Rachel Reeves has confirmed UK Government funding for the Acorn Project in Aberdeenshire, keeping hopes of creating 15,000 energy transition jobs alive.
Setting out the UK's first multi-year spending review since 2021, the chancellor announced development funding for the long-awaited carbon capture and storage facility at St Fergus.
Further details of the funding package are expected to be revealed later today when Energy Secretary Ed Miliband visits the North-east of Scotland.
In documents published after Ms Reeves had finished speaking yesterday, the nature of the funding was not immediately clear.
It said: "A final investment decision will be taken later this Parliament, subject to project readiness and affordability".
Russell Borthwick, Chief Executive of Aberdeen and Grampian Chamber of Commerce, said: “We welcome the Government’s recognition that Acorn is of vital strategic importance to the energy transition. This is a case the Chamber has been making strongly over a number of years now.
“Alongside partners, we recently coordinated open letters to the Chancellor from Scottish businesses and elected representatives from across Scotland calling for the project to be progressed as an immediate priority – highlighting the huge potential to unlock £7billion in private investment, to protect and create thousands of high value jobs, and to support our supply chain through the transition.
“While we await further detail around the scale of government support, we hope it will allow work to proceed on the project’s preliminary stages and move it forward. The UK is going to require five CCS projects, at scale, to meet its climate targets – the North-east of Scotland has a vital part to play.”
Investment Zone cash confirmed
The spending review also confirmed the sector and geography focus for the North East Scotland Investment Zone, which will centre on sites in Aberdeen City and Aberdeenshire local authorities, including the Energy Transition Zone.
The sector focus is green industries and the digital and technology sector, particularly floating offshore wind and green hydrogen, and harnessing digital technology to drive innovation in green energy solutions.
Local partners expect it to generate over £220million of initial private sector investment, create over 8,000 jobs, and boost the region’s research and innovation economy.
Sir Ian Wood, Chair of the North East Scotland Investment Zone Steering Group, said: “The confirmation of the Energy Transition Zone and site in Aberdeenshire as focal points for the North East Scotland Investment Zone, along with the dual focus of green energy and digital tech, is very welcome.
"The region’s economic partners have been working closely with both the Scottish and UK Governments to develop this very important policy which will position the Zone and wider region as a globally recognised supply chain hub of energy excellence and one of the most attractive locations in the UK for investment in low carbon technologies.”
On Acorn, Sir Ian added: “We also welcome the Chancellor’s announcement that the Acorn Project at St Fergus will receive critical development funding to allow Scotland’s only Carbon Capture Cluster to proceed toward a final investment decision. The region’s economic partners are longstanding advocates of this transformational project and it is very encouraging to see its importance being recognised.
"All efforts must be made to fully realise Acorn’s potential and ensure the unlocking of significant job creation and investment for the North-east of Scotland.”
Row over Scottish funding
According to the Treasury, the Scottish Government will see an increase of £9.1billion over the next three years - leading to a row with the Scottish Government.
In a briefing for Scottish journalists, Chief Secretary to the Treasury Darren Jones said on average, the increase will mean £2.9billion extra for Scotland each year – £2.4billion of which will be revenue spending up to 2028-29 and around £510million in capital for the slightly longer period of four years.
However, Scottish Finance Secretary Shona Robison said the overall funding increase does not match that of Whitehall departments, claiming Scotland has missed out on more than £ billion.
“Today’s settlement for Scotland is particularly disappointing, with real-terms growth of 0.8 per cent a year for our overall block grant, which is lower than the average for UK departments,” she said.
“Had our resource funding for day-to-day priorities grown in line with the UK Government’s overall spending, we would have £1.1billion more to spend on our priorities over the next three years. In effect, Scotland has been short-changed by more than £1billion pounds."