Department for Energy Security and Net Zero major projects: accounting officer assessments

Departmental accounting officers must produce an assessment of all projects or programmes which form part of the Government’s Major Projects Portfolio ( GMPP ). They are assessed against the 4 accounting officer standards as expected by Parliament and the public for use of public resources: regularity propriety value for money feasibility See related assessments on the former Department for Business, Energy and Industrial Strategy accounting officer assessments page. Project title: Track-1 Carbon Capture, Usage and Storage Programme – HyNet and East Coast Cluster Main scheme project stage: Full Business Case approved by PIC in July 2024 and MPRG in August 2024. Introduction It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has agreed an assessment of projects within the government’s Major Projects Portfolio. This Accounting Officer Assessment was made for Track-1 of the Carbon Capture, Usage and Storage Programme. Track-1 is made up of the initial two CCUS clusters: HyNet and the East Coast Cluster . Both clusters have completed their Full Business Case stage and these business cases are published separately. I have made the assessment as the Accounting Officer for the Department for Energy Security and Net Zero. Background and context Track-1 of the Carbon Capture, Usage and Storage ( CCUS ) programme aims to deliver the first two CCUS clusters in the UK as part of the government’s wider ambition to build a self-sustaining CCUS industry. CCUS Track-1 comprises both HyNet and East Coast Cluster ( ECC ) “anchor” and “build out” projects. The scope of this Accounting Officer Assessment relates to the Full Business Case ( FBC ) approvals sought for anchor projects in both the HyNet and ECC cluster. The anchor comprised both Transport & Storage ( T&S ) and capture projects (‘Users’). This included Eni ( T&S ), Hydrogen Production Plant 1 ( HPP1 ) and Protos for HyNet, as well as Northern Endurance Partnership ( NEP ) ( T&S ) and Net Zero Teesside ( NZT ) for ECC . Funding approval for further build-out projects will be sought through individual FBCs. The HyNet and East Coast Clusters include projects supporting CCUS -enabled low-carbon (‘blue’) hydrogen, gas fired power CCS , industrial carbon capture and CCUS -enabled energy from waste. Assessment against the Accounting Officer standards Regularity Track-1 of the CCUS programme is underpinned by powers under the Energy Act 2023, Energy Act 2013 and the Secretary of State’s common law power to enter into contracts. The relevant legislation provides the authority for the Secretary of State to provide financial assistance to support the establishment of CCUS and low carbon hydrogen in the UK, and to designate and direct a counterparty to enter into contracts. It also establishes an economic regulation and licensing framework for carbon dioxide transport and storage, given the current monopolistic characteristics of the infrastructure, where oversight by Ofgem will ensure appropriate protections for users of the networks, and consumers where relevant, ensuring costs are economic and efficient. The Secretary of State fulfilled the requirement, pursuant to section 9(4) (as modified by Section 16 and Schedule 1) of the Energy Act 2023, to give notice of the proposal to grant economic licenses to the Track-1 carbon dioxide transport and storage companies. There are several contingent liabilities associated with the contracts enabling delivery of these two clusters. Parliament has been notified of these contingent liabilities. The Chancellor has approved the funding for this programme, which was announced in October 2024. Overall assessment: My assessment is that the regularity test is satisfied. Propriety The CCUS Programme has been approved at both Strategic Outline Business Case and Outline Business Case stage by the BEIS Portfolio and Investment Committee. The Programme received conditional approval to proceed to the Full Business Case stage from the HMG Major Projects Review Group in May 2022. Track-1 of the CCUS Programme (HyNet and the East Coast Cluster) was approved via two Full Business Cases by the DESNZ Portfolio and Investment Committee in July 2024. It was approved by the Major Projects Review Group in August 2024 subject to conditions. The programme will continue to provide information through annual Government Major Projects Portfolio reporting. Summaries of the Full Business Cases have also been published. The programme delivery model is structured to allow delivery oversight, management of risks and transparency across the partner organisations. This includes consideration of fraud risk. Overall assessment: My assessment is that the propriety test is satisfied. Value for money There is a clear rationale for government intervention in the market for CCUS . Intervention is intended to correct market failures, including first mover disadvantage due to the high start-up costs of establishing a new CCUS market, investment coordination failure, the negative externalities of carbon emissions not being fully internalised, and the market price for carbon being too low to incentivise CCUS uptake. Without intervention, market failures would prevent a CCUS market from developing in the UK. The cost benefit analysis conducted for the Full Business Cases demonstrates that both HyNet and the East Coast Cluster offer value for money when appraised against a Net Zero consistent counterfactual. This indicates that investment in these clusters offers a cost-effective route to meeting Net Zero targets. The benefits of HyNet and the East Coast Cluster primarily accrue from carbon abatement. Wider social and economic benefits are also expected to be delivered, such as energy security, jobs and investment across regions of the UK. Establishing initial CO2 transport and storage will provide future opportunities to connect more projects to HyNet and the East Coast Cluster, facilitating further carbon abatement and the option to deploy CCUS -enabled GGRs in the UK, necessary to meet Carbon Budgets. Overall assessment: My assessment is that the value for money test is satisfied. Feasibility Delivery of the two Track-1 CCUS clusters is complex and as such it presents many technical, financial and operational risks. HMG has set out mitigations to the risks and assessed the risks to be acceptable relative to other choices. Consequently, the government remains committed to the deployment of CCUS due to the strategic benefits it presents. Prior to the Full Business Case approvals, the two clusters underwent Gate 3 reviews in April and May 2024, which resulted in Amber ratings for both. The reviews tested the clusters’ readiness to move towards Final Investment Decisions and provided sufficient confidence in delivery, with all recommendations now being fully implemented. The Full Business Cases were then approved by the Department’s Portfolio and Investment Committee and by the Major Projects Review Group, before the investments were approved by DESNZ and HM Treasury Ministers. The delivery of the CCUS Programme is a combined effort between industry, DESNZ and other organisations including other government departments and arm’s length bodies. Following contract signature and licence issue, the programme will move into a new delivery model with the roles of DESNZ , Ofgem and the Low Carbon Contracts Company changing in line with changing roles and responsibilities. DESNZ officials are working closely with our delivery partners to support their readiness. Overall assessment: My assessment is that the feasibility test is satisfied, although I note the risk to achieving the full targets. Conclusion As the DESNZ Accounting Officer I have considered the assessment of Track-1 of the Carbon Capture, Usage and Storage Programme (HyNet and East Coast Cluster) and approved it on 20th March 2025. I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them. The summary included in this letter will be published on the government’s website (GOV.UK). Copies of this letter will be deposited in the Libraries of the House and sent to the Comptroller and Auditor General and Treasury Officer of Accounts. Jeremy Pocklington Permanent Secretary, DESNZ Project title: Spherical Tokamak for Energy Production Main scheme project stage: Tranche 2a Outline Business Case conditionally approved by DESNZ PIC , May 2023 Tranche 2a Outline Business Case conditionally approved by MPRG, July 2023 Introduction It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has agreed an assessment of projects within the Government’s Major Projects Portfolio ( GMPP ). This Accounting Officer Assessment was made for the Spherical Tokamak for Energy Production ( STEP ) Programme, following Outline Business Case conditional approval by MPRG, July 2023. I have made this assessment as the Accounting Officer for the UK Atomic Energy Authority ( UKAEA ). Background and context This assessment relates to the Spherical Tokamak for Energy Production ( STEP ) programme. In 2021, the Government published its Fusion Strategy [footnote 1] , outlining how the UK will build on its fusion research leadership to commercialise fusion energy technology. The Fusion Strategy has two overarching goals: For the UK to demonstrate the commercial viability of fusion by building a prototype fusion power plant in the UK that puts energy on the grid For the UK to build a world-leading fusion industry which can export fusion technology around the world in subsequent decades At the heart of this strategy is the STEP programme, with the aim to design and build, by 2040, a UK prototype fusion energy plant capable of delivering net-energy to the grid, demonstrating a path to commercial viability and stimulating a UK fusion supply chain. It is a research-informed delivery programme covering design, manufacture, construction, and operations. The plant will be a non-commercial prototype but will pave the way for subsequent commercial developments of the technology. STEP is being delivered in phases called tranches. The current tranche, Tranche 1 (2019-2024), is being led by the UK Atomic Energy Authority ( UKAEA ) with the objective to develop a concept design, select a site, identify a delivery vehicle for subsequent tranches, and develop the regulatory framework for fusion in the UK. This assessment relates to the Outline Business Case for Tranche 2a of the programme, which will be led by a wholly-owned subsidiary company to UKAEA called UK Industrial Fusion Solutions ( UKIFS ). Tranche 2a marks a transition from R&D to industrial delivery, partnering with industry to develop and, in Tranche 3, build the prototype plant. Tranche 2a of the programme has the following objectives: mature the STEP plant design improve technical confidence through prototyping and testing mobilise UKIFS , whole plant partners and wider supply chain confirm regulatory compliance and long lead materials path maximise value derived from technology developed maximise regional economic and levelling up benefits mobilise the STEP site and commence site development Assessment against the Accounting Officer standards Regularity The approvals sought do not introduce any regulatory challenges. UKAEA and its subsidiaries have the legal power to undertake this programme of work. UKAEA is a Non-Departmental Public Body (NDPB) that was established by the Atomic Energy Authority Act 1954 (the 1954 Act) as a statutory corporation. Its functions, powers, and duties (and those of its subsidiaries) stem from this Act and were extended through the Atomic Energy Authority Act 1986, and Section 80 (5) of the Energy Act (2004). These provide the legal basis for UKAEA to deliver this programme. The proposal has legal basis, Parliamentary authority, and Treasury authorisation; and is compatible with the agreed spending budgets. Conclusion : My assessment is that the accounting officer test is met. Propriety The STEP programme is included in the GMPP with quarterly reports being submitted. The programme has received independent assurance reviews from the Infrastructure and Projects Authority ( IPA ). There are actions in place which address each of the recommendations from these reviews. The Department for Business, Energy and Industrial Strategy ( BEIS ) Project Investment Committee ( PIC ) approved the Full Business Case ( FBC ) for Tranche 1 of STEP in January 2020, and more recently, the Strategic Outline Case ( SOC ) for Tranche 2a in April 2022. The Outline Business Case ( OBC ) for Tranche 2a received conditional approval from the Department for Energy Security and Net Zero ( DESNZ ) Project Investment Committee ( PIC ) in May 2023 and conditional approval from the IPA ’s Major Project Review Group (MPRG) in July 2023. Tranche 2a is affordable within allocated budgets through to 2024-2025. Affordability beyond 2024-2025 is dependent on subsequent Spending Reviews. Conclusion : My assessment is that the accounting officer test is met. Value for Money Fusion energy is a concept that could deliver low carbon, secure, continuous, and virtually inexhaustible energy. The UK, as a fusion world-leader, is poised to take advantage of this opportunity. This leadership, arising from over 65 years of developing and operating fusion devices, has delivered fusion world records [footnote 2] , and attracted international investment into the UK. Given wider global climate and energy security objectives, the commercialisation of fusion could provide a unique opportunity for the UK to leverage its scientific leadership within an emerging energy sector and subsequently benefit from the associated export market. The Government published its Fusion Strategy [footnote 3] in 2021 which aims to realise the economic benefits of this opportunity. At the heart of this strategy is the STEP programme, to design and build, by 2040, a UK prototype fusion energy plant capable of delivering net-energy to the grid. STEP Tranche 2a present the best Value for Money option to progress towards achieving the UK Fusion Strategy goals. A critical source of Value for Money from Tranche 2a will be its role in understanding and mitigating design and engineering cost risk. This will serve to reduce delivery costs for the prototype, which, given the technological complexities involved, will be a key contributor to improving outturn Value for Money in later STEP tranches and beyond. Tranche 2a will maintain and grow a highly skilled workforce, building capacity in the UK labour market to support fusion and other advanced scientific developments. The enhanced skills generated through engagement in the STEP programme will support productivity gains reflected in wage premia given the uniqueness of the design, engineering and scientific activities of STEP . There is a clear rationale for government intervention in STEP due to market failures arising from first mover disadvantage for companies establishing a new market, in addition to incomplete and asymmetric information. The scale of fusion’s technical challenges and the resulting high fixed costs for an at-scale prototype power plant are too great for individual private actors to tackle, especially when the market is competitive and uncertain, leading to underinvestment. In the short-term, economic additionality from this tranche of activity, will include: increased economic activity, for example through the creation and transfer of skills and expertise as the programme is implemented, with spill over to adjacent sectors and wider UK industry an increase in the scale of innovation resulting from the programme through the development of new and novel technologies and IP assets resulting from detailed plant design a greater development of UK industrial capacity and capability, facilitated through the creation of significant opportunities for the market In the longer term, successful development of commercially viable fusion energy and highly improved fusion devices would create an opportunity to capture a UK share of a future fusion industry. It would also have far-reaching impacts beyond those that could be captured by the original developers of the technology. The knowledge and skills developed by the UK companies involved will likely lead to spill overs which will place them and collaborative partners at a significant advantage for other UK and international commercial opportunities. It is recognised that at this stage there remain uncertainties, particularly those relating to the scaling of immature technologies. However, given the strength of the estimated economic value and targeted plans to resolve outstanding uncertainties as the programme progresses, the use of public funding to achieve the programmes strategic objectives remains justified. Value for money will continue to be tested at key points throughout programme delivery as the cases for subsequent stages are developed to inform decision making and ensure sound use of public funds. Conclusion : My assessment is that the accounting officer test is met. Feasibility The STEP Programme has been reviewed periodically by an independent and international panel of specialist technical and programmatic experts, the Fusion Technical Advisory Group ( FTAG ), convened by the then BEIS and continued by DESNZ . In the most recent FTAG review, the members commended the progress made by the programme in the design of the Prototype Power Plant and offered recommendations on areas of focus for subsequent design activities. Overall, therefore, FTAG considers that the current concept design proposal is evolving on a course towards a CML5 (Concept Maturity Level) which will provide a viable approach to delivery, but with a significant number of design choices retaining high technical risks that will ultimately need to be resolved through R&D . Resourcing is a concern and pay-related recruitment / retention challenges are recognised as a key corporate risk for the wider UKAEA group, with the latest IPA PAR review formally recognising it as a blocker to the programme. Specific programme mitigations are in place to address this and enable a ramp up of the programme. As part of this, further necessary pay flexibilities are being considered by central government. It is the programme’s view that the proposed delivery schedule can be implemented effectively and credibly, in line with policy intentions. Conclusion : My assessment is that the accounting officer test is met. Conclusion As the Accounting Officer for UKAEA I considered this assessment of the Spherical Tokamak for Energy Production ( STEP ) and approved it on 8 August. I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them. This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons, and sent to the Comptroller and Auditor General and Treasury Officer of Accounts. Professor Sir Ian Chapman Towards fusion energy: the UK fusion strategy ↩ JET makes history again ↩ Towards fusion energy: the UK fusion strategy ↩ Scheme project stage: Full Business Case ( FBC ) for the extension of the scheme, which has been in delivery since April 2022, was approved by Project Investment Committee ( PIC – now InvestCo) in November 2025 and Treasury Approval Point ( TAP ) in January 2026. Introduction This accounting officer assessment considers whether the Boiler Upgrade Scheme ( BUS ) continues to meet the four accounting officer standards of regularity, propriety, value for money and feasibility, as set out in Managing Public Money. The assessment supports assurance for the ongoing operation and development of the scheme, including delivery arrangements with Ofgem (and associated programme costs) and provides a clear audit trail for parliamentary and external scrutiny. Background and context The BUS supports the decarbonisation of domestic heating in England and Wales by providing capital grants to encourage the installation of low‑carbon heating technologies, including heat pumps and biomass boilers as replacements for existing fossil fuel systems. The scheme contributes to the government’s wider objectives to reduce carbon emissions in buildings and support the transition to net zero. The scheme is delivered by Ofgem on behalf of the Department of Energy Security and Net Zero ( DESNZ ). DESNZ retains responsibility for policy design, funding and overall accountability, while Ofgem is responsible for day‑to‑day administration, including installer registration, grant processing, compliance and assurance activity. The scheme operates under the Boiler Upgrade Scheme (England and Wales) Regulations 2022, which provide the statutory basis for grant payments and administration. BUS forms part of the Net Zero Buildings Portfolio and interlinks with other government interventions aimed at supporting low‑carbon heating deployment. The scope of this assessment relates to the FBC approvals recently obtained by the scheme via InvestCo and TAP . Assessment against the Accounting Officer Standards Regularity The BUS is underpinned by a clear statutory and delegated authority framework. The scheme is established under the Boiler Upgrade Scheme (England and Wales) Regulations 2022 (SI 2022/565), which were made using powers conferred by sections 100 and 104 of the Energy Act 2008. These regulations provide the legal basis for the Secretary of State to establish the scheme, appoint an authority to administer it and make grant payments to installers in respect of eligible low carbon heating installations in England and Wales. Expenditure under the scheme is consistent with parliamentary authority and Treasury spending controls. Funding is provided within agreed departmental budgets, with delivery delegated to Ofgem under established governance and financial control arrangements. Grant payments and associated administration costs are incurred solely for the purposes set out in the regulations and related scheme guidance. Accounting procedure of scheme expenditure, including grant payments and programme delivery costs, is consistent with departmental and cross government accounting guidance. Where liabilities or commitments arise through delivery arrangements, these are managed in accordance with established government processes and within delegated authority. Overall assessment: My assessment is that the regularity test is satisfied. Propriety The BUS has been subject to appropriate internal governance, assurance and approval processes throughout its development and delivery. The scheme joined the Government Major Projects Portfolio ( GMPP ) in July 2024 and reports quarterly to the National Infrastructure and Service Transformation Authority ( NISTA ). The scheme design and delivery model have been considered through departmental governance structures, including review and approval through InvestCo and TAP prior to launch in 2022 and more recently for the extension to the scheme in 2025 (InvestCo and TAP ). The project will continue to provide information through quarterly and annual GMPP reporting and be subject to an annual assessment by NISTA . A summary of the FBC will be published along with this assessment. The programme delivery model is structured to allow delivery oversight and management of risks and issues. Overall assessment: My assessment is that the propriety test is satisfied. Value for Money There is a clear rationale for government intervention in the domestic heating market. Intervention is required to address market gaps, including the higher upfront costs of low carbon heating technologies and the fact that the environmental benefits of carbon abatement are not fully reflected in market prices. The grant-based design of the scheme provides targeted support to reduce barriers to uptake while limiting public expenditure exposure. Delivery through Ofgem enables the scheme to leverage existing capability and systems, reducing duplication and administrative cost. The scheme’s value for money case has been tested through the government’s spending and approval framework, including scrutiny by HM Treasury at the relevant approval point. This scrutiny considered the economic rationale for intervention, the appraisal of costs and benefits, affordability and the robustness of delivery and assurance arrangements, in line with Managing Public Money. The scheme delivers benefits primarily through carbon abatement, with wider social and economic benefits, including support for supply chains, skills development and progress towards net zero commitments. Ongoing monitoring and evaluation supports continuous improvement and value for money over the life of the scheme. Overall assessment: My assessment is that the value for money test is satisfied. Feasibility The BUS is well established operationally, with four years of successful delivery having already taken place. The scheme will continue to operate under the current delivery model. Ofgem has established systems and processes to administer the scheme at scale, including digital automated application, redemption and payment routes. The delivery model has been subject to recent assurance through departmental governance and assurance processes, including scrutiny by InvestCo and TAP . This assurance activity tested the robustness of the delivery approach, the clarity of roles and responsibilities between DESNZ and Ofgem, delivery capability and the management of key operational and delivery risks. The scheme forms part of the Department’s wider portfolio and is subject to ongoing oversight through GMPP reporting, providing continued visibility of delivery confidence, risks, and mitigations at a cross-government level. DESNZ retains appropriate programme management and SRO oversight, with risks monitored through established governance arrangements. Key risks, including demand uncertainty, supply chain capacity, and consumer awareness are actively managed and kept under review. While delivery of low carbon heating at the scale required for net zero presents ongoing challenges, the scheme is feasible within the current legislative, financial and operational framework. Overall assessment: My assessment is that the feasibility test is satisfied. Conclusion As the DESNZ Accounting Officer I have considered the assessment of the Boiler Upgrade Scheme and approved it on 23 April 2026. I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them. The summary included in this letter will be published on the government’s website (GOV.UK). Copies of this letter will be deposited in the Libraries of the House and sent to the Comptroller and Auditor General and Treasury Officer of Accounts. Jonathan Brearley Permanent Secretary, DESNZ