design weaknesses contributed to the Treasury’s decision, as part of the 2015 Spending Review, to bring the competition to an early end by withdrawing the £1bn capital grant it had previously made available to contribute to the projects’ construction costs.”

The committee said it was the latest in “a series of decisions” indicating that the Treasury was having “undue influence” on the UK Government’s energy policy.

And it warned: “Halting CCS’s deployment means that the UK will have to pay billions of pounds more to meet its decarbonisation targets, has missed opportunities to be at the forefront of a growing global industry, and has damaged investors’ confidence in working with the government on CCS in the future.”

It recommended the BEIS should set out in its industrial strategy the role that CCS can play, and recognise the potential economic value of being a world leader in a globally expanding technology. And it urged Ministers to publish by the end of the year an analysis quantifying the impact across the whole UK economy of delays to CCS development. Of the Treasury’s influence on policy, it said: “The Department and HM Treasury … should agree a way of appraising the costs and benefits of energy policies, which reflects the potential impact across sectors and over the long term, rather than relying on the strike price measure.”

The PAC is not the only body to criticise the government’s approach to CCS. The National Audit Office (NAO) attacked its decision in 2015 to cancel the CCS competition, when it concluded it could “reduce investors’ confidence even further when dealing with the Government in future”, and in January this year, when it said the decision had failed to achieve value for money for taxpayers.

BEIS said it could not comment directly on the report’s findings due to purdah rules ahead of June’s General Election, but after January’s NAO report, the government said it was continuing to work with industry to develop the technology in the UK. However, it stressed that costs would have to fall for it to play a major role in the UK’s decarbonisation efforts.

The BEIS said then: “We haven’t closed the door to CCS technology in the UK, but decisions had to be taken to control government spending and protect consumer bills. This is why the government ended the funding for the CCS competition, and ensured taxpayers were protected from significant costs when the competition closed.”

Experts have argued a CCS industry could be critical to the UK’s ability to meet its long term emissions reductions goals, as it is likely to prove essential to cutting emissions from heavy industry.

Dr Luke Warren, chief executive of trade body the Carbon Capture and Storage Association (CCSA), welcomed the PAC’s findings as “yet another clear voice highlighting the incredible importance of CCS for the UK”. He added: “It is clear that developing CCS is in the national interest, and whichever party is in power after June 8 has a key early opportunity to act on the committee’s findings and release the Emissions Reduction Plan [now called the Clean Growth Plan], setting out a fresh, ambitious approach to CCS that learns the lessons of the past.”