© Supplied by Steve Brown / DCT Me Major carbon capture and storage (CCS) projects in Scotland and the Humber are set to progress further as the UK government confirmed funding support in its spending review.
The UK government will provide development funding for the Acorn Project and Viking CCS over the spending review period as part of the track-2 cluster sequencing process.
The funding comes after the government last year provided close to £22bn in funding for the first wave of track-1 CCS projects in Teesside and Liverpool Bay.
However, the spending review did not specify how much funding it will provide to Acorn and Viking specifically.
While the government said it will allocate £9.4 billion towards carbon capture, usage and storage (CCUS) over the spending review period, some of this will go towards track-1 expansion projects.
The government said this will “maximise deployment to fill the storage capacity” of the East Coast Cluster and HyNet, and provide development funding to advance the delivery of Acorn and Viking.
“A final investment decision will be taken later this Parliament, subject to project readiness and affordability,” the government stated.
Speaking to MPs, Chancellor Rachel Reeves said the government investment in Acorn and Viking will “back British industries” through “pioneering work” in CCS.
SNP calls for clarity on Acorn funding
But the SNP criticised the “glaring omission” on funding detail for Acorn and Viking in the spending review.
SNP Westminster leader Stephen Flynn called on Labour to deliver meaningful funding at concrete support for Acorn “at pace”.
Flynn said success Westminster governments had “dragged their heels on Acorn”.
Scottish politicians and industry groups have long campaigned for Acorn funding, with the SNP accusing the Labour government of “betraying” the north east of Scotland over repeated delays.
© Supplied by ShellAlongside capturing emissions from existing industrial facilities, both Acorn and Viking include proposals for new gas-fired power, bioenergy, and blue hydrogen projects.
These proposals, and the wider UK CCS strategy, have attracted significant criticism from some industry observers who say the technology is unproven and costly.
But the National Audit Office last year deemed CCS a “risk worth taking” and the technology has also gained the backing of the independent Climate Change Committee.
In addition to storage, captured CO2 emissions can also be used to create green fuels such as e-methanol and synthetic aviation fuel (SAF).
What are the Acorn and Viking CCS projects?
Centred on the St Fergus gas terminal in Peterhead, the Acorn project involves capturing emissions from major industrial emitters in Scotland.
Known as the Scottish Cluster, the group includes industrial sites which emit an estimated 9.3 million tonnes of CO2 per year.
Altogether, the industrial facilities, located mostly in Scotland’s Central Belt region, account for around 80% of Scotland’s industrial emissions.
They include Ineos facilities around Grangemouth, Shell’s Mossmorran plant, a cement factory near Dunbar and power stations near Glenrothes and Peterhead among others.
The closure of Scotland’s only oil refinery by PetroIneos at Grangemouth means there are fewer potential customers for Acorn, although supporters have said the project could underpin government-backed investments plans known as Project Willow.
© Supplied by StoreggaOnce captured, the CO2 emissions will be transported via a pipeline to the St Fergus gas terminal in Peterhead before it is permanently stored underneath the North Sea.
A Storegga, Shell, Harbour Energy and North Sea Midstream Partners joint venture is developing the CO2 transportation and storage component of Acorn.
The Acorn partners received initial UK government funding support in 2023, with the Scottish government also providing financial backing.
By 2030, the Scottish Cluster and Acorn partnership aims to capture and store between five and 10 million tonnes of CO2 each year.
A 2024 Biggar Economics report estimated that delivering the Scottish Cluster could provide £17.7 billion in economic benefits to the UK economy by 2050.
Over the course of development and construction, the Scottish Cluster estimates it will support 10,800 jobs, including 4,700 in Scotland.
Viking CCS and the Humber
Acorn partner Harbour Energy is also developing the Viking CCS project in the Humber region, alongside fellow North Sea operator BP.
The Humber emits more CO2 than any other UK industrial cluster, and the Viking CCS project aims to capture and store up to 15 million tonnes of CO2 per year by 2035.
Harbour is working alongside a cluster of Humber industrial emitters including VPI Immingham, Phillips 66, RWE, Drax and Cory Group.
The Viking project will transport captured CO2 emissions via a pipeline to the Theddlethorpe gas terminal before it is sent offshore for permanent storage.
© Supplied by Viking CCSHarbour estimates the Viking project could unlock up to £7bn in investment and potentially create over 10,000 jobs during construction, providing around £4bn of gross value added (GVA) benefits to the Humber region.
The Aberdeen-headquartered operator recently cited uncertainty and slow progress on funding for Viking as part of its decision to cut 250 jobs in the Granite City.
UK carbon capture and storage sector
In addition, both Acorn and Viking could benefit from a plan to receive both domestic and international shipments of CO2.
The Acorn developers are in discussions with the Milford Haven CO2 Project in Wales and the 7CO2 project in Severnside regarding possible CO2 shipments to Scotland.
Future shipments could also come from major European emitters in countries such as Germany, with projects in Denmark and Norway already pursuing this model.
Harbour is a partner in Project Greensand in Denmark, while fellow North Sea operator Equinor is progressing the Northern Lights CCS project in Norway.
EnQuest, Spirit Energy, Eni and Perenco are also developing future North Sea CCS projects, some of which could involve international CO2 shipments.
More UK offshore CCS developments could soon follow after the North Sea Transition Authority (NSTA) regulator recently issued a call for proposals.
According to the Carbon Capture and Storage Association (CCSA) trade body, the UK CCS supply chain could be worth £2.5bn per year by 2040.
Ahead of the spending review, the CCSA called for the Labour government to back Acorn and Viking alongside track-1 expansion projects.
The industry also wants to see the government provide a clear programme for future CCS project allocation and targeted financial support for supply chain firms.
