© Jacob King/PA Wire 
Backers of the Acorn flagship carbon capture and storage (CCS) project and other clean energy advisers have renewed calls for government support as Chancellor Rachel Reeves shifted focus – and investment – towards boosting UK defence spending in her spring statement.
Reeves set out plans for the UK to become a “defence industrial superpower” but made no mention of ambitions held by Energy Secretary Ed Miliband for the country to become a “clean energy superpower”, with concerns being raised about whether this is affordable.
Reeves pledged to up spending in the UK’s defence industry to 2.5% of GDP, including an initial £2.2 billion boost, while admitting economic growth was set to slump from 2% to 1% this year.
Energy industry projects will have to wait for the next fiscal event for updates on investment in the energy transition – Reeves said there will be a spending review in June where the government will set out its plans for spending as well as public sector reforms also announced Wednesday on 11 June 2025.
Through reforms planned on cutting tax evasion, the chancellor aims to raise an extra £2bn a year by the end of 2029/30. Further, the report by the Office for Budget Responsibility (OBR) whose economic update spurred the spring statement, said changes to the planning system to increase housebuilding would increase the economy by £3.4bn.
The strange silence on energy caused developers and analysts to scratch their heads.
Storegga chief executive Tim Stedman said his project, which is the heart of the Acorn CCS scheme in Peterhead and the wider industrial plan called the Scottish Cluster, needed “clear policy support” – or risk losing its potential to create thousands of jobs.
The so-called track 2 project has been left in the wake of the Hynet scheme in North West of England around the Stanlow complex and the Northern Endurance Partnership (NEP) in Teesside. These track-1 projects were backed with £21.7bn government from the UK government last year.
“Following the spring statement, we renew our call for the government to provide clear policy support for the track-2 clusters,” said Stedman
“The chancellor and Secretary of State for DESNZ have both said that net zero is the industrial opportunity of the 21st century, and Britain must lead the way.
“We urge the government to ensure that Scotland is not left behind. Without urgent clarity on support and timelines for Acorn and the Scottish Cluster – Scotland’s only CO2 transport and storage system – we risk losing out on critical investment, economic growth, jobs and industrial development.”
Ed Matthew, UK programme director of climate change think tank E3G said Reeves was missing an economic growth trick in leaving energy transition behind: “The chancellor has left a huge open goal by neglecting the clean economy as the primary driver for growth in the UK.
“While the broader economy slumped, the clean economy boomed, growing by 10% last year, creating £83bn of added value.
“If the government is serious about growth, it must stop tinkering at the edges and ramp up capital investment into the clean economy – the best chance we have for economic recovery.”
Matt Swannell, chief economic Advisor to the EY ITEM Club, said the chancellor had stuck to her rules on debt and investment which “restored” the fiscal headroom that would have otherwise been wiped out by the UK’s deteriorating economy but raised questions over the strength of the UK’s ability to invest.
He said: “A weaker-than-expected economy and an increase in market interest rates saw all the £9.9bn headroom left after the autumn budget used up.
“The government announced welfare cuts and smaller day-to-day spending increases which, alongside an accounting benefit from switching foreign aid to defence spending, saw the lost headroom restored. However, the margin of error remains small by previous standards and once again risks being knocked off course by relatively normal shifts in the economy or financial markets.
“The spring statement did little to shed any light on how the government intends to answer the big questions that will shape fiscal policy over the rest of this parliament.
“While departmental spending totals will not be set until the middle of this year, overall day-to-day spending implies that some of the unprotected government departments will still face challenging budgets. In the face of these challenges, the government will have to rely quite heavily on ambitious plans for public sector efficiency gains to be able to deliver public services. But there will always be a question over the extent to which this is achievable.”
He added: “Meanwhile, a common narrative over the coming months will be the continued improvement of Europe’s defence capabilities. This might require defence spending to increase beyond the 2.5% of GDP currently pencilled into the government’s existing spending plans. Under the current framework, there’s a question as to how this would be funded, as there is unlikely to be enough headroom to meet this extra spending.”
