The Budget held out hope for Scotland's energy industry, with a promise to fund cutting-edge "carbon capture" technology.

The Budget held out hope for Scotland's energy industry, with a promise to fund cutting-edge "carbon capture" technology.

The chancellor unveiled funding for up to four projects to test technology which captures and stores carbon underground. Previously the Government had only planned to fund one project.

ScottishPower has already earmarked its massive Longannet power station on the banks of the Forth as a potential location for a successful carbon capture installation.

A spokesman said: "ScottishPower is leading the way on the reduction of CO2 emissions through the development of carbon capture and storage (CCS) technology.

"By 2014, we can demonstrate a fully operational CCS system capable of being deployed in the UK and around the world.

"We welcome the Government's Budget announcement on developing a new and more ambitious CCS policy including its intention to allocate £90m to fund companies to undertake detailed preparatory engineering studies.

"The UK has a real opportunity to become a global player in the low carbon economy of the future. Our combination of strong offshore and engineering skills and the opportunities offered once again by the natural resource of the Central North Sea give the UK a unique position in this emerging industry."

Following the chancellor's announcement of support for carbon capture and storage schemes there were calls for "clusters" of power stations fitted with the technology to make it more efficient.

National Grid chief executive Steve Holliday said CCS had the potential to massively reduce UK carbon dioxide emissions and maintain secure energy supplies, and welcomed the plans to as much as quadruple the scheme.

Mr Holliday said: "The next step for Government is to focus on how the carbon dioxide will get from the power stations to offshore storage fields."

Power company E.ON has outlined a vision for a "cluster" of power stations in the Thames Estuary, which it says could save millions of tons of CO2 a year, centred on its controversial plans for a new coal-fired power station at Kingsnorth, Kent.

Funding for CCS includes £90m for studies by the companies, including ScottishPower, who are already involved in a Government competition to build a demonstration plant to help construction start as early as possible.

Environmental coalition Green Alliance said it was "delighted" with the funding for CCS, which it said was a "vital technology" in the fight against climate change.

The budget also contained promises to spend £525m on offshore wind projects, plus £435m to support energy efficiency schemes.

But WWF Scotland's Director, Dr Richard Dixon, said the measures did not go far enough.

Dr Dixon said: "This Budget was the opportunity to link economic recovery with delivering on commitments to cut our climate pollution by creating many thousands of green jobs.

"Despite some welcome measures the overall impact on climate emissions and low-carbon jobs will be frustratingly small. This is a particularly disappointing Budget for Scotland on environmental terms.

"More investment in offshore wind is welcome but wave and tidal energy are even more significant for Scotland. Wave and tidal technology could create thousands of new jobs in Scotland but the Budget offers no guaranteed money for these technologies.

"The expansion of the carbon capture and storage competition to up to four sites is encouraging and likely means a bright future for Longannet's bid. However, the current progress has been glacially slow and things will need to move much quicker if we are not simply to follow other countries into this technology."

The chancellor also unveiled a target of reducing the UK's C02 gas emissions by 34% by 2020.

Friends of the Earth's executive director Andy Atkins said ministers had squandered a historic opportunity to "kick start a green revolution" which would create tens of thousands of jobs and slash carbon emissions.

He added: "The green sheen on this year's budget will do little to disguise the fact that yet again the Government has merely applied a sticking plaster to a low-carbon industry on life support.

"The Government should be sprinting towards a low carbon future - instead it's limping along."

The New Economics Foundation's policy director Andrew Simms accused the Chancellor of wanting to "have his planet and eat it", by supporting the car and oil industries at the same time as making commitments to energy efficiency and low-carbon technology.

Mr Simms said: "You could say this is a balanced budget in the sense that any positive environmental action is likely to be cancelled out by the Government locking in a fossil fuel intensive infrastructure for transport and energy."

And Christian Aid's climate policy expert Dr Alison Doig said: "Cutting emissions by 34% by 2020 will fail to prevent dangerous global warming from devastating the lives of people in developing countries, who are least responsible for this crisis.