MPs warn £22bn green tech investment may increase consumer energy bills

The UK government’s decision to invest nearly £22bn in Carbon Capture, Utilisation, and Storage (CCUS) technology has come under criticism from MPs, who warn that the financial impact on consumers has not been properly assessed. A report from the House of Commons’ Public Accounts Committee, released on Friday, raises concerns that the majority of this funding three-quarters of it will be raised through charges on consumer energy bills.

CCUS is designed to prevent carbon dioxide emissions from industrial processes from reaching the atmosphere by capturing and storing them underground. The government has positioned the technology as essential to meeting the UK’s legally binding net-zero target by 2050, arguing that it will help maintain energy security while reducing emissions. However, the committee cautioned that the policy could substantially impact electricity costs for households and businesses. Sir Geoffrey Clifton-Brown, chair of the cross-party committee overseeing public spending, emphasized that CCUS is still an untested technology in the UK.

The government, in response, reiterated its stance that CCUS is a “necessity, not an option” for achieving climate goals, insisting that investment in the technology will ultimately contribute to lowering long-term energy costs.

The UK’s transition to net zero requires a drastic reduction in greenhouse gas emissions, particularly as it moves away from fossil fuels for energy and transportation. While much of this can be achieved through renewable energy, certain industries such as cement production still rely on fossil fuels and currently lack viable green alternatives. CCUS is seen as a way to capture emissions from these hard-to-decarbonize sectors.

Both the UK’s independent Climate Change Committee and the UN’s climate science panel, the IPCC, support the use of CCUS as part of a broader strategy to reduce global carbon emissions. The government aims to capture and store 50 million tonnes of CO2 annually by 2050. To achieve this, funding has been allocated to CCUS clusters in industrial hubs such as Merseyside and Teesside, where the government claims the projects will create thousands of jobs and attract billions in private investment.

While some experts challenge the committee’s claim that CCUS is “unproven,” they acknowledge that questions remain about the sustainability of the current funding approach. Dr. Stuart Jenkins, a research fellow at the University of Oxford, rejected the idea that CCUS technology is untested, pointing out that 45 commercial CCUS facilities are already in operation worldwide, capturing approximately 50 million tonnes of CO2 annually. The International Energy Agency has identified over 700 additional projects currently in development.

Jenkins agreed that relying on consumer energy bills to fund CCUS may not be the most effective model. Other experts, such as Mirte Boot from the Carbon Balance Initiative, have proposed alternative financing mechanisms. Boot’s research suggests that a carbon storage mandate forcing fossil fuel producers to store a portion of the CO2 they generate or face penalties could provide a more sustainable and equitable solution while giving investors the certainty they need.

The government has defended its approach, arguing that its £21.7bn investment in CCUS will unlock an additional £8bn in private funding over the next 25 years. Nonetheless, as scrutiny intensifies over how the costs of green energy transitions are distributed, the debate over the financial implications of CCUS is likely to continue.