| Synopsis: |
This report discusses the competition, cancelled in October 2011, to design, construct and operate the UK's first commercial-scale carbon capture and storage project. The competition was launched in 2007 by the then Department for Business, Enterprise and Regulatory Reform. It was cancelled four years later by the Department of Energy and Climate Change on the grounds of protecting value for money and because the project could not be funded within the GBP1 billion budget agreed at the 2010 Spending Review. It concludes that the competition had been a high risk and challenging undertaking launched with insufficient planning and recognition of the commercial risks. However, the results of engineering and design studies completed by bidders, upon which the Government spent GBP40 million (63 per cent of the GBP64 million it spent in total on the competition), may help to reduce the costs of future carbon capture and storage projects. The cost of the competition was relatively small compared to the investment required to develop CCS at commercial scale and the competition has increased the Department's experience in this field and understanding of project costs.DECC now plans to pursue other carbon capture and storage projects using the GBP1 billion capital fund. The NAO has made recommendations for the Department to address in its future programme |