Labour’s carbon-capture scheme will be Starmer’s white elephant: a terrible mistake costing billions

The supposedly green project – brainchild of the previous Tory government – will increase emissions, not reduce them

This will be Keir Starmer’s HS2: a hugely expensive scheme that will either be abandoned, scaled back or require massive extra funding to continue, after many billions have been spent. The government’s plan for carbon capture and storage (CCS) – catching carbon dioxide from major industry and pumping it into rocks under the North Sea – is a fossil fuel-driven boondoggle that will accelerate climate breakdown. Its ticket price of £21.7bn is just the beginning of a phenomenal fiscal nightmare.

There might be a case for a CCS programme if the following conditions were met. First, that the money for cheaper and more effective projects had already been committed. The opposite has happened. Labour slashed its green prosperity plan from £28bn a year to £15bn, and with it a sensible and rational programme for insulating 19m homes.

The government boasts that its CCS scheme will be “the equivalent of taking around 4m cars off the road”. But at far lower cost, through a rational transport policy, it could remove millions of real cars from the roads, while improving our mobility, cutting air pollution and releasing land for green spaces and housing.

It could also launch a programme for the mass restoration of nature in the UK. The rewilding of land and sea would draw down vast amounts of carbon from the atmosphere while simultaneously reversing our ecological catastrophe. All these are cost-effective ways of eliminating greenhouse gas emissions. And all of them, unlike CCS, have “co-benefits”: they achieve more than one good thing.

That £21.7bn is the budget for construction only. To judge by decades of expensive CCS failures, it’s likely to be highly optimistic. The UK’s three previous attempts at CCS (the 2005 Peterhead plan, the 2011 demonstration project and the 2012 funding competition) were all cancelled as a result of cost escalation.

An analysis by Oxford University’s Smith School shows that a heavy reliance on CCS massively increases the costs of cutting emissions. By contrast to other technologies such as solar, wind and batteries, its costs have not fallen at all in 40 years. When I asked the government what guarantee it could provide that construction costs would be capped at £21.7bn, it gave me a woolly answer about “value for money”, but no such reassurance.

And this is just the start of it. Buried in an obscure ancillary document is a government commitment to pay a “premium” for the hydrogen component of the CCS programme for 15 years. How much will the total cost of this be? Again, no clear answer. Cutting cost-effective measures in favour of an open-ended, staggeringly expensive programme is the very definition of fiscal irresponsibility.

The second condition is that CCS will accelerate or complete the UK’s decarbonisation. But there’s a reason why oil and gas companies have lobbied so forcefully for this policy: it licenses continued fossil fuel production. The government’s CCS decision has been sold to us as a way to deliver blue hydrogen. This means hydrogen made from fossil gas, as opposed to green hydrogen, which is made by electrolysis with renewable electricity.

An analysis by the climate experts Carbon Tracker shows that the additional gas demand caused by the UK’s CCS blue hydrogen programme will greatly increase overall emissions. It would exhaust the UK’s domestic gas supply, which would then necessitate importing liquefied gas (LNG) from the US and other sources. The government knows this, which is why it intends to approve the construction of an LNG terminal at Teesside.

LNG from the US, thanks to the impacts of fracking, liquefaction and leakage, releases higher greenhouse gas emissions than coal. Blue hydrogen produced from LNG massively exceeds the low carbon hydrogen standard with which the entire programme is justified. Far from accelerating decarbonisation, Labour’s CCS scheme locks in high emissions and fossil fuel dependency for decades to come.

Don’t take it from me. Take it from the government. There’s a rule applied to all such spending, called “principle H”. It says: “subsidies for the decarbonisation of emissions linked to industrial activities in the UK shall achieve an overall reduction in greenhouse gas emissions.” Uniquely, the government has decided that principle H is “not applicable” to its CCS programme. Otherwise, it notes, the scheme could not proceed, because “liquified natural gas is associated with increased upstream emissions of greenhouse gases”. The breathtaking excuse it gives for rescinding this principle is that the state will “subsidise the construction” of CCS plants but “not their operation”. This is untrue and nonsensical. Labour ministers are spending £21.7bn on an alleged climate project that will increase emissions, and they know it.

The third condition is an audit of the carbon emissions that cannot be eliminated by other means. The government tells me there are “no viable alternatives” to CCS for “decarbonising key industrial sectors (eg cement)”. But what if there are? What if conventional cement production were replaced with geopolymeric cement? What if green hydrogen were used to make steel? What if thermal power plants were no longer required for electricity production? No such audit has been conducted. Already, as Carbon Tracker has shown, the assumptions behind the CCS programme are outdated. The decision to deploy CCS comes before an attempt to determine whether it is necessary. That’s what happens when fossil fuel lobbyists drive government policy.

When I asked the Department for Energy Security and Net Zero for background documents, all those it sent me were published by the previous government. None had been updated since Labour took office. This, in other words, is Tory policy. My guess is that Labour feared that dropping the Tory programme, with its massive handouts to corporations, would trigger a concerted attack by lobby groups and the billionaire press, alleging it was “anti-business”. Our money is being used for political purposes.

Starmer campaigned on a platform of “change”. But there has been no change from this demented Tory policy, no change in the influence of the fossil fuel industry, no change in the perverse justifications. And, I suspect, there will be no change from £50bn for this profligate CCS scheme.

The chancellor, Rachel Reeves, talks of a fiscal “black hole” of £21.9bn. But this is a real black hole: a long tunnel into the rocks, down which £21.7bn and more will be poured. A more reliable and cost-effective means of sequestering carbon would be to bundle up the money (roughly 1,100 tonnes in £20 notes) and shove it down the pipe.

Cover photo: By The Guardian