The future of Rosebank, fears over funding for the Acorn carbon capture project and plans to cut household energy bills will dominate the North-east’s attention as Chancellor John Healey delivers his first Budget today.
In a significant development for the region’s energy sector, Treasury forecasts are reportedly assuming the Rosebank oilfield will be approved and generate billions of pounds in tax revenues, despite divisions within the Cabinet over whether the project should proceed.
However, concerns are growing that the Acorn carbon capture project at St Fergus could lose out as the Chancellor diverts funding towards defence, placing 15,000 future North-east jobs at risk.
According to The Times, Treasury calculations and Office for Budget Responsibility (OBR) forecasts published today will include expected production from Rosebank, even though the development has yet to receive final consent.
The Chancellor, Business Secretary Jonathan Reynolds and Prime Minister Andy Burnham are understood to support Rosebank, while Energy Secretary Miatta Fahnbulleh and Foreign Secretary Ed Miliband are reportedly opposed.
Rosebank’s developer, Adura, estimates that the project and the recently approved Jackdaw gasfield could generate £1.4billion in tax revenues before the end of this Parliament, rising to £3.8billion by the end of the next.
The revelation comes as Healey prepares to announce a £2billion Energy Wealth Fund, designed to use energy sector revenues to support low-carbon investment. A final decision on Rosebank is expected before the end of the year.
However, uncertainty surrounds the future of Acorn, with speculation that carbon capture funding could be reduced to help pay for increased military spending.
Former Energy Secretary Ed Miliband pledged £200million towards Acorn during a visit to St Fergus last year, but newspaper reports question whether the money might be diverted elsewhere.
SNP MP Seamus Logan told The Scotsman: "The Westminster government has dithered and delayed on North East carbon capture for too long and quite frankly this is a complete betrayal of the sector.
"Energy security is national security so let's not pretend this is about defence spending - this is about Westminster hammering Scottish industry to patch holes in the Treasury finances just as they always have done.”
On household energy costs, the Chancellor is expected to shift green levies from bills to general taxation, extend a VAT reduction on electricity and abolish the gas standing charge, saving households £27 annually.
The measures come as average household energy bills are forecast to rise by 27% to £2,192 from January, amid concerns that further US military action against Iran could drive up energy prices.
Healey is also expected to outline plans to break the link between gas and electricity prices, extend the fuel duty freeze and target online retailers to fund business rates reductions for high street shops.
Ahead of the announcement, Healey said: “We can’t stop these shocks that hit Britain, but we can make Britain more resilient when they do.
"This budget is designed to give households breathing space from some of the everyday costs, provide targeted support for businesses and self-employed people, and to start the long-term action needed to get energy costs down for good.”