The Scottish Government has earmarked up to £80 million in a bid to bring forward the timeline for a key decarbonisation project.
Energy Secretary Michael Matheson says Holyrood “stands ready” to accelerate the development of the Scottish Cluster after it missed out on UK Government funding last year.
It is hoped the cash, which would come for the emerging energy technologies fund, will encourage Westminster to bump the scheme up to ‘track-1 status’.
Scotland’s energy sector was left dumfounded in October when the Scottish Cluster was not one of the carbon capture and storage (CCS) initiatives selected for UK Government funding.
It prompted calls for ministers to reconsider their decision amid fears that without the scheme, which has Aberdeenshire’s Acorn CCS project at its core, Scotland will not be able to hit its net zero goals.
Three for the price of two
In a fresh bid to make sure the Scottish Cluster is part of the vanguard, the Scottish Government has now set aside the cash and offered to work with Westminster to develop “three CCS clusters for the price of two”.
Mr Matheson met virtually with Greg Hands, the UK’s energy minister, on Thursday to lay out the funding offer.
He said: “The UK Government’s decision not to award the Scottish Cluster clear and definitive Track-1 status is a serious mistake which shows a clear lack of ambition and leadership on climate change.
“Delaying or halting the deployment of the Scottish Cluster has serious consequences, including jeopardising the industrial decarbonisation of Scotland and our just transition to net zero, creating an un-level playing field across the UK, and endangering Scottish and UK-wide net zero targets.
“That is why I am announcing today that we stand ready with up to £80 million of funding to help the Scottish Cluster continue and accelerate the deployment of carbon capture technology.
“Unfortunately we do not hold all the necessary legislative and regulatory levers needed to support the Scottish Cluster, as they are not devolved. We cannot simply go it alone with our funding. Our offer of support is therefore made on the basis that the Scottish Cluster is given certainty of its due status within the UK sequencing process, and I once again urge the UK Government to provide this certainty for the benefit of our energy sector and for our ability to deliver a just transition to net zero.”
The Department for Business, Energy and Industrial Strategy has been contacted for support.
A ‘catastrophic blow’
Mr Hands was charged with dealing the north-east a “catastrophic blow” when he revealed that the Scottish Cluster had only made the reserve list.
SNP politicians accused Conservative ministers of delivering “let down after let down”, while senior industry figures questioned the rationale of the decision.
The East Coast Cluster and HyNet were the two chosen to receive support.
The Scottish Cluster’s omission was particularly sore given a similar competition – that Peterhead Power Station was a front-runner in – was scrapped by the UK Government in 2015.
With the Acorn project as its backbone, the scheme boasts a number of impressive partners, including Harbour Energy, ExxonMobil and Ineos.
Acorn is based at the St Fergus gas plant near Peterhead and is planning to use existing oil and gas infrastructure to store carbon emissions under the North Sea.
Several large emitters, including Grangemouth and Mossmorran, have already signalled their intention to use the technology.
Engineers are also exploring the potential for producing blue hydrogen at the St Fergus site.
Acorn is expected to create thousands of low carbon jobs that could be filled by oil and gas workers as part of a just transition.
Cash can ‘turn the tide’
As the reserve project, the Scottish Cluster would be drafted into ‘Track-1’ should HyNet or the East Coast Cluster fail to meet the government’s requirements.
It is more likely however that it will have to bid in the second round of funding, meaning it would be up and running by 2030.
But Aberdeen South SNP MP Stephen Flynn says the Scottish Government cash has the potential to spped up develpoment of the Scottish Cluster.
He said: “There can be no doubt that the Tory decision to snub the Scottish cluster was a slap in the face to the North East, but this funding can help turn the tide back in our favour and shows that confidence in the project still remains high.
“This £80 million investment clearly shows the Scottish Government’s commitment to the North East but the reality of devolution remains and we now need both financial and regulatory support from Westminster.
“The Tories must come back to the table and give the Scottish cluster the track-1 status it merits and show the same desire as our government in Holyrood.”
Aberdeenshire East SNP MSP Gillian Martin said: “The Scottish Government has shown it stands ready to provide funding which could accelerate the deployment of carbon capture technology here in Scotland.
“As the representative of a north-east constituency, which has been at the forefront of energy in the UK for more than 50 years, we do not have time to delay or halt the deployment of the Scottish Cluster.
“The future of the Acorn Project is not just a north-east issue – it is one for families right across Scotland who are reliant on oil and gas and their supply chains for their incomes, either directly or indirectly.
“We have possibly the most concentrated transferrable skills base on our doorstep as well as the universities to enable the innovation that will surround the project.
“This project will support thousands of jobs and investment in the north-east and the longer-term expansion of the cluster would unlock further economic benefits with safeguarding of industrial jobs in sites across the UK.
“I welcome this funding commitment by the Scottish Government and would urge the UK Government to support it.”