NAO report claims DECC and predecessor did not effectively manage risk

The government failed to get to grips with the technical, commercial and regulatory risks involved in its cancelled £1bn bid to create the UK’s first commercial-scale carbon capture and storage project, the National Audit Office said today.
The competition to design, construct and operate the plant was cancelled by DECC last October on the grounds of protecting public money.
It had been launched by the then Department for Business, Enterprise and Regulatory Reform in 2007.
The NAO report acknowleged the inherent risks involved in the scheme but said these had not been properly evaluated and planned for, despite overall expenditure of £64m.
However, it also highlighted benefits from £40m worth of this spending, which was spent on engineering and design studies and “may help to reduce the costs of future carbon capture and storage projects,”.
Amyas Morse, head of the National Audit Office, said: “In the context of value for money, developing new technologies is an inherently risky undertaking. Taking calculated risks is perfectly acceptable if those risks are managed effectively; but in this case DECC, and its predecessor, took too long to get to grips with the significant technical, commercial and regulatory risks involved.
“Four years down the road, commercial scale carbon capture and storage technology has still to be developed. 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.”
DECC now plans to pursue other carbon capture and storage projects using the £1 billion capital fund allocated in the 2010 Spending Review.